−Removed: Investing in our common stock involves a high degree of risk.
−Removed: You should carefully consider the risks described below, as well as the other information in this Annual Report on Form 10-K, or Annual Report, and in our other public filings before making an investment decision.
−Removed: Our business, prospects, financial condition, or operating results could be harmed by any of these risks, as well as other risks not currently known to us or that we currently consider immaterial.
−Removed: If any such risks or uncertainties actually occur, our business, financial condition or operating results could differ materially from the plans, projections and other forward-looking statements included in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Annual Report and in our other public filings.
−Removed: trading price of our common stock could decline due to any of these risks, and as a result, you may lose all or part of your investment.
−Removed: Risks Related to the Merger
−Removed: If the proposed merger with Chondrial is not consummated, our business could suffer materially and our stock price could decline.
−Removed: The consummation of the proposed merger with Chondrial is subject to a number of closing conditions, including the approval by our stockholders, approval by NASDAQ of our application for initial listing of our common stock in connection with the merger, and other customary closing conditions.
−Removed: We are targeting a closing of the transaction in the second quarter of 2020.
−Removed: If the proposed merger is not consummated, we may be subject to a number of material risks, and our business and stock price could be adversely affected, as follows:
−Removed: We have incurred and expect to continue to incur significant expenses related to the proposed merger with Chondrial even if the merger is not consummated.
−Removed: The merger agreement contains covenants relating to our solicitation of competing acquisition proposals and the conduct of our business between the date of signing the merger agreement and the closing of the merger.
−Removed: As a result, significant business decisions and transactions before the closing of the merger require the consent of Chondrial.
−Removed: Accordingly, we may be unable to pursue business opportunities that would otherwise be in its best interest as a standalone company.
−Removed: If the merger agreement is terminated after we have invested significant time and resources in the transaction process, we will have a limited ability to continue its current operations without obtaining additional financing to fund our operations.
−Removed: We could be obligated to pay Chondrial a $3,375,000 termination fee in connection with the termination of the merger agreement, depending on the reason for the termination.
−Removed: We could be obligated to pay Chondrial a $350,000 expense reimbursement in connection with the termination of the merger agreement, depending on the reason for the termination.
−Removed: Our collaborators and other business partners and investors in general may view the failure to consummate the merger as a poor reflection on its business or prospects.
−Removed: Some of our suppliers, collaborators and other business partners may seek to change or terminate their relationships with us as a result of the proposed merger.
−Removed: As a result of the proposed merger, current and prospective employees could experience uncertainty about their future roles within the combined company.
−Removed: This uncertainty may adversely affect our ability to retain our key employees, who may seek other employment opportunities.
−Removed: Additionally, pursuant to the merger agreement, all of our employees will be terminated effective as of the closing.
−Removed: Our management team may be distracted from day to day operations as a result of the proposed merger.
−Removed: The market price of our common stock may decline to the extent that the current market price reflects a market assumption that the proposed merger will be completed.
−Removed: In addition, if the merger agreement is terminated and our board of directors, or our Board, determines to seek another business combination, we may not be able to find a third party willing to provide equivalent or more attractive consideration than the consideration to be provided by each party in the merger.
−Removed: In such circumstances, our Board may elect to, among other things, divest all or a portion of our business, or take the steps necessary to liquidate all of our business and assets, and in either such case, the consideration that we receive may be less attractive than the consideration to be received by us pursuant to the merger agreement.
−Removed: If we do not successfully consummate the merger or another strategic transaction, our Board may decide to pursue a dissolution and liquidation.
−Removed: In such an event, the amount of cash available for distribution to our stockholders will depend heavily on the timing of such liquidation as well as the amount of cash that will need to be reserved for commitments and contingent liabilities.
−Removed: There can be no assurance that the merger will be completed.
−Removed: If the merger is not completed, our Board may decide to pursue a dissolution and liquidation.
−Removed: In such an event, the amount of cash available for distribution to our stockholders will depend heavily on the timing of such decision and, as with the passage of time the amount of cash available for distribution
−Removed: will be reduced as we continue to fund o ur operations.
−Removed: In addition, if our Board were to approve and recommend, and our stockholders were to approve, a dissolution and liquidation, we would be required under Delaware corporate law to pay our outstanding obligations, as well as to make reasonable provision for contingent and unknown obligations, prior to making any distributions in liquidation to our stockholders.
−Removed: As a result of this requirement, a portion of our assets may need to be reserved pending the resolution of such obligations and the tim ing of any such resolution is uncertain .
−Removed: In addition, we may be subject to litigation or other claims related to a dissolution and liquidation.
−Removed: If a dissolution and liquidation were pursued, our Board, in consultation with our advisors, would need to evalu ate these matters and make a determination about a reasonable amount to reserve.
−Removed: Accordingly, holders of our common stock could lose all or a significant portion of their investment in the event of a liquidation, dissolution or winding up .
−Removed: The amount of merger consideration may vary depending on the amount of our net cash as of a certain determination date prior to closing and the date on which the closing occurs, which could result in our stockholders owning a smaller percentage of the combined company than expected.
−Removed: Under the terms of the merger agreement, the number of shares of our common stock to be issued to Chondrial’s stockholder at the closing of the merger will be determined based on an exchange ratio, which will be calculated based on the total number of outstanding shares of our common stock and Chondrial common stock, each on a fully-diluted basis, and the respective valuations of Chondrial and us, as of immediately prior to the closing of the merger.
−Removed: If the closing occurs on or before March 31, 2020 and there is no adjustment to the closing valuation of us (as described below), then immediately following the effective time of the merger, Chondrial’s stockholder will own, or hold rights to acquire, 60% of the common stock of the combined company, on a fully-diluted basis, and our existing stockholders will own or hold rights to acquire 40% of the common stock of the combined company, on a fully-diluted basis.
−Removed: The respective valuations of Chondrial and us, and the corresponding ownership percentages of Chondrial’s stockholder and our existing stockholders, may be adjusted upward or downward based on the date the closing occurs and the net cash balance (defined in the merger agreement as cash, cash equivalents and marketable securities minus certain outstanding liabilities) of us as of a determination date prior to the closing of the merger, and as a result, either our stockholders could own less of the combined company than expected.
−Removed: There can be no assurances as to our level of net cash between now and closing or as to the date the closing will occur.
−Removed: Our net cash may be less than $30,000,000 at the closing of the merger, which would cause a condition to Chondrial’s obligation to consummate the merger to fail to be satisfied and may result in the termination of the merger agreement.
−Removed: We are required to have a net cash balance of at least $30,000,000 at the closing of the merger as a condition to Chondrial’s obligation to consummate the merger.
−Removed: For purposes of the merger agreement, net cash is subject to certain reductions, including, without limitation, accounts payable, accrued expenses (except those related to the merger), current liabilities payable in cash, unpaid expenses related to the merger and certain other unpaid obligations, including outstanding lease obligations.
−Removed: In the event that our net cash falls below this threshold, a condition to the Chondrial’s obligation to consummate the merger will fail to be satisfied and Chondrial will have the right to terminate the merger agreement at an outside date of September 17, 2020 (subject to extension as provided in the merger agreement) if our net cash continues to be lower than the $30,000,000 threshold.
−Removed: Some of our officers and directors have conflicts of interest that may influence them to support or approve the merger.
−Removed: Our officers and directors participate in arrangements that provide them with interests in the merger that are different from yours, including, among others, their continued service as a director of the combined company, retention and severance benefits, the acceleration of restricted stock and option vesting and continued indemnification.
−Removed: These interests, among others, may influence our officers and directors to support or approve the merger.
−Removed: The merger may be completed even though material adverse changes may result from the announcement of the merger, industry-wide changes and other causes.
−Removed: In general, either party can refuse to complete the merger if there is a material adverse change affecting the other party between December 17, 2019, the date of the merger agreement, and the closing.
−Removed: However, some types of changes do not permit either party to refuse to complete the merger, even if such changes would have a material adverse effect on us or Chondrial, to the extent they resulted from the following and do not have a materially disproportionate effect on us or Chondrial, as the case may be:
−Removed: the announcement or pendency of the merger agreement or the transactions contemplated thereby;
−Removed: the taking of any action, or the failure to take any action, by any party that is required to comply with the terms of the merger agreement;
−Removed: any natural disaster or any act or threat of terrorism or war anywhere in the world, any armed hostilities or terrorist activities anywhere in the world, any threat or escalation or armed hostilities or terrorist activities anywhere in the world or any governmental or other response or reaction to any of the foregoing;
−Removed: any change in generally accepted accounting principles or any change in applicable laws, rules or regulations or the interpretation thereof;
−Removed: general economic or political conditions or conditions generally affecting the industries in which either party and its subsidiaries operate;
−Removed: with respect to us, any change in the stock price or trading volume of our common stock;
−Removed: with respect to us, subject to certain exceptions, a change in the listing status of our common stock on NASDAQ;
−Removed: with respect to Chondrial, any change in the cash position of Chondrial or its subsidiaries which results from operations in the ordinary course of business.
−Removed: If adverse changes occur but we and Chondrial must still complete the merger, the combined company’s stock price may suffer.
−Removed: The market price of the combined company’s common stock may decline as a result of the merger.
−Removed: The market price of the combined company’s common stock may decline as a result of the merger for a number of reasons including if:
−Removed: the combined company does not achieve the perceived benefits of the merger as rapidly or to the extent anticipated by financial or industry analysts;
−Removed: the effect of the merger on the combined company’s business and prospects is not consistent with the expectations of financial or industry analysts;
−Removed: investors react negatively to the effect on the combined company’s business and prospects from the merger.
−Removed: Our stockholders may not realize a benefit from the merger commensurate with the ownership dilution they will experience in connection with the merger.
−Removed: If the combined company is unable to realize the strategic and financial benefits currently anticipated from the merger, our stockholders will have experienced substantial dilution of their ownership interest without receiving any commensurate benefit.
−Removed: Significant management attention and resources will be required to integrate the two companies.
−Removed: Delays in this process could adversely affect the combined company’s business, financial results, financial condition and stock price following the merger.
−Removed: During the pendency of the merger, we may not be able to enter into a business combination with another party and will be subject to contractual limitations on certain actions because of restrictions in the merger agreement.
−Removed: Covenants in the merger agreement impede the ability of us or Chondrial to make acquisitions or complete other transactions that are not in the ordinary course of business pending completion of the merger.
−Removed: As a result, if the merger is not completed, the parties may be at a disadvantage to their competitors.
−Removed: In addition, while the merger agreement is in effect and subject to limited exceptions, each party is prohibited from soliciting, initiating, encouraging or taking actions designed to facilitate any inquiries or the making of any proposal or offer that could lead to the entering into certain extraordinary transactions with any third party, such as a sale of assets, an acquisition of our common stock, a tender offer for our common stock, a merger or other business combination outside the ordinary course of business.
−Removed: Any such transactions could be favorable to such party’s stockholders.
−Removed: Because the lack of a public market for Chondrial common stock makes it difficult to evaluate the fairness of the merger, Chondrial’s stockholder may receive consideration in the merge r that is greater than or less than the fair market value of Chondrial common stock.
−Removed: The outstanding share capital of Chondrial is privately held and is not traded in any public market.
−Removed: The lack of a public market makes it extremely difficult to determine the fair market value of Chondrial.
−Removed: Since the percentage of our equity to be issued to Chondrial’s stockholder was determined based on negotiations between the parties, it is possible that the value of our common stock to be issued in connection with the merger will be greater than the fair market value of Chondrial.
−Removed: Alternatively, it is possible that the value of the shares of our common stock to be issued in connection with the merger will be less than the fair market value of Chondrial.
−Removed: The combined company will incur significant transaction costs as a result of the merger, including investment banking, legal and accounting fees.
−Removed: In addition, the combined company will incur significant consolidation and integration expenses which cannot be accurately estimated at this time.
−Removed: These costs could include the possible relocation of certain operations from Massachusetts to other offices of the combined company as well as costs associated with terminating existing office leases and the loss of benefits of certain favorable office leases.
−Removed: Actual transaction costs may substantially exceed Chondrial’s estimates and may have an adverse effect on the combined company’s financial condition and operating results.
−Removed: Failure of the merger to qualify as a reorganization within the meaning of Section 368(a) of the Code could harm the combined company.
−Removed: The parties intend for the merger to qualify as a reorganization within the meaning of Section 368(a) of the Code, as amended.
−Removed: To comply with the requirements for a Section 368(a) reorganization, certain structural and other requirements for the transaction must be met;
−Removed: if not satisfied, Chondrial’s stockholder could be subject to tax liability.
−Removed: The merger is expected to result in a limitation on our ability to utilize its net operating loss carryforward.
−Removed: Under Section 382 of the Code, use of our net operating loss carryforwards, or NOL, will be limited if we experience an “ownership change.” For these purposes, an ownership change generally occurs where the aggregate stock ownership of one or more stockholders or groups of stockholders who owns at least 5% of a corporation’s stock increases its ownership by more than 50 percentage points over its lowest ownership percentage within a specified testing period.
−Removed: We are expected to experience an ownership change as a result of the merger and therefore its ability to utilize its NOLs and certain credit carryforwards remaining at the effective time will be limited.
−Removed: The limitation will be determined by the fair market value of our common stock outstanding prior to the ownership change, multiplied by the applicable federal rate.
−Removed: Limitations imposed on our ability to utilize NOLs could cause U.S.
−Removed: federal and state income taxes to be paid earlier than would be paid if such limitations were not in effect and could cause such NOLs to expire unused, in each case reducing or eliminating the benefit of such NOLs.
−Removed: Certain stockholders could attempt to influence changes which could adversely affect our operations, financial condition and the value of our common stock.
−Removed: Our stockholders may from time-to-time seek to acquire a controlling stake, engage in proxy solicitations, advance stockholder proposals or otherwise attempt to effect changes.
−Removed: Campaigns by stockholders to effect changes at publicly-traded companies are sometimes led by investors seeking to increase short-term stockholder value through actions such as financial restructuring, increased debt, special dividends, stock repurchases or sales of assets or the entire company.
−Removed: Responding to proxy contests and other actions by activist stockholders can be costly and time-consuming, and could disrupt our operations and divert the attention of our Board and senior management from the pursuit of the proposed merger transaction.
−Removed: These actions could adversely affect our operations, financial condition, our ability to consummate the merger and the value of our common stock.
−Removed: Chondrial and us may become involved in securities litigation or stockholder derivative litigation in connection with the merger, and this could divert the attention of our management and Chondrial management and harm the combined company’s business, and insurance coverage may not be sufficient to cover all related costs and damages.
−Removed: Securities litigation or stockholder derivative litigation frequently follows the announcement of certain significant business transactions, such as the sale of a business division or announcement of a business combination transaction.
−Removed: Chondrial and us may become involved in this type of litigation in connection with the merger, and the combined company may become involved in this type of litigation in the future.
−Removed: Litigation often is expensive and diverts management’s attention and resources, which could adversely affect our business, Chondrial and the combined company.
−Removed: Failure to complete the merger may result in us and Chondrial paying a termination fee or expenses to t he other party and could harm the price of our common stock and the future business and operations of each company.
−Removed: If the merger is not completed and the merger agreement is terminated under certain circumstances, we or Chondrial may be required to pay the other party a termination fee of $3,375,000 and/or an expense reimbursement of up to $350,000.
−Removed: Even if a termination fee or expense reimbursement is not payable in connection with a termination of the merger agreement, we and Chondrial will have incurred significant fees and expenses, which must be paid whether or not the merger is completed.
−Removed: Further, if the merger is not completed, it could significantly harm the market price of our common stock.
−Removed: The exchange ratio is not adjustable based on the market price of our common stock so the merger consideration at the closing may have greater or lesser value than the market price at the time the merger agreement was signed.
−Removed: The merger agreement has set the exchange ratio for Chondrial common stock, and the exchange ratio is based on the outstanding Chondrial common stock and our outstanding common stock, in each case immediately prior to the closing of the merger.
−Removed: Applying the exchange ratio formula in the merger agreement, the former Chondrial stockholders immediately before the merger are expected to own 60% of our outstanding capital stock immediately following the merger, and our stockholders immediately before the merger are expected to own approximately 40% of our outstanding capital stock immediately following the merger, subject to certain assumptions.
−Removed: Under certain circumstances further described in the merger agreement, however, these ownership percentages may be adjusted upward or downward based on the date the closing occurs and the cash levels of the respective companies at the closing of the merger, and as a result, our stockholders could own less of the combined company than expected.
−Removed: Any changes in the market price of our common stock before the completion of the merger will not affect the number of shares of our common stock issuable to Chondrial’s stockholders pursuant to the merger agreement.
−Removed: Therefore, if before the completion of the merger the market price of our common stock declines from the market price on the date of the merger agreement, then Chondrial’s stockholders could receive merger consideration with substantially lower value than the value of such merger consideration on the date of the merger agreement.
−Removed: Similarly, if before the completion of the merger the market price of our common stock increases from the market price of our common stock on the date of the merger agreement, then Chondrial’s stockholders could receive merger consideration with substantially greater value than the value of such merger consideration on the date of the merger agreement.
−Removed: The merger agreement does not include a price-based termination right.
−Removed: Because the exchange ratio does not adjust as a result of changes in the market price of our common stock, for each one percentage point change in the market price of our common stock, there is a corresponding one percentage point rise or decline, respectively, in the value of the total merger consideration payable to Chondrial’s stockholders pursuant to the merger agreement.
−Removed: Certain provisions of the merger agreement may discourage third parties from submitting alternative takeover proposals, including proposals that may be superior to the arrangements contemplated by the merger agreement.
−Removed: The terms of the merger agreement prohibit each of us and Chondrial from soliciting alternative takeover proposals or cooperating with persons making unsolicited takeover proposals, except in limited circumstances when our Board determines in good faith that an unsolicited alternative takeover proposal is or is reasonably likely to lead to a superior takeover proposal and that failure to cooperate with the proponent of the proposal would be reasonably likely to be inconsistent with our Board fiduciary duties.
−Removed: If the conditions to the merger are not met, the merger may not occur.
−Removed: Even if share issuance and reverse stock split are approved by our stockholders and Chondrial’s, specified conditions must be satisfied or waived to complete the merger.
−Removed: These conditions are set forth in the merger agreement.
−Removed: We cannot assure you that all of the conditions will be satisfied or waived.
−Removed: If the conditions are not satisfied or waived, the merger will not occur or will be delayed, and we and Chondrial each may lose some or all of the intended benefits of the merger.
−Removed: General Company-Related Risks
−Removed: Our ability to consummate the proposed merger with Chondrial, depends on our ability to retain our employees required to consummate a strategic transaction as previously announced.
−Removed: Our ability to consummate the proposed merger with Chondrial depends upon our ability to retain our employees required to consummate a strategic transaction, the loss of whose services may adversely impact the ability to consummate the merger.
−Removed: On September 10, 2019, we announced a reduction in workforce that includes reducing employees by
−Removed: approximately 48%, and when combined with the reduction in workforce announced on July 24, 2019 and other attrition in 2019, resulted in a total reduction of employees of approximately 70%.
−Removed: On September 10, 2019, we also announced a retention plan for the remaining executive officers and implemented retention plans for the other remaining employees that is designed to retain the employees required to explore and consummate a strategic transaction.
−Removed: We have entered into amendments to severance and change in control agreements with certain of our executive officers, but they may terminate their employment with us at any time.
−Removed: With any change in leadership, there is also a risk to retention of employees, as well as the potential for disruption to our exploration and consummation of a strategic alternative as well as business operations, initiatives, plans and strategies.
−Removed: We must maintain effective internal control over financial reporting, and if we are unable to do so, the accuracy and timeliness of our financial reporting may be adversely affected, which could have a material adverse effect on our business and stock price.
−Removed: We must maintain effective internal control over financial reporting in order to accurately and timely report our results of operations and financial condition.
−Removed: In addition, as a public company, the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, requires, among other things, that we assess the effectiveness of our disclosure controls and procedures quarterly and the effectiveness of our internal control over financial reporting at the end of each fiscal year.
−Removed: The rules governing the standards that must be met for our management to assess our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act are complex and require significant documentation, testing and possible remediation.
−Removed: These stringent standards require that our audit committee be advised and regularly updated on management’s review of internal control over financial reporting.
−Removed: Our management may not be able to effectively and timely implement controls and procedures that adequately respond to the increased regulatory compliance and reporting requirements that are applicable to us as a public company.
−Removed: If we fail to staff our accounting, finance and information technology functions adequately or maintain internal control over financial reporting adequate to meet the demands that will be placed upon us as a public company, including the requirements of the Sarbanes-Oxley Act, our business and reputation may be harmed and our stock price may decline.
−Removed: Furthermore, investor perceptions of us may be adversely affected, which could cause a decline in the market price of our common stock.
−Removed: Unfavorable global economic conditions could adversely affect our business, financial condition or results of operations.
−Removed: Our results of operations could be adversely affected by general conditions in the global economy and in the global financial markets.
−Removed: A severe or prolonged economic downturn could result in a variety of risks to our business, including, weakened demand for our future product candidates, if any and our ability to raise additional capital when needed on acceptable terms, if at all.
−Removed: A weak or declining economy could also strain our suppliers, possibly resulting in supply disruption, or cause our customers to delay making payments for our services.
−Removed: Any of the foregoing could harm our business and we cannot anticipate all of the ways in which the current economic climate and financial market conditions could adversely impact our business.
−Removed: Our internal computer systems, or those of our third-party contract research organizations or other contractors or consultants, may fail or suffer security breaches, which could result in a material disruption of our future product candidates.
−Removed: Despite the implementation of security measures, our internal computer systems and those of our third-party contract research organizations, or CROs, and other contractors and consultants are vulnerable to damage from computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures.
−Removed: While we have not experienced any such system failure or accident, if such an event were to occur and cause interruptions in our operations, it could result in a material disruption of our programs.
−Removed: For example, the loss of nonclinical or clinical trial data for our future product candidates could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data.
−Removed: To the extent that any disruption or security breach results in a loss of or damage to our data or applications or other data or applications relating to our technology or product candidates, or inappropriate disclosure of confidential or proprietary information, we could incur liabilities and the further development of our future product candidates could be delayed.
−Removed: We may acquire businesses or products, or form strategic alliances, in the future, and we may not realize the benefits of such acquisitions or alliances.
−Removed: We may acquire additional businesses or products, form strategic alliances or create joint ventures with third parties that we believe will complement or augment our existing business.
−Removed: If we acquire businesses with promising markets or technologies, we may not be able to realize the benefit of such transactions if we are unable to successfully integrate such businesses with our existing operations and company culture.
−Removed: We may encounter numerous difficulties in developing, manufacturing and marketing any new products resulting from a strategic alliance or acquisition that delay or prevent us from realizing their expected benefits or enhancing our business.
−Removed: We cannot assure you that, following any such transaction including the proposed merger with Chondrial, we will achieve the expected synergies to justify the transaction.
−Removed: We face potential product liability exposure, and, if claims are brought against us, we may incur substantial liability.
−Removed: The use of any future product candidates in clinical trials, if any, and the sale of any future product candidates, if developed and approved, exposes us to the risk of product liability claims.
−Removed: Product liability claims might be brought against us by patients, healthcare providers or others selling or otherwise who have come into contact with our future product candidates.
−Removed: For example, we may be sued if any product we develop allegedly causes injury or death or is found to be otherwise unsuitable during product testing, manufacturing, marketing or sale.
−Removed: Any such product liability claims may include allegations of defects in manufacturing, defects in design, a failure to warn of dangers inherent in the product, including as a result of interactions with alcohol or other drugs, negligence, strict liability and a breach of warranties.
−Removed: Claims could also be asserted under state consumer protection acts.
−Removed: If we become subject to product liability claims and cannot successfully defend ourselves against them, we could incur substantial liabilities.
−Removed: In addition, regardless of merit or eventual outcome, product liability claims may result in, among other things:
−Removed: withdrawal of patients from our clinical trials;
−Removed: substantial monetary awards to patients or other claimants;
−Removed: decreased demand for our future product candidates following marketing approval, if obtained;
−Removed: damage to our reputation and exposure to adverse publicity;
−Removed: increased U.S.
−Removed: Food and Drug Administration, or FDA, warnings on product labels;
−Removed: litigation costs;
−Removed: distraction of management’s attention from our primary business;
−Removed: loss of revenue;
−Removed: the inability to successfully commercialize our future product candidates, if approved.
−Removed: For our prior clinical trials, we have maintained product liability insurance coverage with a $10.0 million annual aggregate coverage limit.
−Removed: Nevertheless, our insurance coverage may be insufficient to reimburse us for any expenses or losses we may suffer.
−Removed: Moreover, in the future, we may not be able to maintain insurance coverage at a reasonable cost or in sufficient amounts to protect us against losses, including if insurance coverage becomes increasingly expensive.
−Removed: If and when we obtain marketing approval for our future product candidates, we intend to expand our insurance coverage to include the sale of commercial products;
−Removed: however, we may not be able to obtain this product liability insurance on commercially reasonable terms.
−Removed: Large judgments have been awarded in class action lawsuits based on drugs that had unanticipated side effects.
−Removed: The cost of any product liability litigation or other proceedings, even if resolved in our favor, could be substantial, particularly in light of the size of our business and financial resources.
−Removed: A product liability claim or series of claims brought against us could cause our stock price to decline and, if we are unsuccessful in defending such a claim or claims and the resulting judgments exceed our insurance coverage, our financial condition, business and prospects could be materially adversely affected.
−Removed: Comprehensive tax reform legislation could adversely affect our business and financial condition.
−Removed: On December 22, 2017, President Trump signed into law the “Tax Cuts and Jobs Act,” or the TCJA, that significantly reforms the Internal Revenue Code of 1986, as amended, or the Code.
−Removed: The TCJA, among other things, contains significant changes to corporate taxation, including reduction of the corporate tax rate, limitation of the tax deduction for interest expense, limitation of the deduction for net operating losses and elimination of net operating loss carrybacks and modifying or repealing many business deductions and credits (including reducing the business tax credit for certain clinical testing
−Removed: expenses incurred in the testing of certain drugs for rare diseases or conditions generally referred to as “orphan drugs”).
−Removed: In 2017, our net deferred tax assets and liabilities were revalued at the newly enacted U.S.
−Removed: corporate rate.
−Removed: Our ability to use our net operating loss carryforwards and certain tax credit carryforwards may be subject to limitation.
−Removed: Since our inception in 2005, we have not recorded any U.S.
−Removed: federal or state income tax benefits for the net losses we have incurred in each year or our earned tax credits, due to our uncertainty of realizing a benefit from those items.
−Removed: As of December 31, 2019, we had net operating loss carryforwards for federal and state income tax purposes of $55.7 million and $57.0 million, respectively, which begin to expire in 2026 and 2030, respectively.
−Removed: As of December 31, 2019, we also had available tax credit carryforwards for federal and state income tax purposes of $17.9 million and $4.2 million, respectively, which begin to expire in 2026 and 2022, respectively.
−Removed: Under Section 382 of the Code, changes in our ownership may limit the amount of our net operating loss carryforwards and tax credit carryforwards that could be utilized annually to offset our future taxable income, if any.
−Removed: This limitation would generally apply in the event of a cumulative change in ownership of our company of more than 50% within a three-year period.
−Removed: Any such limitation may significantly reduce our ability to utilize our net operating loss carryforwards and tax credit carryforwards before they expire.
−Removed: Our follow-on public offering, initial public offering, or IPO, private placements and other transactions that have occurred since our inception, may trigger such an ownership change pursuant to Section 382.
−Removed: Any such limitation, whether as the result of our follow-on public offering, IPO, prior private placements, sales of our common stock by our existing stockholders or additional sales of our common stock by us, could have a material adverse effect on our results of operations in future years.
−Removed: We have not completed a study to assess whether an ownership change for purposes of Section 382 has occurred, or whether there have been multiple ownership changes since our inception, due to the significant costs and complexities associated with such study.
−Removed: The reduction of the corporate tax rate under TCJA may cause a reduction in the economic benefit of our net operating loss carryforwards and other deferred tax assets available to us.
−Removed: Under the TCJA, net operating losses generated after December 31, 2017 will not be subject to expiration.
−Removed: As of December 31, 2019, we had net operating loss carryforwards that were generated after December 31, 2017, of $21.2 million that do not expire.
−Removed: Our employees may engage in misconduct or other improper activities, including violating applicable regulatory standards and requirements or engaging in insider trading, which could significantly harm our business.
−Removed: We are exposed to the risk of employee fraud or other misconduct.
−Removed: Misconduct by employees could include intentional failures to comply with the regulations of the FDA and applicable non-U.S.
−Removed: regulators, provide accurate information to the FDA and applicable non-U.S.
−Removed: regulators, comply with healthcare fraud and abuse laws and regulations in the United States and abroad, report financial information or data accurately or disclose unauthorized activities to us.
−Removed: In particular, sales, marketing and business arrangements in the healthcare industry are subject to extensive laws and regulations intended to prevent fraud, misconduct, kickbacks, self-dealing and other abusive practices.
−Removed: These laws and regulations restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other business arrangements.
−Removed: Employee misconduct could also involve the improper use of, including trading on, information obtained in the course of clinical trials, which could result in regulatory sanctions and serious harm to our reputation.
−Removed: We have adopted an insider trading policy and a code of conduct, but it is not always possible to identify and deter employee misconduct, and the precautions we take to detect and prevent this activity may be ineffective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to comply with these laws or regulations.
−Removed: If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including the imposition of significant fines or other sanctions.
−Removed: We may not be successful in our efforts to identify or discover additional product candidates.
−Removed: Our research methodology may be unsuccessful in identifying potential product candidates or our potential product candidates may be shown to have harmful side effects or may have other characteristics that may make the products unmarketable or unlikely to receive marketing approval.
−Removed: If any of these events occur, we may be forced to abandon our development efforts for a program or programs, which would have a material adverse effect on our business and could potentially cause us to cease operations.
−Removed: Research programs to identify new product candidates require substantial technical, financial and human resources.
−Removed: We may focus our efforts and resources on potential programs or product candidates that ultimately prove to be unsuccessful.
−Removed: We may seek to establi sh collaborations and, if we are not able to establish them on commercially reasonable terms, we may have to alter our development and commercialization plans or expand our internal efforts and growth.
−Removed: Our future drug development programs and the potential commercialization of our future product candidates, if any, will require substantial additional cash to fund expenses.
−Removed: For our future product candidates, if any, we may decide to collaborate with pharmaceutical and biotechnology companies for the development and potential commercialization of those product candidates in some or all markets.
−Removed: We face significant competition in seeking appropriate collaborators.
−Removed: Whether we reach a definitive agreement for a collaboration for any future product candidates will depend, among other things, upon our assessment of the collaborator’s resources and expertise, the terms and conditions of the proposed collaboration and the proposed collaborator’s evaluation of a number of factors.
−Removed: Those factors may include the design or results of clinical trials, the likelihood of approval by the FDA or similar regulatory authorities outside the United States, the potential market for the applicable product candidate, the costs and complexities of manufacturing and delivering such product candidate to patients, the potential of competing products, the existence of uncertainty with respect to our ownership of technology, which can exist if there is a challenge to such ownership without regard to the merits of the challenge and industry and market conditions generally.
−Removed: The collaborator may also consider alternative product candidates or technologies for similar indications that may be available to collaborate on and whether such collaboration could be more attractive than the one with us for our future product candidates, if any.
−Removed: The terms of any collaboration or other arrangements that we may establish may not be favorable to us.
−Removed: We may also be restricted under existing license agreements from entering into future agreements on certain terms with potential collaborators.
−Removed: Collaborations are complex and time-consuming to negotiate and document.
−Removed: In addition, there have been a significant number of recent business combinations among large pharmaceutical companies that have resulted in a reduced number of potential future collaborators.
−Removed: We may not be able to negotiate collaborations on a timely basis, on acceptable terms, or at all.
−Removed: If we are unable or unwilling to do so, we may have to curtail the development of our future product candidates for which we are seeking to collaborate, reduce or delay its development program or one or more of our other development programs, delay potential commercialization in some or all markets or reduce the scope of any sales or marketing activities, or increase our expenditures and undertake development or commercialization activities at our own expense, including potentially increasing our infrastructure and investment outside the United States.
−Removed: If we elect to increase our expenditures to fund development or commercialization activities on our own, we will need to obtain additional capital, which may not be available to us on acceptable terms or at all.
−Removed: If we do not have sufficient funds, we may not be able to further develop our future product candidates, if any, or bring them to market and generate product revenue.
−Removed: In addition, such efforts may require diversion of a disproportionate amount of our attention away from other day-to-day activities and require devotion of a substantial amount of our time to managing these expansion activities.
−Removed: In addition, any future collaborations that we enter into for our future product candidates may not be successful.
−Removed: The success of our collaboration arrangements will depend heavily on the efforts and activities of our collaborators.
−Removed: Collaborators generally have significant discretion in determining the efforts and resources that they will apply to these collaborations.
−Removed: Disagreements between parties to a collaboration arrangement regarding clinical development and commercialization matters can lead to delays in the development process or commercializing the applicable product candidate and, in some cases, termination of the collaboration arrangement.
−Removed: These disagreements can be difficult to resolve if neither of the parties has final decision-making authority.
−Removed: Collaborations with pharmaceutical or biotechnology companies and other third parties often are terminated or allowed to expire by the other party.
−Removed: Any such termination or expiration would adversely affect us financially and could harm our business reputation.
−Removed: Risks Related to Our Common Stock
−Removed: We expect that our stock price will continue to fluctuate significantly.
−Removed: The market price of shares of our common stock, similar to the market price of shares of common stock of other biopharmaceutical companies, is subject to wide fluctuations.
−Removed: From January 1, 2019 to December 31, 2019 the daily closing price of our common stock on the NASDAQ Global Market ranged from a high of $5.30 to a low of $0.66 and will continue to be subject to wide fluctuations in response to many risk factors listed in this section, and others beyond our control, including:
−Removed: plans and expectations regarding the merger with Chondrial, including the expected completion of the merger;
−Removed: plans for, progress of, or results from nonclinical studies and clinical trials of our future product candidates;
−Removed: the failure of the FDA to permit an investigational new drug application, or IND, to go into effect for our future product candidates, if any;
−Removed: the failure of the FDA or the European Medicines Agency, or EMA , to approve our future product candidates, if any;
−Removed: our ability to establish an adequate safety margin and profile for our future product candidates, if any;
−Removed: announcements of new products, technologies, commercial relationships, acquisitions or other events by us or our competitors;
−Removed: regulatory or legal developments in the United States and other countries;
−Removed: failure of our future product candidates, if successfully developed and approved, to achieve commercial success;
−Removed: fluctuations in stock market prices and trading volumes of similar companies;
−Removed: general market conditions and overall fluctuations in U.S.
−Removed: equity markets;
−Removed: variations in our quarterly operating results;
−Removed: changes in our financial guidance or securities analysts’ estimates of our financial performance;
−Removed: changes in accounting principles;
−Removed: our ability to raise additional capital and the terms on which we can raise it;
−Removed: sales of large blocks of our common stock, including sales by our executive officers, directors and significant stockholders;
−Removed: additions or departures of key personnel;
−Removed: discussion of us or our stock price by the press and by online investor communities;
−Removed: other risks and uncertainties described in these risk factors.
−Removed: These and other market and industry factors may cause the market price and demand for our common stock to fluctuate substantially, regardless of our actual operating performance, which may limit or prevent investors from readily selling their shares of common stock and may otherwise negatively affect the liquidity of our common stock.
−Removed: In addition, the stock market in general, and NASDAQ listed and biopharmaceutical companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of these companies.
−Removed: In the past, when the market price of a stock has been volatile, holders of that stock have instituted securities class action litigation against the company that issued the stock.
−Removed: Our executive officers, directors, and principal stockholders exercise significant control over our company.
−Removed: As of March 1, 2020, the existing holdings of our executive officers, directors, principal stock holders and their affiliates, including investment funds affiliated with Atlas Ventures, 683 Capital Management, LLC, AIGH Capital Management, LLC, Renaissance Technologies LLC, Sphera Funds Management Ltd., and Sio Capital Management, LLC, represent beneficial ownership, in the aggregate, of approximately 48.1% of our common stock.
−Removed: As a result, these stockholders, if they act together, are able to influence our management and affairs and control the outcome of matters submitted to our stockholders for approval, including the election of directors and any sale, merger, consolidation, or sale of all or substantially all of our assets.
−Removed: The concentration of voting power among these stockholders may have an adverse effect
−Removed: on the price of our common stock.
−Removed: In add ition, this concentration of ownership might adversely affect the market price of our common stock by:
−Removed: delaying, deferring or preventing our change of control;
−Removed: impeding a merger, consolidation, takeover or other business combination involving us;
−Removed: discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control.
−Removed: Future sales of our common stock may cause our stock price to decline.
−Removed: Sales of a substantial number of shares of our common stock in the public market or the perception that these sales might occur could significantly reduce the market price of our common stock and impair our ability to raise adequate capital through the sale of additional equity securities.
−Removed: We may be at an increased risk of securities class action litigation.
−Removed: Historically, securities class action litigation has often been brought against a company following a decline in the market price of its securities.
−Removed: This risk is especially relevant for us because biotechnology and pharmaceutical companies, including us, have experienced significant stock price volatility in the past.
−Removed: We are a “smaller reporting company” and have availed ourselves of reduced disclosure requirements applicable to smaller reporting companies, which could make our common stock less attractive to investors.
−Removed: We are a smaller reporting company, and we will remain a smaller reporting company as long as our voting and non-voting common shares held by non-affiliates is less than $250 million measured on the last business day of our second fiscal quarter;
−Removed: or our annual revenues are less than $100 million during the most recently completed fiscal year and our voting and non-voting common shares held by non-affiliates is less than $700 million measured on the last business day of our second fiscal quarter.
−Removed: Smaller reporting companies are able to provide simplified executive compensation disclosure and have certain other reduced disclosure obligations, including, among other things, being required to provide only two years of audited financial statements and not being required to provide selected financial data, supplemental financial information or risk factors.
−Removed: We may choose to take advantage of some, but not all, of the available exemptions for smaller reporting companies.
−Removed: We cannot predict whether investors will find our common stock less attractive if we rely on these exemptions.
−Removed: If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our shares price may be more volatile.
−Removed: We have never paid dividends on our common stock and we do not anticipate paying any dividends in the foreseeable future.
−Removed: Consequently, any gains from an investment in our common stock will likely depend on whether the price of our common stock increases.
−Removed: We have not paid dividends on any of our common stock to date and we currently intend to retain all of our future earnings, if any, to fund the development and growth of our business.
−Removed: As a result, capital appreciation, if any, of our common stock will be the sole source of gains for our common stockholders for the foreseeable future.
−Removed: Consequently, in the foreseeable future, our common stockholders will likely only experience a gain from their investment in our common stock if the price of our common stock increases.
−Removed: If equity research analysts do not continue to publish research or reports about our business or if they issue unfavorable commentary or downgrade our common stock, the price of our common stock could decline.
−Removed: The trading market for our common stock relies in part on the research and reports that equity research analysts publish about us and our business.
−Removed: We do not control these analysts.
−Removed: The price of our common stock could decline if one or more equity analysts downgrade our common stock or if analysts issue other unfavorable commentary or cease publishing reports about us or our business.
−Removed: Anti-takeover provisions contained in our amended and restated certificate of incorporation and amended and restated bylaws, as well as provisions of Delaware law, could impair a takeover attempt.
−Removed: Our amended and restated certificate of incorporation, amended and restated bylaws and Delaware law contain provisions which could have the effect of rendering more difficult, delaying or preventing an acquisition deemed undesirable by our board of directors.
−Removed: Our corporate governance documents include provisions:
−Removed: creating a classified board of directors whose members serve staggered three-year terms;
−Removed: authorizing “blank check” preferred stock, which could be issued by our board of directors without stockholder approval and may contain voting, liquidation, dividend, and other rights superior to our common stock;
−Removed: limiting the liability of, and providing indemnification to, our directors and officers;
−Removed: limiting the ability of our stockholders to call and bring business before special meetings;
−Removed: requiring advance notice of stockholder proposals for business to be conducted at meetings of our stockholders and for nominations of candidates for election to our board of directors;
−Removed: controlling the procedures for the conduct and scheduling of board of directors and stockholder meetings;
−Removed: providing our board of directors with the express power to postpone previously scheduled annual meetings and to cancel previously scheduled special meetings.
−Removed: These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in our management.
−Removed: As a Delaware corporation, we are also subject to provisions of Delaware law, including Section 203 of the Delaware General Corporation law, which prevents some stockholders holding more than 15% of our outstanding common stock from engaging in certain business combinations without approval of the holders of substantially all of our outstanding common stock.
−Removed: Any provision of our amended and restated certificate of incorporation, amended and restated bylaws or Delaware law that has the effect of delaying or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our common stock, and could also affect the price that some investors are willing to pay for our common stock.
−Removed: We may not be able to comply with all applicable listing requirements or standards of The Nasdaq Global Market and Nasdaq could delist our common stock.
−Removed: Our common stock is currently listed on The Nasdaq Global Market.
−Removed: In order to maintain that listing, we must satisfy minimum financial and other continued listing requirements and standards.
−Removed: One such requirement is that we maintain a minimum bid price of at least $1.00 per share for our common stock.
−Removed: On September 17, 2019, we received a letter from the Listing Qualifications Department of The Nasdaq Stock Market (Nasdaq) advising us that for 30 consecutive trading days preceding the date of the notice, the bid price of our common stock had closed below the $1.00 per share minimum required for continued listing on The Nasdaq Global Market pursuant to Nasdaq Listing Rule 5550(a)(1).
−Removed: However, on January 9, 2020, we were notified by Nasdaq that as of January 8, 2020 we had maintained a closing bid above $1.00 for a period of 10 consecutive trading days and therefore had regained compliance with the minimum bid price requirement.
−Removed: There can be no assurance that we will continue to be in compliance with the $1.00 minimum bid price requirement or comply with Nasdaq’s other continued listing standards in the future.
−Removed: If in the future we are not able to maintain compliance with the minimum bid price requirement within an allotted grace period, our shares of common stock would be subject to delisting.
−Removed: In the event that our common stock is not eligible for continued listing on Nasdaq or another national securities exchange, trading of our common stock could be conducted in the over-the-counter market or on an electronic bulletin board established for unlisted securities such as the Pink Sheets or the OTC Bulletin Board.
−Removed: In such event, it could become more difficult to dispose of, or obtain accurate price quotations for, our common stock, and there would likely also be a reduction in our coverage by security analysts and the news media, which could cause the price of our common stock to decline further.
−Removed: Also, it may be difficult for us to raise additional capital if we are not listed on a major exchange.
−Removed: Risks Related to Pr oduct Development, Regulatory Approval and Commercialization
−Removed: We cannot be certain that we will be able to successfully complete clinical trials for our future product candidates, if any, obtain regulatory approval for any product candidates or successfully commercialize any product candidates, if approved.
−Removed: Before our future product candidates, if any, can be marketed, our IND application or other comparable regulatory approvals must go into effect permitting the conduct of clinical trials, and we must then successfully complete human testing.
−Removed: The FDA and other comparable foreign regulatory agencies must approve our New Drug Application, or NDA, or comparable regulatory submissions.
−Removed: Even after successful completion of clinical testing, there is a risk that the FDA or other regulatory agencies may request further information from us, disagree with our findings or otherwise undertake a lengthy review of our submission.
−Removed: Even if the FDA approves our NDA, we may be unable to successfully commercialize our product candidates.
−Removed: It is possible that the FDA or other regulatory agencies will not approve any application that we may submit.
−Removed: It is possible that our future product candidates, if any, may not obtain appropriate regulatory approvals necessary for us to commence clinical trials for our future product candidates, if any.
−Removed: Any delay or failure in obtaining required approvals could have a material adverse effect on our business.
−Removed: This process can take many years and will likely require the expenditure of substantial resources beyond the proceeds we currently have on hand.
−Removed: Favorable results from nonclinical studies and clinical trials to date are not necessarily predictive of the results of additional nonclinical studies or later-stage clinical trials of our future product candidates, if any.
−Removed: Favorable results from our nonclinical studies may not necessarily be predictive of the results from clinical trials.
−Removed: Many companies in the pharmaceutical and biotechnology industries have suffered significant setbacks in clinical trials after achieving positive results in nonclinical and early-stage clinical development.
−Removed: In particular, we have suffered significant setbacks in later-stage clinical trials of our former lead product candidates, beloranib and ZGN-1061, after achievin g positive results in nonclinical and clinical development, and we cannot be certain that we will not face similar setbacks in our development of our future product candidates, if any.
−Removed: The setbacks in later-stage clinical development have been caused by, among other things, nonclinical findings made while clinical trials were underway or safety or efficacy observations made in clinical trials, including previously unreported or understood adverse events.
−Removed: Moreover, nonclinical and clinical data are often susceptible to varying interpretations and analyses, and many companies that believed their product candidates performed satisfactorily in nonclinical studies and clinical trials nonetheless failed to obtain FDA and/or EMA approval.
−Removed: If we fail to produce positive results in our later-stage clinical trials of any future product candidates, if any, the development timeline and regulatory approval and commercialization prospects for any future product candidates, if any, and, correspondingly, our business and financial prospects, would be materially adversely affected.
−Removed: Our future product candidates, if any, may cause undesirable side effects that could delay or prevent their regulatory approval, limit the commercial profile of an approved label, or result in significant negative consequences following marketing approval, if any.
−Removed: Undesirable side effects caused by our future product candidates, if any, could cause us or regulatory authorities such as the FDA to interrupt, delay or halt clinical trials and could result in a more restrictive label or the delay or denial of regulatory approval by the FDA or other regulatory authorities.
−Removed: Further, if any future product candidates receive marketing approval and we or others identify undesirable side effects caused by the product (or any other similar product) after the approval, a number of potentially significant negative consequences could result, including:
−Removed: regulatory authorities may request that we withdraw the product from the market or may limit their approval of the product through labeling or other means;
−Removed: regulatory authorities may require the addition of labeling statements, such as a “black box” warning or a contraindication or a precaution;
−Removed: we may be required to change the way the product is distributed or administered, conduct additional clinical trials or change the labeling of the product;
−Removed: we may decide to remove the product from the marketplace;
−Removed: we could be sued and held liable for injury caused to individuals exposed to or taking our product candidates ;
−Removed: our reputation may suffer.
−Removed: Any of these events could prevent us from achieving or maintaining market acceptance of the affected product candidate and could substantially increase the costs of commercializing our product candidates and significantly impact our ability to successfully commercialize our product candidates and generate revenues.
−Removed: Failures or delays in the commencement or completion of our clinical trials of our future product candidates could result in increased costs to us and could delay, prevent or limit our ability to generate revenue and continue our business.
−Removed: Despite the guidance we may receive from the FDA, the EMA, or other applicable regulatory authorities, any of these regulatory authorities can change their positions on the acceptability of our clinical trial designs or the clinical endpoints selected, which may require us to complete additional clinical trials or impose stricter approval conditions than we expect.
−Removed: Successful completion of such clinical trials is a prerequisite to submitting an NDA to the FDA and a M arketing Authorization Application to the EMA and, consequently, the ultimate approval and commercial marketing of our future product candidates, if any.
−Removed: We do not know whether any clinical trials for our future product candidates will begin or be completed on schedule, if at all, as the commencement and completion of clinical trials can be delayed or prevented for a number of reasons, including, among others:
−Removed: the FDA, or other applicable regulatory authorities, may deny permission to begin or continue clinical trials, including for certain indications, we want to conduct;
−Removed: delays in regulatory filings or receiving regulatory authorizations of IND applications, or clinical trial authorization applications that may be required;
−Removed: unfavorable results from our nonclinical studies, thus the FDA, or other applicable regulatory authorities, may require additional nonclinical studies;
−Removed: delays in reaching or failing to reach agreement on acceptable terms with prospective CROs and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites;
−Removed: inadequate quantity or quality of a product candidate or other materials necessary to conduct clinical trials, for example delays in the manufacturing of sufficient supply of finished drug product;
−Removed: difficulties obtaining Institutional Review Board, or IRB, and/or ethics committee approval to conduct a clinical trial at a prospective site or sites in the United States, or other country;
−Removed: challenges in recruiting and enrolling patients to participate in clinical trials, including the size and nature of the patient population, the proximity of patients to clinical trial sites, eligibility criteria for the clinical trial, the nature of the clinical trial protocol, the availability of approved effective treatments for the relevant disease and competition from other clinical trial programs for similar indications;
−Removed: difficulties in retaining or recruiting clinical investigators and/or patients in our future clinical trials;
−Removed: difficulties retaining patients who have enrolled in a clinical trial but may be prone to withdraw due to rigors of the clinical trial, lack of efficacy, side effects, screening and monitoring measures, personal issues or loss of interest;
−Removed: severe or unexpected drug-related side effects experienced by patients in a clinical trial;
−Removed: the FDA or the applicable regulatory authorities, may disagree with our clinical trial designs, our interpretation of data from clinical trials, or may change the requirements for approval even after it has reviewed and commented on the design for our clinical trials;
−Removed: reports from nonclinical or clinical testing of other therapies that raise safety or efficacy concerns.
−Removed: Clinical trials may also be delayed or terminated as a result of ambiguous or negative interim results.
−Removed: In addition, a clinical trial may be suspended or terminated by us, the FDA, other regulatory authorities, the IRBs or ethics committees, at the sites where the IRBs or ethics committees are overseeing a clinical trial, a data monitoring committee overseeing the clinical trial at issue or other regulatory authorities due to a number of factors, including, among others:
+Added: You should consider carefully the following risks and uncertainties when reading this Annual Report.
+Added: If any of the following risks occur our business, financial condition and results of operations could be materially and adversely Although we believe that we have identified and discussed below the key risk factors affecting our business, there may be additional risks and uncertainties that are not presently known or that are not currently believed to be significant that may adversely affect our performance or financial condition.
+Added: In that event, the trading price of our common stock could decline.
+Added: Risks Related to Our Financial Position and Need for Capital
+Added: We have incurred significant losses since our inception and anticipate that we will incur continued losses for the foreseeable future.
+Added: Since our inception we have devoted substantially all of our resources to the development of CTI-1601.
+Added: We have incurred significant losses in each year of operation since our inception in 2016.
+Added: For the year ended December 31, 2020, we had net losses of $42.5 million and as of December 31, 2020, had an accumulated deficit of $65.6 million and we expect to continue to incur significant expenses and net operating losses for the foreseeable future.
+Added: We have devoted substantially all of our financial resources and efforts to research and development, including nonclinical studies, our clinical development program, the development of manufacturing processes as well as the manufacture of initial lots of clinical trial material.
+Added: We expect to incur significant losses for the foreseeable future to further develop and commercialize our lead drug candidate.
+Added: We expect that our expenses will increase substantially if and as we:
+Added: continue clinical development efforts for CTI-1601;
+Added: seek regulatory and marketing approvals in the United States and in foreign jurisdictions for our product candidates that successfully complete clinical trials, if any;
+Added: establish sales, marketing, distribution and other commercial infrastructure to commercialize various products for which we may obtain marketing approval, if any;
+Added: contract for the manufacture of larger quantities of product candidates for clinical development and potentially commercialization;
+Added: maintain, expand and protect our intellectual property portfolio;
+Added: hire and retain additional personnel, such as clinical, manufacturing, quality control, regulatory, finance, and compliance personnel.
+Added: Net losses and negative cash flows have had, and will continue to have, an adverse effect on our stockholder’s (deficit) equity and working capital.
+Added: We have no commercial revenue and may never become profitable.
+Added: To date, we have not generated any commercial revenue.
+Added: Our ability to generate revenue and become profitable depends upon our ability to obtain regulatory approval for, and successfully commercialize, CTI-1601 or other product candidates that we may develop, in-license or acquire in the future.
+Added: This will require success in a range of challenging activities, including completing numerous clinical trials of CTI-1601 or any future product candidates, obtaining marketing approval for CTI-1601 and any future product candidates, manufacturing, marketing and selling those products for which we, or any future collaborators or partners , may obtain marketing approval, satisfying any post-marketing requirements and obtaining reimbursement for our products from private insurance or government payors.
+Added: Even if we are able to successfully achieve the above, we do not know what the reimbursement status of CTI-1601 or any other future product candidates will be or when any of these products will generate revenue for us, if at all.
+Added: We have not generated, and do not expect to generate, any product revenue for the foreseeable future, and expect to continue to incur significant operating losses for the foreseeable future due to the cost of research and development, nonclinical studies and clinical trials and the regulatory approval process for CTI-1601 and any future product candidates.
+Added: Our ability to generate revenue from CTI-1601 or any future product candidates also depends on a number of additional factors, including our ability to:
+Added: successfully complete development activities, including the remaining nonclinical studies and planned clinical trials for our product candidates;
+Added: complete and submit New Drug Applications, or NDAs, and Biologics License Applications, or BLAs, to the U.S.
+Added: Food and Drug Administration, or FDA, and Marketing Authorization Applications, or MAAs, to the European Medicines Agency, or EMA, and obtain regulatory approval for indications for which there is a commercial market;
+Added: complete and submit applications to, and obtain regulatory approval from, other foreign regulatory authorities;
+Added: manufacture or have manufactured any approved products in commercial quantities and on commercially reasonable terms;
+Added: develop a commercial organization, or find suitable partners, to market, sell and distribute approved products in the markets in which we have retained commercialization rights;
+Added: achieve acceptance among patients, clinicians and advocacy groups for any products we develop;
+Added: obtain coverage and adequate reimbursement from third parties, including government payors;
+Added: set a commercially viable price for any products for which we may receive approval.
+Added: Because of the uncertainties and risks associated with these activities, we are unable to accurately predict the timing and amount of increased expenses, and if or when we might achieve or maintain profitability.
+Added: We and any future collaborators may never succeed in these activities and, even if we do, or any future collaborators do, we may never generate revenues that are large enough for us to achieve profitability.
+Added: Even if we are able to complete the processes described above, we anticipate incurring significant costs associated with commercializing CTI-1601 or any of our future product candidates.
+Added: Even if we achieve profitability in the future, we may not be able to sustain profitability in subsequent periods.
+Added: We need to raise additional funding.
+Added: This funding may not be available on acceptable terms, or at all.
+Added: Failure to obtain this necessary capital when needed would force us to delay, limit or terminate our product development efforts or other operations.
+Added: We expect to continue to spend substantial and increasing amounts to conduct clinical trials of CTI-1601 and further research and development activities for CTI-1601, and for any additional product candidates that we may develop, in-license or acquire in the future.
+Added: In addition, raising funds in the current economic environment may present substantial challenges, and our expenses will increase as we expand, through development, in-license or acquisition, our pipeline of product candidates.
+Added: If we obtain marketing approval for any of our product candidates, we will likely incur significant commercialization expenses related to product sales, marketing, manufacturing and distribution to the extent that such sales, marketing, manufacturing and distribution are not the responsibility of a future collaborator.
+Added: Accordingly, we will need to obtain additional funding in connection with our continuing operations.
+Added: As of December 31, 2020, our existing cash , cash equivalents and marketable debt securities were $92.6 million , excluding restricted cash of $1.
+Added: This amount will not be sufficient to fund all of the efforts that we plan to undertake or to fund the completion of development of CTI-1601.
+Added: Accordingly, we will be required to obtain further funding through public or private equity offerings, debt financings, collaborations and licensing arrangements or other sources.
+Added: The incurrence of indebtedness would result in increased fixed payment obligations and we may be required to agree to certain restrictive covenants, such as limitations on our ability to incur additional debt, limitations on our ability to acquire, sell or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business.
+Added: Any additional fundraising efforts may divert our management from their day-to-day activities, which may adversely affect our ability to develop and commercialize our product candidates.
+Added: In addition, we cannot guarantee that future financing will be available in sufficient amounts or on terms acceptable to us, if at all.
+Added: We could also be required to seek funds through arrangements with collaborative partners or otherwise at an earlier stage than otherwise would be desirable and we may be required to relinquish rights to some of our technologies or product candidates or otherwise agree to terms unfavorable to us, any of which may have a material adverse effect on our business, operating results and prospects.
+Added: If we are unable to obtain funding on a timely basis, or on acceptable terms, we may be required to significantly curtail, delay or discontinue one or more of our research or development programs, the manufacture of clinical and commercial supplies or the commercialization of any product candidate.
+Added: Our failure to raise capital as and when needed would have a negative impact on our business, financial condition and results of operations and our ability to pursue the development of CTI-1601 or future product candidates.
+Added: Raising additional capital may cause dilution to our existing stockholders, restrict our operations or require us to relinquish rights to our technologies, CTI-1601 or other product candidates that we may develop, in-license or acquire in the future.
+Added: We may seek additional capital through a combination of private or public equity offerings, debt financings, collaborations and licensing arrangements or other sources.
+Added: To the extent we raise additional capital through the sale of equity or convertible debt securities, existing ownership interests will be diluted and the terms of such financings may include liquidation or other preferences that adversely affect the rights of existing stockholders.
+Added: Debt or equity financings may be coupled with an additional equity component, such as warrants to purchase shares, which could also result in dilution of our existing stockholder’s ownership.
+Added: If we raise additional funds through strategic partnerships and alliances and licensing arrangements with third parties, we may have to relinquish valuable rights, including future revenue streams, to CTI-1601 or other product candidates that we may develop, in-license or acquire in the future, or grant licenses on terms that are not favorable to us.
+Added: Our ability to use our NOLs and certain other tax attributes may be limited.
+Added: Under Section 382 of the Internal Revenue Code, or the Code, if a corporation undergoes an “ownership change,” generally defined as a greater than 50% change (by value) in its equity ownership over a three-year period, the corporation’s ability to use its pre-change Net Operating Losses, or NOLs and other pre-change tax attributes (such as capitalized research and development costs and research tax credits) to offset its post-change income may be limited.
+Added: We believe that as a result of our merger with Zafgen, Inc., our ability to utilize NOLs acquired in this transaction is expected to be severely limited by Section 382 of the Code.
+Added: We may also experience ownership changes in the future as a result of subsequent shifts in our stock ownership.
+Added: As a result, if we earn net taxable income, our ability to use our pre-change NOLs to offset U.S.
+Added: federal taxable income may be subject to limitations, which could potentially result in increased future tax liability to us.
+Added: The Tax Cuts and Jobs Act of 2017, or Tax Act, which significantly reformed the Code, also reduced the corporate income tax rate to 21%, from a prior rate of 35%.
+Added: This may cause a reduction in the economic benefit of our NOLs and other deferred tax assets available to us.
+Added: In addition, at the state level, there may be periods during which the use of NOLs is suspended or otherwise limited, which could accelerate or permanently increase state taxes owed and would adversely affect our business, financial condition and results of operations.
+Added: Risks Related to Our Product Development and Regulatory Approvals
+Added: Our success is currently dependent upon the success of our sole product candidate, CTI-1601, which is currently in Phase 1 clinical trials.
+Added: We cannot be certain that we will be successful with our clinical development or that we will be able to obtain regulatory approval for CTI-1601.
+Added: We currently have no drug products for sale and our business is currently wholly dependent on our successful clinical development, regulatory approval and commercialization of CTI-1601, which is currently completing Phase 1 clinical trials.
+Added: If our efforts to develop and commercialize CTI-1601 for the treatment of Friedreich’s ataxia are unsuccessful, or we experience significant delays in doing so, our business could also be substantially harmed.
+Added: The success of CTI-1601 will depend on several factors, including the following:
+Added: maintaining our IND application with the FDA in order to continue to conduct clinical trials in the United States;
+Added: successfully recruiting, enrolling and retaining patients in and completing our Phase 1 clinical trials and any clinical trials we may conduct in the future;
+Added: including trials in pediatric patients;
+Added: demonstrating safety, tolerability and efficacy profiles that are satisfactory to the FDA, EMA and other comparable regulatory authorities for marketing approval;
+Added: successfully completing all necessary toxicology studies to support clinical development and regulatory approval for CTI-1601;
+Added: receiving timely marketing approvals from applicable regulatory authorities;
+Added: managing the extent and cost of any required post-marketing approval commitments to applicable regulatory authorities;
+Added: establishing and maintaining arrangements with third-party manufacturers for CTI-1601, including developing, validating and maintaining a commercially viable manufacturing process that is compliant with cGMPs;
+Added: obtaining, maintaining and protecting our patents, trade secrets and regulatory exclusivity in the United States and other countries;
+Added: successfully launching commercial sales following any marketing approval, including establishing a specialty sales organization, or successfully partnering with another organization, if applicable;
+Added: obtaining commercial acceptance of our products, if approved, by patients, the medical community and third-party payors and obtaining and maintaining healthcare coverage and adequate reimbursement;
+Added: maintaining an acceptable safety profile following any marketing approval;
+Added: competing with other therapies.
+Added: Many of these factors are outside of our control, including the clinical development and regulatory approval processes, results of nonclinical and toxicology studies and clinical trials, potential threats to our intellectual property rights and the manufacturing, marketing and sales efforts, respectively.
+Added: The process of obtaining regulatory approval is expensive and time consuming.
+Added: The FDA and foreign regulatory authorities may never approve CTI-1601 for sale and marketing, and even if CTI-1601 is ultimately approved, regulatory approval may be delayed or limited in the United States or in other jurisdictions.
+Added: Even if we are authorized to sell and market CTI-1601 in one or
+Added: more markets, there is no assurance that we will be able to successfully market CTI-1601 or that CTI-1601 will achieve market acceptance sufficient to generate profits.
+Added: If we are unable to successfully develop and commercialize CTI-1601 due to failure to obtain regulatory approval for CTI-1601, to successfully market CTI-1601, to generate profits from the sale of CTI-1601, or due to other risk factors outlined in this report, it would have material adverse effects on our business, financial condition, and results of operations as CTI-1601 is currently our sole product candidate.
+Added: Clinical development is a lengthy and expensive process with an uncertain outcome, and the results of nonclinical studies, toxicology studies or clinical trials may not be predictive of future nonclinical studies, toxicology studies or clinical trial results.
+Added: Clinical development is expensive and can take many years to complete, and its outcome is inherently uncertain.
+Added: We cannot guarantee that any nonclinical studies, toxicology studies or clinical trials will be conducted as planned or completed on schedule, if at all, and failure can occur at any time during the nonclinical study, toxicology study or clinical trial process.
+Added: Despite promising nonclinical, toxicology or clinical results, any product candidate can unexpectedly fail at any stage of nonclinical, toxicology or clinical development.
+Added: The historical failure rate for product candidates in our industry is high, especially for products in early stages of development.
+Added: The results from nonclinical studies, toxicology studies or clinical trials of a product candidate may not predict the results of later nonclinical or clinical trials of the product candidate, or in clinical trials with different patient populations such as children and adolescents and interim results of a clinical trial are not necessarily indicative of final results.
+Added: Product candidates in later stages of clinical trials may fail to show the desired safety and efficacy characteristics despite having progressed through nonclinical studies and initial clinical trials.
+Added: It is not uncommon to observe results in clinical trials that are unexpected based on nonclinical studies and early clinical trials, and many product candidates fail in clinical trials despite very promising early results.
+Added: Favorable safety and efficacy outcomes in adult clinical trials may not be seen in pediatric clinical trials.
+Added: Moreover, current and future nonclinical and clinical data may be susceptible to varying interpretations and analyses.
+Added: A number of companies in the pharmaceutical and biotechnology industries have suffered significant setbacks in clinical development even after achieving promising results in earlier studies.
+Added: Furthermore, we cannot provide assurance that we will be able to successfully progress any future nonclinical programs from candidate identification to Phase 1 clinical development.
+Added: As is typical in candidate development, we have a program of ongoing toxicology studies in animals for CTI-1601 and cannot provide assurance that the findings from such studies or any ongoing or future clinical trials will not adversely affect the clinical development of CTI-1601.
+Added: For the foregoing reasons, we cannot be certain that our ongoing and planned nonclinical studies and clinical trials will be successful.
+Added: If nonclinical or clinical trials for CT1-1601 or any future product candidates or indications fail to demonstrate safety or efficacy to the satisfaction of the FDA or the equivalent regulatory authorities in other countries, the FDA or equivalent regulatory authority will not approve our product candidates in those and other indications, which could have a material adverse effect on our business, financial condition results of operations and prospects.
+Added: We do not know whether any ongoing or future clinical trials for CTI-1601 will be completed on schedule, if at all, as the commencement and completion of clinical trials can be delayed, prevented or terminated for a number of reasons, including as a result of safety concerns, or ambiguous or negative interim results.
+Added: In addition, a clinical trial may be suspended or terminated by us, the FDA, other regulatory authorities, the institutional review boards, or IRBs, or ethics committees, a data monitoring committee, or safety review committee, overseeing the clinical trial at issue or other regulatory authorities due to a number of factors, including, among others:
failure to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols;
−Removed: inspection of the clinical trial operations or trial sites by the FDA or other applicable regulatory authorities, that reveals deficiencies or violations that require us to undertake correctiv e action, including the imposition of a partial clinical hold or a full clinical hold;
−Removed: unforeseen safety issues, including any that could be identified in our nonclinical studies or in the clinical studies of drugs in the same class as our future product candidates, adverse side effects or lack of effectiveness;
+Added: inspection of the clinical trial operations or trial sites by the FDA, the EMA, or other applicable regulatory authorities that reveals deficiencies or violations that require us to undertake corrective action, including the imposition of a partial clinical hold or a full clinical hold;
+Added: unforeseen safety issues, including any that could be identified in our prior or ongoing toxicology studies, adverse events or lack of effectiveness;
changes in government regulations or administrative actions;
1 unchanged sentence
lack of adequate funding to continue the clinical trial;
−Removed: Changes in regulatory requirements, FDA guidance or guidance from other regulatory agencies or unanticipated events during our clinical trials of our future product candidates, may occur, which may result in changes to clinical trial protocols or additional clinical trial requirements, which could result in increased costs to us and could delay our development timeline.
−Removed: Changes in regulatory requirements, FDA guidance or guidance from EMA or unanticipated events during our future clinical trials, if any, may force us to adjust our clinical program.
−Removed: The FDA, the EMA, or the applicable regulatory authorities may impose additional clinical trial and/or nonclinical study requirements.
−Removed: Amendments to our future clinical trial protocols would require resubmission to the FDA or other applicable regulatory authorities as well as IRBs and ethics committees for review and approval, which may adversely impact the cost, timing or successful completion of a clinical trial.
−Removed: If we experience delays completing, or if we terminate, any of our clinical trials, or if we are required to conduct additional clinical trials and/or nonclinical studies, the commercial prospects for our future product candidates may be harmed and our ability to generate product revenue will be delayed.
−Removed: We have relied on, and expect that we will continue to rely, on third parties to conduct any future clinical trials for our future product candidates, if any.
−Removed: If these third parties do not successfully carry out their contractual duties or meet expected deadlines, we may not be able to develop and obtain regulatory approval for or commercialize any future product candidates, and our business could be substantially harmed.
−Removed: We entered into agreements with third-party CROs to provide monitors for and to manage data for our prior clinical trials.
−Removed: We relied heavily on these parties for execution of past clinical trials and may continue to rely on these parties for clinical trials for our future product candidates, if any, but we only control certain aspects of their activities.
−Removed: As a result, we have less direct control over the conduct, timing and completion of these clinical trials and the management of data developed through the clinical trials than would be the case if we were relying entirely upon our own staff.
−Removed: Communicating with outside parties can also be challenging, potentially leading to mistakes as well as difficulties in coordinating activities.
−Removed: Outside parties may:
−Removed: have staffing difficulties;
−Removed: fail to comply with contractual obligations;
−Removed: experience regulatory compliance issues;
−Removed: undergo changes in priorities or become financially distressed;
−Removed: form relationships with other entities, some of which may be our competitors.
−Removed: These factors may materially adversely affect the willingness or ability of third parties to conduct our clinical trials in the future, if any, and may subject us to unexpected cost increases that are beyond our control.
−Removed: Nevertheless, we are responsible for ensuring that each of our clinical trials is conducted in accordance with the applicable protocol, legal and regulatory requirements and scientific standards, and our reliance on CROs does not relieve us of our regulatory responsibilities.
−Removed: We and our CROs must comply with requirements for Good Clinical Practice, or GCPs, which are legal requirements enforced by the FDA, the Competent Authorities of the Member States of the European Economic Area and comparable foreign regulatory authorities for any products in clinical development.
−Removed: The FDA enforces these GCP regulations through periodic inspections of clinical trial sponsors, principal investigators and clinical trial sites, IRBs, and other vendors that may be involved in the clinical development of new products.
−Removed: If we or our investigators or CROs fail to comply with applicable GCPs, the clinical data generated in our future clinical trials, if any, may be deemed unreliable and the FDA or comparable foreign regulatory authorities may require us to perform additional clinical trials before approving our marketing applications.
−Removed: We cannot assure you that, upon inspection, the FDA will determine that any of our future clinical trials comply
−Removed: In addition, our future clinical trials, if any, must be conducted with products produced under current Good Manufacturing Practices, or c GMPs, regulations to assure the identity, strength, quality, and purity of our drug product candidates being used in the clinical trials, as well as the to-be-marketed formulation and product.
−Removed: Our failure or the failure of our CROs and/or contract manufact uring organizations, or CMOs, to comply with these regulations may require us to repeat clinical trials, which would delay the regulatory approval process and could also subject us to enforcement action, up to and including, civil and criminal penalties.
−Removed: Although we design our clinical trials, in the past, investigators and CROs have conducted all of our clinical trials.
−Removed: As a result, many important aspects of our drug development programs have been outside of our direct control.
−Removed: In addition, the investigators or CROs may not perform all of their obligations under arrangements with us or in compliance with regulatory requirements, but we remain responsible and are subject to enforcement action that may include civil penalties up to and including criminal prosecution for any violations of FDA or comparable foreign laws and regulations during the conduct of our clinical trials.
−Removed: If the investigators or CROs do not perform clinical trials in a satisfactory manner, breach their obligations to us, or fail to comply with regulatory requirements, the development and commercialization of our future product candidates may be delayed or our development program materially and irreversibly harmed.
−Removed: We cannot control the amount and timing of resources these investigators or CROs will devote to our future product candidates.
−Removed: If we are unable to rely on clinical data collected by our investigators or CROs, we could be required to repeat, extend the duration of, or increase the size of our clinical trials and this could significantly delay commercialization and require significantly greater expenditures.
−Removed: If any of our relationships with these third-party investigators or CROs terminate, we may not be able to enter into arrangements with alternative investigators or CROs in a timely manner, or at all.
−Removed: If investigators or CROs do not successfully carry out their contractual duties or obligations or meet expected deadlines, if they need to be replaced or if the quality or accuracy of the clinical data they obtain is compromised due to the failure to adhere to our clinical protocols, regulatory requirements or for other reasons, any such clinical trials may be extended, delayed or terminated, and we may not be able to obtain regulatory approval for or successfully commercialize our future product candidates.
−Removed: As a result, our financial results and the commercial prospects for our future product candidates in the subject indications would be harmed, our costs could increase and our ability to generate revenue could be delayed.
−Removed: We have no experience manufacturing our product candidates on a large clinical or commercial scale and have no manufacturing facility.
−Removed: As a result, we are dependent on third-party manufacturers, as well as on third parties for our supply chain, and if we experience problems with any third parties, or the actual demand for our future product candidates, if any, exceed our forecasts, the manufacture of adequate supplies of our future product candidates or products could be delayed.
−Removed: We do not own or operate facilities for the manufacture of our future product candidates, if any.
−Removed: We currently have no plans to build our own manufacturing facilities for clinical or commercial operations.
−Removed: We have in the past relied on contract manufacturing organizations, or CMOs, for the chemical manufacture of active pharmaceutical ingredient and for the production of final product formulation and packaging for clinical trials, and expect to rely on CMOs for any future product candidate we are able to advance into clinical development.
−Removed: Although alternative third party suppliers with the necessary manufacturing and regulatory expertise and facilities exist, it could be expensive and take a significant amount of time to arrange for alternative suppliers should we commence clinical development of any future product candidate.
−Removed: We may encounter technical difficulties or delays in the transfer of manufacturing on a commercial scale to third party manufacturers.
−Removed: We may be unable to enter into agreements for commercial supply with third party manufacturers, or may be unable to do so on acceptable terms.
−Removed: If we are unable to arrange for alternative third-party manufacturing sources, or to do so on commercially reasonable terms or in a timely manner, we may not be able to complete development of any future product candidates, or market or distribute them.
−Removed: Reliance on third party manufacturers entails risks to which we would not be subject if we manufactured product candidates or products ourselves, including reliance on the third party for regulatory compliance and quality assurance, the possibility of breach of the manufacturing agreement by the third party because of factors beyond our control, including a failure to synthesize and manufacture our product candidates or any products we may eventually commercialize in accordance with our specifications, and the possibility of termination or nonrenewal of the agreement by the third party, based on its own business priorities, at a time that is costly or damaging to us.
−Removed: In addition, the FDA and other regulatory authorities require that our product candidates and any products that we may eventually commercialize be manufactured according to cGMP and similar foreign standards.
−Removed: Any failure by our third-party manufacturers to comply with cGMP or failure to scale up manufacturing processes, including any failure to deliver sufficient quantities of product candidates in a timely manner, could lead to a delay in, or failure to obtain, regulatory approval of any of our product candidates and could cause us to incur higher costs and prevent us from commercializing our product candidates successfully.
−Removed: In addition, such failure could be the basis for the FDA to issue a warning letter, withdraw approvals for product candidates previously granted
−Removed: to us, or take other regulatory or legal action, including recall or seizure of o utside supplies of the product candidate, total or partial suspension of production, suspension of ongoing clinical trials, refusal to approve pending applications or supplemental applications, detention of products, refusal to permit the import or export of products, injunction, or imposing civil and criminal penalties.
−Removed: Any significant disruption in our supplier relationships could harm our business.
−Removed: Any significant delay in the supply of a product candidate or its key materials for a clinical trial could considerably delay completion of our clinical trials, product testing and potential regulatory approval of our future product candidates.
−Removed: If our manufacturers or we are unable to purchase these key materials after regulatory approval has been obtained for our product candidates, the commercial launch of our product candidates would be delayed or there would be a shortage in supply, which would impair our ability to generate revenues from the sale of our product candidates.
−Removed: If our CMOs cannot manufacture sufficient quantity to meet the demand for our product candidates after regulatory approval, there would be a shortage in supply which would negatively impact our revenue from the sale of our product candidates.
−Removed: It may take several years to establish an alternative source of supply for our product candidates and to have any such new source approved by the FDA.
−Removed: Even if we receive marketing approval for a product candidate in the United States, we may never receive regulatory approval to market such product candidate outside of the United States.
−Removed: We may pursue marketing approval for certain of our future product candidates in the United States, the EU and in other countries worldwide.
−Removed: In order to market any product outside of the United States, we must establish and comply with the numerous and varying safety, efficacy and other regulatory requirements of other countries, including potential additional clinical trials and/or nonclinical studies.
−Removed: Approval procedures vary among countries and can involve additional product candidate testing and additional administrative review periods.
−Removed: The time required to obtain approvals in other countries might differ from that required to obtain FDA approval.
−Removed: The marketing approval processes in other countries may implicate all of the risks detailed above regarding FDA approval in the United States as well as other risks.
−Removed: In particular, in many countries outside of the United States, products must receive pricing and reimbursement approval before the product can be commercialized.
−Removed: Obtaining this approval can result in substantial delays in bringing products to market in such countries.
−Removed: In addition, on January 31, 2020, the United Kingdom government completed the process to leave the EU, or Brexit.
−Removed: The effects of Brexit will depend on any agreements the United Kingdom makes to retain access to EU markets either during a transitional period or more permanently.
−Removed: Brexit could lead to legal uncertainty and potentially divergent national laws and regulation as the United Kingdom determines which EU laws to replace or replicate.
−Removed: Marketing approval in one country does not necessarily ensure marketing approval in another, but a failure or delay in obtaining marketing approval in one country may have a negative effect on the regulatory process or commercial activities in others.
−Removed: Failure to obtain marketing approval in other countries or any delay or other setback in obtaining such approval would impair our ability to market a product candidate in such foreign markets.
−Removed: Any such impairment would reduce the size of our potential market, which could have a material adverse impact on our business, results of operations and prospects.
−Removed: Even if we receive marketing approval for a product candidate, it may not achieve broad market acceptance, which would limit the revenue that we generate from its sales.
−Removed: The commercial success of a product candidate, if developed and approved for marketing by the FDA or EMA or other applicable regulatory authorities, will depend upon the awareness and acceptance of our future product candidates, if any, among the medical community, including physicians, patients, advocacy groups and healthcare payors.
−Removed: Market acceptance of a product candidate, if approved, will depend on a number of factors, including, among others:
−Removed: the relative convenience and ease of administration of our future product candidates;
−Removed: the prevalence and severity of any adverse side effects associated with a product candidate;
−Removed: limitations or warnings contained in the labeling approved for a product candidate by the FDA, EMA, or other regulatory authorities, such as a “black box” warning;
−Removed: the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies;
−Removed: the strength of marketing and distribution support and timing of market introduction of competitive products;
−Removed: publicity concerning our products or competing products and treatments;
−Removed: the effectiveness of our sales and marketing strategies;
−Removed: our ability to increase awareness of a product candidate through marketing efforts;
−Removed: our ability to obtain sufficient third party coverage or reimbursement;
−Removed: the willingness of patients to pay out-of-pocket in the absence of third party coverage;
−Removed: the likelihood that the FDA may require development of a Risk Evaluation and Mitigation Strategies, or REMS, as a condition of approval or post-approval or may not agree with our proposed REMS or may impose additional requirements that limit the promotion, advertising, distribution or sales of our product candidates.
−Removed: If a product candidate is approved but does not achieve an adequate level of acceptance by patients, advocacy groups, physicians and payors, we may not generate sufficient revenue from a product candidate to become or remain profitable.
−Removed: Before granting reimbursement approval, healthcare payors may require us to demonstrate that a product candidate also provides incremental health benefits to patients.
−Removed: Our efforts to educate the medical community and third-party payors about the benefits of a product candidate may require significant resources and may never be successful.
−Removed: If we are unable to establish sales and marketing capabilities or enter into agreements with third parties to market and sell a product candidate, we may not be able to generate any revenue.
−Removed: We do not currently have an established infrastructure for the sales, marketing and distribution of pharmaceutical products.
−Removed: In order to market any future product candidate, if approved by the FDA or any other regulatory body, we must build our sales, marketing, managerial and other non-technical capabilities or make arrangements with third parties to perform these services.
−Removed: If we are unable to establish adequate sales, marketing and distribution capabilities, whether independently or with third parties, or if we are unable to do so on commercially reasonable terms, our business, results of operations, financial condition and prospects will be materially adversely affected.
−Removed: Even if we receive marketing approval for any future product candidate, we may still face future development and regulatory difficulties.
−Removed: Even if we receive marketing approval for a future product candidate, if any, regulatory authorities may still impose significant restrictions on the indicated uses or marketing of our product candidates, or may impose ongoing requirements for potentially costly post-approval studies.
−Removed: A product candidate will also be subject to ongoing FDA and EMA requirements governing the labeling, packaging, storage and promotion of the product and recordkeeping and submission of safety and other post-market information.
+Added: challenges in recruiting and enrolling patients to participate in clinical trials, including the size and nature of the patient population, such as pediatric patients, the proximity of patients to clinical trial sites, eligibility criteria for the clinical trial, the nature of the clinical trial protocol, the availability of approved effective treatments for the relevant disease and competition from other clinical trial programs for similar indications, and the ongoing effects of COVID-19;
+Added: difficulties in retaining or recruiting clinical investigators in our ongoing or future clinical trials;
+Added: difficulties retaining patients who have enrolled in a clinical trial but may be prone to withdraw due to rigors of the clinical trial, perceived lack of efficacy, side effects, screening and monitoring measures, personal issues or loss of interest;
+Added: severe or unexpected drug-related adverse events experienced by patients in clinical trials;
+Added: the FDA, the EMA, or other applicable regulatory authorities may disagree with our clinical trial designs, our interpretation of data from clinical trials, or may change the requirements for approval even after it has reviewed and commented on the design for our clinical trials;
+Added: reports from nonclinical studies or clinical testing of other therapies that raise safety or efficacy concerns.
+Added: Failures or delays in the completion of our clinical trials could result in increased costs and could delay, prevent or limit our ability to generate revenue and continue our business.
+Added: Our lead product candidate CTI-1601 is currently in Phase 1 clinical trials, and there are a number of FDA regulatory requirements that we must satisfy before we can commence late-stage clinical trials of CTI-1601.
+Added: To receive approval of CTI-1601 in other countries we will also have to satisfy their regulatory requirements.
+Added: Satisfaction of these requirements will entail substantial time, effort and financial resources.
+Added: We may never satisfy these requirements.
+Added: Clinical trials may also be delayed or terminated as a result of ambiguous or negative interim results or events outside of our control.
+Added: The pandemic resulted in the temporary stoppage of our Phase 1 clinical trials studying CTI-1601in patients with Friedreich’s ataxia.
+Added: after the completion of two cohorts, In July 2020, we resumed our Phase 1 clinical trials of CTI-1601.
+Added: We are conducting the clinical trial at one clinical trial site in New Jersey.
+Added: Because Friedreich’s ataxia is a rare disease, there are a limited number of patients in close proximity to the clinical trial site and clinical trial patients travel from throughout the United States to the clinical trial site to participate.
+Added: The travel advisories and risk of infection related to COVID-19 have presented increased risks to patients traveling to our clinical trial site for dosing.
+Added: While top line results from the SAD and MAD clinical trials were originally expected by the end of 2020, the delay in the clinical trial timeline caused by the ongoing impact of COVID-19 has resulted in top line results being delayed until the second quarter of 2021.
+Added: If Phase 1 clinical trials of CTI-1601 fail or further delays occur, we may not be able to develop and commercialize CTI-1601 and could fail to realize the potential advantages of doing so, and it could materially adversely affect our business, financial condition and results of operations.
+Added: We may not be successful in our efforts to identify, discover or acquire additional product candidates.
+Added: We currently only have one product candidate CTI-1601, which is completing Phase 1 clinical trials in the United States.
+Added: Therefore, the success of our business largely depends upon our ability to identify, develop, in-license or acquire and commercialize products targeting rare diseases.
+Added: We may focus our efforts and resources on potential programs or product candidates that ultimately prove to be unsuccessful.
+Added: In addition, our research methodology may be unsuccessful in identifying potential product candidates or our potential product candidates may be shown to have harmful side effects or may have other characteristics that may make the products unmarketable or unlikely to receive marketing approval.
+Added: Research programs to identify new product candidates require substantial technical, financial and human resources.
+Added: We may focus our efforts and resources on potential programs or product candidates that ultimately prove to be unsuccessful.
+Added: If any of these events occur, we may be forced to abandon our development efforts for a program or programs, which would have a material adverse effect on our business, financial condition and results of operations.
+Added: We have no marketed proprietary products and have not yet advanced a product candidate beyond Phase 1 clinical trials, which makes it difficult to assess our ability to develop CTI-1601 or any future product candidates and commercialize any resulting products independently.
+Added: We have no experience in later stage clinical development, and related regulatory requirements or the commercialization of products.
+Added: As a result, we have not yet demonstrated our ability to independently and repeatedly conduct clinical development after Phase 1, which has not yet been successfully completed, successfully conduct an international multi-center clinical trial, conduct a pivotal clinical trial, obtain regulatory approval, manufacture drug product on a commercial scale or arrange for a third party to do so on our behalf, and commercialize therapeutic products.
+Added: We will need to develop such abilities if we are to execute on our business strategy to develop and independently commercialize product candidates for orphan and niche indications.
+Added: To execute on our business plan for the development of independent programs, we will need to successfully:
+Added: execute our clinical development plans for later-stage product candidates;
+Added: obtain required regulatory approvals in each jurisdiction in which we will seek to commercialize products;
+Added: build and maintain appropriate sales, distribution and marketing capabilities;
+Added: gain market acceptance for our future products, if any;
+Added: manage our spending as costs and expenses increase due to clinical trials, regulatory approvals and commercialization activities.
+Added: If we are unsuccessful in accomplishing these objectives, we will not be able to develop and commercialize any product candidates independently and could fail to realize the potential advantages of doing so, and it would materially adversely affect our business, financial condition and results of operations.
+Added: We cannot be certain that we will be able to successfully complete clinical trials for CTI-1601 or any other product candidates.
+Added: We currently have only one product candidate in clinical development, CTI-1601, which is currently completing Phase 1 clinical trials in the United States.
+Added: Our business currently depends primarily on CTI-1601’s successful clinical development, regulatory approval and commercialization.
+Added: We submitted our IND, and our application has gone into effect, permitting the conduct of clinical trials.
+Added: However, the outcome of toxicology studies and early clinical trials may not be positive and may not be predictive of the success of later nonclinical studies or clinical trials, and interim results of clinical trials do not necessarily predict success in those or future clinical trials.
+Added: Success in adult clinical trials may not predict the outcome of pediatric clinical trials.
+Added: Published clinical data or case reports from third parties or early clinical trial data of CTI-1601 or any future product candidates may not be predictive of the results of later-stage clinical trials.
+Added: Interpretation of results from early, usually smaller, studies that suggest a clinically meaningful response in some patients, requires caution.
+Added: Results from later stages of clinical trials enrolling more patients , or different patient populations, such as pediatric patients, may fail to show the desired safety or efficacy results or otherwise fail to be consistent with the results of earlier trials of the same product candidate.
+Added: Later clinical trial results may not replicate earlier clinical trials for a variety of reasons, including differences in trial design, different trial endpoints (or lack of trial endpoints in exploratory studies), different patient population, number of patients, patient selection criteria, trial duration, drug dosage and formulation and lack of statistical power.
+Added: These uncertainties are enhanced where the diseases under study lack established clinical endpoints, validated measures of efficacy, as is often the case with orphan diseases for which no drugs have been developed previously and where the product candidates target novel mechanisms.
+Added: For example, to our knowledge, CTI-1601 is the only protein replacement therapy being developed for the treatment of Friedreich’s a taxia and therefore nonclinical studies may not be adequate to predict efficacy in a clinical trial due to our novel protein replacement therapy platform.
+Added: In some instances, there can be significant variability in safety or efficacy results between different clinical trials of the same product candidate due to numerous factors, including changes in trial procedures set forth in protocols, differences in the size and type of the patient populations, such as pediatric patients, variability of the disease being studied, changes in and adherence to the dosing regimen and other clinical trial protocols and the rate of dropout among clinical trial participants.
+Added: If we fail to ultimately receive positive results in clinical trials of CTI-1601, the development timeline and regulatory approval and commercialization prospects for CTI-1601, and, correspondingly, our business, financial prospects and results of operation would be negatively impacted.
+Added: Further, CTI-1601 or any future product candidates may not be approved even if they achieve their primary endpoint in clinical trials.
+Added: The FDA, EMA or foreign regulatory authorities may disagree with our trial design and our interpretation of data from nonclinical studies and clinical trials.
+Added: In addition, any of these regulatory authorities may change its requirements for the approval of a product candidate even after reviewing and providing comments or advice on a protocol for a pivotal clinical trial that, if successful, would potentially form the basis for an application for approval by the FDA, EMA or another regulatory authority.
+Added: Furthermore, any of these regulatory authorities may also approve CTI-1601 or any future product candidates for a narrower indication than we may request or may grant approval contingent on the performance of costly post-marketing clinical trials.
+Added: Any of the above could materially adversely affect our business, financial condition and results of operations.
+Added: We may experience difficulties identifying and enrolling patients in our clinical trials given the limited number of patients who have the disease for which CTI-1601 is being studied or for any other product candidate we may study in the future.
+Added: Difficulty in enrolling patients could delay or prevent clinical trials of CTI-1601 or any future product candidate.
+Added: Identifying and qualifying patients to participate in clinical trials of CTI-1601 is critical to our success.
+Added: The timing of our clinical trials depends in part on the speed at which we can recruit patients to participate in testing CTI-1601, and we may experience delays in our clinical trials if we encounter difficulties in enrollment, such as difficulties with enrollment in pediatric clinical trials.
+Added: The conditions for which we are planning to evaluate CTI-1601 and any product candidates we may evaluate in the future, are rare genetic diseases.
+Added: Accordingly, there are limited patient pools from which to draw for clinical trials.
+Added: We are investigating our product candidate in Friedreich’s ataxia, a rare disease.
+Added: Arranging for investigative sites and recruiting patients for clinical trials in this disease may be very difficult.
+Added: In addition, if other companies are investigating their investigational products in Friedreich’s ataxia, it may be more difficult to enroll eligible patients into our clinical trials.
+Added: In addition to the rarity of Friedreich’s a taxia and other diseases that we are studying, the eligibility criteria of our clinical trials will further limit the pool of available study participants as it will require patients to have specific characteristics that we can measure to assure their disease is either severe enough or not too advanced to include them in a clinical trial.
+Added: The process of finding and diagnosing patients may prove costly, especially since the diseases we are studying are rare.
+Added: We also may not be able to identify, recruit, and enroll a sufficient number of appropriate patients to complete our clinical trials because of demographic criteria for prospective patients, the perceived risks and benefits of the product candidate under study, the proximity and availability of clinical trial sites for prospective patients, and the patient referral practices of physicians.
+Added: The availability and efficacy of competing therapies and clinical trials can also adversely impact enrollment.
+Added: Furthermore, our inability to enroll a sufficient number of patients for our clinical trials , including pediatric clinical trials, could result in significant delays or may require us to abandon one or more clinical trials altogether.
+Added: Enrollment delays in our clinical trials may result in increased development costs for CTI-1601 or any future product candidates, and jeopardize our ability to achieve our clinical development timeline and goals, including the dates by which we will commence, complete and receive results from clinical trials .
+Added: If patients are unwilling to participate in our trials for any reason, the timeline for recruiting patients, conducting trials, and obtaining regulatory approval of potential products may be delayed, Enrollment delays in our clinical trials may also jeopardize our ability to commence sales of and generate revenues from CTI-1601, which could cause the value of our company to decline and limit our ability to obtain additional financing, if needed.
+Added: Any of these occurrences may harm our business, financial condition, and prospects significantly.
+Added: Friedreich’s ataxia has no FDA-approved treatments, and clinical endpoints required to obtain approval are not well defined.
+Added: There are currently no therapies approved to treat Friedreich’s ataxia.
+Added: We have concentrated our research and development efforts on developing a novel therapeutic for the treatment of Friedreich’s ataxia, and our future success depends on the success of this therapeutic approach.
+Added: The clinical trial requirements of the FDA and other comparable regulatory agencies and the criteria these regulators use to determine the safety and efficacy of any product candidate vary substantially according to the type, complexity, novelty and intended use and market of the potential product.
+Added: Given the nature of Friedreich’s ataxia, we may have to devise novel clinical endpoints to be tested in our clinical trials, which can lead to some subjectivity in interpreting trial results and could result in regulatory agencies not agreeing with the validity of our endpoints, or our interpretation of the clinical data, and therefore denying approval, which would materially adversely affect our business, financial condition and results of operations.
+Added: As a result, the design and conduct of clinical trials for a therapeutic product candidate such as CTI-1601 that is intended to deliver human FXN through a subcutaneously administered, recombinant fusion protein in Friedreich’s ataxia patients are subject to unknown risks, and we may experience setbacks with our ongoing or planned clinical trials of CTI-1601 in Friedreich’s ataxia because of the limited clinical experience with our mechanism of action in these patients.
+Added: In particular, regulatory authorities in the United States and the European Union, or the EU, have not issued definitive guidance as to how to measure and achieve efficacy in treatments for Friedreich’s ataxia.
+Added: As a result, the design and conduct of clinical trials of CTI-1601 may take longer, be more costly or be less effective as part of the novelty of development in Friedreich’s ataxia.
+Added: We may use new or novel endpoints or methodologies, and the FDA or other regulatory authorities may not consider the endpoints of our clinical trials to provide clinically meaningful results.
+Added: Even if applicable regulatory authorities do not object to our proposed endpoints in an earlier stage clinical trial, such regulatory authorities may require evaluation of additional or different clinical endpoints in later-stage clinical trials.
+Added: CTI-1601 may cause adverse events or undesirable side effects that could delay or prevent its regulatory approval, limit the commercial profile of an approved label, or result in significant negative consequences following marketing approval, if any.
+Added: We are collecting data about CTI-1601 from ongoing Phase 1 clinical trials and toxicology studies and any adverse events or undesirable side effects caused by, or other unexpected properties of, CTI-1601 could cause us, any future collaborators, an IRB or ethics committee or regulatory authorities to interrupt, delay or halt clinical trials of our product candidate and could result in a more restrictive label or the delay or denial of regulatory approval by the FDA or other regulatory authorities.
+Added: It is possible that as we progress CTI-1601 through clinical trials and toxicology studies, or as the use of CTI-1601 becomes more widespread if it receives regulatory approval, illnesses, injuries, discomforts and other adverse events that were not observed in earlier trials, as well as conditions that did not occur or went undetected in previous trials, may be reported by patients.
+Added: If such side effects become known later in development or after approval, such findings may harm our business, financial condition and prospects significantly.
+Added: Further, if a serious safety issue is identified in connection with the use of CTI-1601 commercially or in third-party clinical trials elsewhere, such issues may adversely affect the development potential of CTI-1601 elsewhere or result in regulatory authorities restricting our ability to develop or commercialize CTI-1601.
+Added: Further, if CTI-1601 were to receive marketing approval and we or others identify undesirable side effects caused by the product (or any other product) after the approval, a number of potentially significant negative consequences could result, including:
+Added: regulatory authorities may request that we recall or withdraw the product from the market or may limit the approval of the product through labeling or other means;
+Added: regulatory authorities may require the addition of labeling statements, such as a “black box” warning or a contraindication or a precaution, or labeling restrictions based on patient population;
+Added: we may be required to change the way the product is distributed or administered, conduct additional clinical trials or change the labeling of the product;
+Added: we may decide to recall or remove the product from the marketplace;
+Added: we could be sued and/or held liable for injury caused to individuals exposed to or taking our product candidates;
+Added: damage to the public perception of the safety of CTI-1601;
+Added: our reputation may suffer.
+Added: Any of these events could prevent us from achieving or maintaining market acceptance of the affected product candidate and could substantially increase the costs of commercializing our product candidates and significantly impact our ability to successfully commercialize our product candidates and generate revenues, all of which would materially adversely affect our business, financial condition and results of operations.
+Added: Our approach to discover and develop fusion proteins for delivering proteins is novel and may never lead to marketable products.
+Added: We have concentrated our efforts and research and development activities on delivering proteins (FXN or other) to intracellular targets.
+Added: Our future success depends on the successful development and manufacturing of such therapeutics and the effectiveness of our platform.
+Added: The scientific discoveries that form the basis for our research are relatively new.
+Added: CTI-1601 uses a novel and unproven approach and mechanism to treat Friedreich’s ataxia and therefore its efficacy and safety are difficult to predict, and there is no guarantee that CTI-1601 will be approved by the FDA, the EMA, or any other regulatory authorities.
+Added: If CTI-1601 proves to be ineffective, unsafe or commercially unviable, it is possible that our platform and pipeline would have little, if any, value, which would substantially harm our business, financial condition, results of operations and prospects.
+Added: In addition, our approach may expose us to additional financial risks and make it more difficult to raise additional capital than other, more advanced proven technologies, which would materially adversely affect our business, financial condition and results of operations.
+Added: Protein replacement therapies are novel, complex and difficult to manufacture.
+Added: We could experience manufacturing problems that result in delays in the development or commercialization of our protein replacement therapy platform or product candidates or otherwise harm our business.
+Added: The manufacture of fusion proteins, such as CTI-1601 and any fusion protein candidates, is technically complex and necessitates substantial expertise and capital investment.
+Added: Production difficulties caused by unforeseen events may delay the availability of material for clinical trials and commercial products for CTI-1601 or any fusion protein product that may receive regulatory approval in the future.
+Added: Additionally, because biologic products are complex, the manufacture of such products and product candidates is more difficult and costly.
+Added: We may not be able to have such products reliably manufactured in accordance with the applicable regulatory requirements in sufficient quantities to support our development programs and, if ultimately approved, commercial supply.
+Added: We currently contract with third parties for the manufacturing of program materials for CTI-1601.
+Added: There are a limited number of contract manufacturers who specialize in the manufacture of biologic products and those that do may still be developing appropriate processes, controls and facilities for large-scale production.
+Added: While we believe that there will be sufficient sources of supply that can satisfy our clinical and commercial requirements, we cannot be certain that we will be able to identify and establish additional relationships with such sources, if necessary, in a timely manner or at all, and what the terms and costs of such new arrangements would be, or that such suppliers would be able to supply our potential commercial needs.
+Added: Furthermore, in the event our primary manufacturer cannot meet our needs, any switch to an alternative manufacturer, if available, would result in a significant delay, would require FDA approval, and cause material additional costs.
+Added: As further described in these risk factors, the manufacturers of biologic products must comply with strictly enforced cGMP requirements, state and federal regulations, as well as foreign requirements when applicable.
+Added: Any failure by us or our contract manufacturing organizations to adhere to or document compliance to such regulatory requirements could lead to a delay or interruption in the availability of our program materials for clinical trials or commercial use, among other consequences.
+Added: If we or our manufacturers fail to comply with the FDA, EMA, or other regulatory authorities, it could result in sanctions being imposed on us, including fines, injunctions, civil penalties, delays, suspension or withdrawal of approvals, clinical holds or termination of clinical trials, warning or untitled letters, regulatory communications warning the public about safety issues with a product, import or export refusals, license revocation, seizures, detentions, or recalls of product candidates or product, operating restrictions, criminal prosecutions or debarment, suits under the civil False Claims Act, corporate integrity agreements, or consent decrees any of which could significantly and adversely affect supplies of our product candidates and our business, financial conditions and results of operations could be materially adversely affected.
+Added: Our current dependence upon others for the manufacture of our product candidates may also adversely affect our business, results of operations, financial condition, and our ability to commercialize any product candidates that receive regulatory approval on a timely and competitive basis.
+Added: Fast Track designation by the FDA or any future designations may not lead to a faster development, regulatory review or approval process and it does not increase the likelihood that any of our product candidates will receive marketing approval.
+Added: We have received Fast Track therapy designation for CTI-1601 for the treatment of Friedreich’s ataxia.
+Added: We may, in the future, apply for other accelerated programs from the FDA (such as breakthrough therapy or accelerated approval) for CTI-1601 or future product candidates.
+Added: Designation for these programs is within the discretion of the FDA.
+Added: Accordingly, even if we believe CTI-1601 or a future product candidate meets the criteria for designation, the FDA may disagree.
+Added: In any event, the receipt of a designation may not result in a faster development process, review or approval compared to products considered for approval under conventional FDA procedures and, in any event, does not assure ultimate approval by the FDA.
+Added: In addition, even though CTI-1601 has been designated as Fast Track, the FDA may later decide that it no longer meets the criteria for designation and revoke it.
+Added: If we apply for designation to additional accelerated programs from the FDA for CTI-1601 or future product candidates, the FDA might not grant the designation.
+Added: If we apply for any similar programs in foreign countries for CTI-1601 or future product candidates, those designations also might not be granted by the regulatory authorities of those countries.
+Added: Any of the above could adversely affect our business, financial condition and results of operations.
+Added: If we fail to maintain orphan drug designation or other regulatory exclusivity for CTI-1601 or obtain such exclusivity for any of our other product candidates in the future, our competitive position would be harmed .
+Added: We received orphan drug designation from the FDA for CTI-1601 in July 2017.
+Added: In the United States, orphan drug designation entitles a party to financial incentives such as tax advantages and user-fee waivers.
+Added: In addition, if a product candidate that has orphan drug designation subsequently receives the first FDA approval for the disease for which it has such designation, the product is entitled to orphan drug exclusivity, which means that the FDA may not approve any other applications, including an NDA or BLA, to market the same drug for the same indication for seven years, except in limited circumstances, including if the FDA concludes that the later drug is clinically superior to the approved drug.
+Added: A drug is clinically superior if it is safer, more effective, or makes a major contribution to patient care.
+Added: Orphan drug designation neither shortens the development time or regulatory review time of a drug nor gives the drug any advantage in the regulatory review or approval process.
+Added: We may lose orphan drug exclusivity if we are unable to assure sufficient quantity of the drug to meet the needs of patients with the rare disease or condition.
+Added: Moreover, orphan drug exclusivity may not effectively protect our product candidates from competition because different drugs can be approved for the same condition.
+Added: Even after an orphan drug is approved, the FDA or comparable foreign regulatory authority can subsequently approve the same drug for the same condition if such regulatory authority concludes that the later drug is clinically superior if it is shown to be safer, more effective or makes a major contribution to patient care.
+Added: We have also received orphan drug designation for CTI-1601 in the EU.
+Added: In the EU, the EMA’s Committee for Orphan Medicinal Products grants orphan drug designation to promote the development of products that are intended for the diagnosis, prevention or treatment of life threatening or chronically debilitating conditions affecting not more than five in 10,000 persons in the European Union.
+Added: Additionally, designation is granted for products intended for the diagnosis, prevention or treatment of a life threatening, seriously debilitating or serious and chronic condition and when, without incentives, it is unlikely that sales of the drug in the European Union would be sufficient to justify the necessary investment in developing the drug.
+Added: In the EU, orphan drug designation also entitles a party to financial incentives such as reduction of fees or fee waivers and ten years of market exclusivity following drug approval.
+Added: This period may be reduced to six years if the orphan drug designation criteria are no longer met, including where it is shown that the product is sufficiently profitable so that market exclusivity is no longer justified.
+Added: Loss of orphan drug designation for CTI-1601 or the failure to obtain such designation in other countries or for any future product candidates could adversely affect our business, financial condition and results of operation.
+Added: Although we have obtained rare pediatric disease designation for CTI-1601, we may not be eligible to receive a priority review voucher in the event the FDA determines we no longer meet the criteria for designation, revokes the designation or that FDA approval does not occur prior to September 30, 2026.
+Added: We received rare pediatric disease designation from the FDA for CTI-1601 in 2019.
+Added: We may, in the future, apply for rare pediatric disease designation from the FDA for future product candidates that may qualify for designation.
+Added: Vouchers for rare pediatric disease drugs are awarded when the designated drug receives approval.
+Added: CTI-1601 may not receive approval and therefore, we may not receive a voucher.
+Added: In addition, even though CTI-1601 has been designated as a drug for a rare pediatric disease, the FDA may later decide that it no longer meets the criteria for designation, revoke the designation or not award the voucher.
+Added: If we apply for designation for future product candidates as drugs for rare pediatric diseases, the FDA may not grant the designation.
+Added: The failure to maintain rare pediatric disease designation for CTI-1601 or if FDA approval does not occur prior to September 30, 2026 could result in the inability to receive a priority review voucher which could adversely affect our business, financial condition and results of operations.
+Added: Changes in regulatory requirements, FDA guidance, guidance from other regulatory authorities or unanticipated events during our clinical trials of CTI-1601 may result in changes to clinical trial protocols or additional clinical trial requirements, which could result in increased costs to us and could delay our development timeline.
+Added: Changes in regulatory requirements, FDA guidance or guidance from EMA or unanticipated events during our clinical trials may force us to terminate or adjust our clinical program.
+Added: The FDA, or the applicable regulatory authorities may impose additional clinical trial and/or nonclinical study requirements.
+Added: Amendments to our clinical trial protocols would require resubmission to the FDA, or the applicable regulatory authorities as well as IRBs and ethics committees for review and approval, which may adversely impact the cost, timing or successful completion of a clinical trial.
+Added: If we experience delays completing, or if we terminate, any of our clinical trials, or if we are required to conduct additional clinical trials, or nonclinical studies and/or post-market studies, the commercial prospects for CTI-1601 or any other potential product candidates may be harmed and our ability to generate product revenue will be delayed, and it would materially adversely affect our business, financial condition and results of operations.
+Added: In order to market any product outside of the United States, we must comply with numerous and varying regulatory requirements of other countries regarding drug development and commercialization.
+Added: The approval process varies from country to country and can involve additional product testing and additional administrative review periods.
+Added: The time required to obtain approval in other countries might differ from and be longer than that required to obtain FDA approval.
+Added: Regulatory approval in one country does not ensure regulatory approval in another, but a failure or delay in obtaining regulatory approval in one country may negatively impact the regulatory process in others.
+Added: In addition, on January 31, 2020, the United Kingdom exited from the European Union, or Brexit.
+Added: 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.
+Added: Over the past year, the UK Medicines and Healthcare Products Regulatory Agency (MHRA) has issued numerous guidances to address how drugs and devices are to be regulated in the UK post-Brexit.
+Added: However, the ultimate impact of the “leave” is not clear as there is still some legal and practical uncertainty surrounding the regulation of drugs in the UK and how such regulation may diverge with regulation in the EU.
+Added: Regulatory requirements governing biologic products have changed frequently and may continue to change in the future.
+Added: Such requirements may lengthen the regulatory review process, require us to perform additional nonclinical studies or clinical trials, and increase our costs, or may force us to delay, limit or terminate certain of ours programs.
+Added: Regulatory requirements governing biologic drug products are still evolving and may continue to change in the future.
+Added: As a result, it is difficult to determine how long it will take or how much it will cost to obtain regulatory approvals for CTI-1601 for the treatment of Friedreich’s ataxia or any other future protein replacement therapy product candidates in any indication, if at all.
+Added: Regulatory review agencies and the new requirements and guidelines they promulgate may lengthen the regulatory review process, require us to perform additional or larger studies, increase our development costs, lead to changes in regulatory positions and interpretations, delay or prevent approval and commercialization of our product candidates or lead to significant post-approval studies, limitations or restrictions.
+Added: Delays, failure or unexpected costs in obtaining, the regulatory approval necessary to bring our product candidates to market could have a material adverse effect on our business, results of operations, financial condition and prospects.
+Added: In addition, the clinical trial requirements of the FDA, the EMA and other regulatory authorities and the criteria these regulators use to determine the safety and efficacy of a product candidate vary substantially according to the type, complexity, novelty and intended use and market of such product candidates.
+Added: The regulatory approval process for novel product candidates such as ours can be more expensive and take longer than for other, better known or more extensively studied product candidates.
+Added: The clinical trials of CTI-1601 and any future product candidates are, and the manufacturing and marketing of CTI-1601 and any future product candidates will be subject to extensive and rigorous review and regulation by numerous government authorities in the United States and in other countries, such as within the EU, where we intend to seek regulatory approval of, and market, any product candidate.
+Added: Before obtaining regulatory approvals for the commercial sale of any product candidate, we must demonstrate through nonclinical testing and clinical trials that the product candidate is safe and effective for use in each target indication.
+Added: This process can take many years.
+Added: If marketing approval is obtained, it will likely include post-marketing studies, and other post-marketing requirements, and surveillance such as Risk Evaluation and Mitigation Strategies, or REMS, which will require the expenditure of substantial resources beyond the proceeds we currently have on hand.
+Added: Furthermore, we are not permitted to market CTI-1601 in the United States or the EU until we receive approval of a BLA from the FDA or a MAA from the EMA, or in any other foreign countries until we receive the requisite marketing approval from such countries.
+Added: The development of drugs for Friedreich’s ataxia or other rare diseases may require initial nonclinical studies, early and usually smaller, clinical trials and randomized, double-blind placebo controlled long-term safety and efficacy trials in order to test the safety and efficacy of the drug.
+Added: CTI-1601 is currently in Phase 1 clinical trials in the United States and will require substantial further clinical development before we can submit a BLA to the FDA.
+Added: Development and/or regulatory programs for CTI-1601 in any countries other than the United States (such as a MAA to the EMA) is only in very preliminary stages and may require substantial further development in those countries prior to regulatory submissions seeking regulatory approval for marketing.
+Added: Even after successful completion of clinical trials, there is a risk that the FDA or other regulatory agencies may request further information from us, disagree with our findings or otherwise undertake a lengthy review of our submission.
+Added: The FDA and certain European regulatory authorities may delay, limit or deny testing or approval of CTI-1601 for many reasons, including, among others:
+Added: we may not be able to demonstrate that CTI-1601 is safe and effective to the satisfaction of the FDA or the EMA;
+Added: the results of our clinical trials may not meet the level of statistical or clinical significance required by the FDA or the EMA for marketing approval;
+Added: the FDA or the EMA may disagree with the number, design, size, duration, conduct or implementation of our clinical trials;
+Added: the FDA or the EMA may require that we conduct additional nonclinical studies or clinical trials;
+Added: the FDA or the EMA may not approve the formulation, manufacturing, labeling or specifications of CTI-1601;
+Added: the contract research organizations, or CROs, that we retain to conduct our clinical trials may take actions outside of our control that materially adversely impact our clinical trials;
+Added: the FDA or the EMA may find the data from nonclinical studies and clinical trials insufficient to demonstrate that CTI-1601’s clinical and other benefits outweigh its safety risks;
+Added: the FDA or the EMA may disagree with our interpretation of data from our nonclinical studies or clinical trials;
+Added: the FDA or the EMA may not accept data generated at our clinical trial sites;
+Added: if and when our BLA is submitted, the FDA could require an FDA advisory committee assessment, or the advisory committee may recommend against approval of our application or may recommend that the FDA require, as a condition of approval, additional nonclinical studies or clinical trials, limitations on approved labeling or distribution and use restrictions;
+Added: the FDA could require development of a REMS as a condition of approval or post-approval, or may not agree with our proposed REMS, or may impose additional requirements, including requirements that limit the promotion, advertising, distribution, or sales of CTI-1601;
+Added: the FDA or the EMA may find deficiencies with or not approve the manufacturing processes or facilities of third-party manufacturers with which we contract;
+Added: the FDA or the EMA may change their approval policies or adopt new regulations.
+Added: Any of these factors, many of which are beyond our control, could jeopardize our ability to obtain and/or maintain regulatory approval for and successfully market CTI-1601.
+Added: Any delay or failure in obtaining required approvals could have a material adverse effect on our business, financial condition and results of operations.
+Added: This process can take many years and will likely require the expenditure of substantial resources.
+Added: Of the large number of drugs in development in the United States, only a small percentage will successfully complete the FDA regulatory approval process and be commercialized.
+Added: It is possible that the FDA or other regulatory agencies will not approve any application that we submit.
+Added: It is possible that our product candidates may not obtain appropriate regulatory approvals necessary for us to commence clinical trials for our product candidates.
+Added: Accordingly, even if we are able to obtain the requisite financing to continue to fund our development and clinical trials, we cannot assure that CTI-1601, or any other of our potential product candidates will be successfully developed or commercialized.
+Added: We are subject to healthcare laws and regulations, and health information privacy and security laws, which could expose us to criminal sanctions, civil penalties, contractual damages, reputational harm and diminished profits and future earnings.
+Added: Healthcare providers, physicians and others will play a primary role in the recommendation and prescription of CTI-1601 or any potential product candidates, if approved.
+Added: Our future arrangements with third-party payors will expose us broadly to applicable fraud and abuse and other healthcare laws and regulations that may constrain the business or financial arrangements and relationships through which we market, sell and distribute CTI-1601 or potential product candidates, if we obtain marketing approval.
+Added: In addition, we may be subject to patient privacy regulation by both the federal government and the states or other countries in which we conduct our business.
+Added: Restrictions under applicable federal and state healthcare laws and regulations include the following:
+Added: the federal Anti-Kickback Statute prohibits, among other things, persons from knowingly and willfully soliciting, offering, receiving or paying remuneration, directly or indirectly, in cash or in kind, to induce or reward either the referral of an individual for, or the purchase, order or recommendation of, any good or service, for which payment may be made under federal healthcare programs such as Medicare and Medicaid;
+Added: the federal false claims laws impose criminal and civil penalties, including those from civil whistleblower or qui tam actions pursuant to the federal False Claims Act, against individuals or entities for knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false or fraudulent or making a false statement to avoid, decrease, or conceal an obligation to pay money to the federal government;
+Added: the federal Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act, or HIPAA, imposes criminal and civil liability for executing a scheme to defraud any healthcare benefit program and also imposes obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information;
+Added: the federal false statements statute prohibits knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement in connection with the delivery of or payment for healthcare benefits, items or services;
+Added: the federal transparency requirements, sometimes referred to as the “Sunshine Act,” under the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Affordability Reconciliation Act, or ACA, require manufacturers of drugs, devices, biologics, and medical supplies to report to the Department of Health and Human Services information related to physician payments and other transfers of value and physician ownership and investment interests;
+Added: federal consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harm consumers;
+Added: analogous state laws and regulations, such as state anti-kickback and false claims laws and transparency laws, may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers, and some state laws require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government in addition to requiring drug manufacturers to report information related to payments to physicians and other healthcare providers or marketing expenditures and drug pricing.
+Added: Ensuring that our future business arrangements with third parties comply with applicable healthcare laws and regulations could be costly.
+Added: It is possible that governmental authorities will conclude that our business practices do not comply with current or future statutes, regulations or case law involving applicable fraud and abuse or other healthcare laws and regulations.
+Added: If our operations, including anticipated activities to be conducted by our sales team, were found to be in violation of any of these laws or any other governmental regulations that may apply to us, we may be subject to significant civil, criminal and administrative penalties, damages, fines and exclusion from government funded healthcare programs, such as Medicare and Medicaid, any of which could substantially disrupt our operations and would materially adversely affect our business, financial condition and results of operations.
+Added: If any of the physicians or other providers or entities with whom we expect to do business is found not to be in compliance with applicable laws, they may be subject to criminal, civil or administrative sanctions, including exclusions from government funded healthcare programs.
+Added: Healthcare legislation, including potentially unfavorable pricing regulations or other healthcare reform initiatives may increase the difficulty and cost for us to obtain marketing approval of and commercialize our product candidates.
+Added: The commercial potential for our approved products, if any, could be affected by changes in healthcare spending and policy in the United States and abroad.
+Added: We operate in a highly regulated industry.
+Added: New laws, regulations or judicial decisions or new interpretations of existing laws, regulations or decisions, related to healthcare availability, the method of delivery or payment for healthcare products and services could adversely affect our business, operations and financial condition.
+Added: The United States and many foreign jurisdictions have enacted or proposed legislative and regulatory changes affecting the healthcare system that may affect our ability to profitably sell our product and product candidates, if approved.
+Added: The United States government, state legislatures and foreign governments also have shown significant interest in implementing cost-containment programs to limit the growth of government-paid healthcare costs, including price controls, restrictions on reimbursement and requirements for substitution of generic products for branded prescription drugs.
+Added: The Affordable Care Act was intended to broaden access to health insurance, reduce or constrain the growth of healthcare spending, enhance remedies against fraud and abuse, add transparency requirements for the healthcare and health insurance industries, impose new taxes and fees on the health industry and impose additional health policy reforms.
+Added: There have been significant ongoing administrative, executive and legislative efforts to modify or eliminate the Affordable Care Act.
+Added: For example, the Tax Act enacted on December 22, 2017, repealed the shared responsibility payment for individuals who fail to maintain minimum essential coverage under section 5000A of the Internal Revenue Code, commonly referred to as the individual mandate.
+Added: The Trump administration issued
+Added: executive orders which sought to reduce burdens associated with the Affordable Care Act and modified how it was implemented.
+Added: Other legislative changes have been proposed and adopted since the passage of the Affordable Care Act.
+Added: 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.
+Added: 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.
+Added: 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.
+Added: 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.
+Added: 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.
+Added: The Affordable Care Act has also been subject to challenges in the courts.
+Added: On December 14, 2018, a Texas U.S.
+Added: District Court Judge ruled that the Affordable Care Act is unconstitutional in its entirety because the “individual mandate” was repealed by Congress.
+Added: On December 18, 2019, the Fifth Circuit U.S.
+Added: Court of Appeals held that the individual mandate is unconstitutional and remanded the case to the Texas District Court to reconsider its earlier invalidation of the entire Affordable Care Act.
+Added: An appeal was taken to the U.S.
+Added: Supreme Court which heard oral arguments in the case on November 10, 2020.
+Added: A ruling is expected in 2021.
+Added: Further changes to and under the Affordable Care Act remain possible, although the new Biden administration 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.
+Added: President Biden indicated that he intends to use executive orders to undo changes to the Affordable Care Act made by the Trump administration and would advocate for legislation to build on the Affordable Care Act.
+Added: It is unknown what form any such changes or any law proposed to replace the Affordable Care Act would take, and how or whether it may affect our business in the future.
+Added: 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.
+Added: Any reduction in reimbursement from Medicare, Medicaid, or other government programs may result in a similar reduction in payments from private payers.
+Added: The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain and maintain profitability of our product and product candidates, if approved .
+Added: Even if approved, reimbursement policies could limit our ability to sell product candidates that we elect to sell on our own.
+Added: If approved by regulatory authorities, market acceptance and sales of product candidates that we elect to sell on our own will depend on reimbursement policies and may be affected by healthcare reform measures.
+Added: Government authorities and third-party payors, such as private health insurers and health maintenance organizations, decide which medications they will pay for and establish reimbursement levels for those medications.
+Added: Cost containment is a primary concern in the U.S.
+Added: healthcare industry and elsewhere.
+Added: Government authorities and these third-party payors have attempted to control costs by limiting coverage and the amount of reimbursement for particular medications.
+Added: We cannot be sure that reimbursement will be available for CTI-1601 or future product candidates that we elect to sell on our own and, if reimbursement is available, the level of such reimbursement.
+Added: Reimbursement may impact the demand for, or the price of, product candidates that we elect to.
+Added: If reimbursement is not available or is available only at limited levels, we may not be able to successfully commercialize product candidates that we elect to sell.
+Added: In some foreign countries, particularly in Canada and European countries, the pricing of prescription pharmaceuticals is subject to strict governmental control.
+Added: In these countries, pricing negotiations with governmental authorities can take six to 12 months or longer after the receipt of regulatory approval and product launch.
+Added: To obtain favorable reimbursement for the indications sought or pricing approval in some countries, we may be required to conduct a clinical trial that compares the cost-effectiveness of product candidates that we elect to sell on our own with other available therapies.
+Added: If reimbursement for product candidates that we elect to sell on our own is unavailable in any country in which we seek reimbursement, if it is limited in scope or amount, if it is conditioned upon our completion of additional clinical trials, or if pricing is set at unsatisfactory levels, our business, financial conditions and results of operations could be materially adversely affected.
+Added: Even if we obtain regulatory and marketing approval for a product candidate, our product candidates will remain subject to regulatory oversight.
+Added: Even if we receive marketing and regulatory approval for CTI-1601 or a future product candidate, regulatory authorities may still impose significant restrictions on the indicated uses or marketing or impose ongoing requirements for potentially costly post-approval studies.
+Added: CTI-1601 or future product candidates will also be subject to ongoing regulatory requirements for manufacturing, labeling, packaging, storage, advertising, promotion, sampling, record-keeping and submission of safety and other post-market information.
The FDA has significant post-market authority, including, for example, the authority to require labeling changes based on new safety information and to require post-market studies or clinical trials to evaluate serious safety risks related to the use of a drug.
−Removed: The FDA also has the authority to require, as part of an NDA or post-approval, the submission of a REMS.
−Removed: Any REMS required by the FDA may lead to increased costs to assure compliance with post-approval regulatory requirements and potential requirements or restrictions on the sale of approved products, all of which could lead to lower sales volume and revenue.
−Removed: Additionally, the FDA may require post-marketing studies and/or post-marketing requirements that could represent and result in additional restrictions and/or limitations for the product.
−Removed: Manufacturers of drug products and their facilities are subject to continual review and periodic inspections by the FDA and other regulatory authorities for compliance with cGMPs and other regulations.
−Removed: If we or a regulatory agency discover problems with any future product candidate, such as adverse events of unanticipated severity or frequency, or problems with the facility where any future product candidate is manufactured, a regulatory agency may impose restrictions on a product candidate, the manufacturer or us, including requiring withdrawal of any future product candidate from the market or suspension of manufacturing.
−Removed: If we or the manufacturing facilities for a product candidate fail to comply with applicable regulatory requirements, a regulatory agency may, among other things:
−Removed: issue warning letters or untitled letters;
−Removed: seek an injunction or impose civil or criminal penalties or monetary fines;
−Removed: suspend or withdraw marketing approval;
+Added: Any regulatory approvals that we receive for CTI-1601 may also be subject to a REMS, limitations on the approved indicated uses for which the product may be marketed or to the conditions of approval, or contain requirements for potentially costly post-marketing testing, including post-approval clinical trials, and surveillance to monitor the quality, safety and efficacy of the product, all of which could lead to lower sales volume and revenue.
+Added: For example, the holder of an approved BLA or NDA is obligated to monitor and report adverse events and any failure of a product to meet the specifications in the BLA or NDA.
+Added: The holder of an approved BLA or NDA also must submit new or supplemental applications and obtain FDA approval for certain changes to the approved product, product labeling or manufacturing process.
+Added: Advertising and promotional materials must comply with FDA rules and are subject to FDA review, in addition to other potentially applicable federal and state laws.
+Added: In addition, product manufacturers and their facilities are subject to payment of user fees and continual review and periodic inspections by the FDA and other regulatory authorities for compliance with cGMP requirements and adherence to commitments made in the BLA or NDA or foreign marketing application.
+Added: If we, or a regulatory authority, discover(s) previously unknown problems with a product, such as adverse events of unanticipated severity or frequency, or problems with the facility where the product is manufactured or disagrees with the promotion, marketing or labeling of that product, a regulatory authority may impose restrictions relative to that product, the manufacturing facility or us, including requiring recall or withdrawal of the product from the market or suspension of manufacturing.
+Added: If we or our contractors fail to comply with applicable regulatory requirements following approval of CTI-1601, a regulatory authority may:
+Added: issue a warning letter asserting that we are in violation of the law;
+Added: request voluntary product recalls;
+Added: seek an injunction or impose administrative, civil or criminal penalties or monetary fines;
+Added: suspend or withdraw regulatory approval;
suspend any ongoing clinical trials;
−Removed: refuse to approve pending applications or supplements to applications submitted by us;
−Removed: suspend or impose restrictions on operations, including costly new manufacturing requirements;
−Removed: seize or detain products, refuse to permit the import or export of products, or request that we initiate a product recall.
−Removed: The FDA’s policies may change and additional government regulations may be enacted.
+Added: refuse to approve a pending BLA or NDA or comparable foreign marketing application (or any supplements thereto) submitted by us or our strategic partners;
+Added: restrict the marketing or manufacturing of the product;
+Added: seize or detain the product or otherwise require the withdrawal of the product from the market;
+Added: refuse to permit the import or export of product candidates;
+Added: refuse to allow us to enter into supply contracts, including government contracts.
+Added: Any government investigation of alleged violations of law could require us to expend significant time and resources in response and could generate negative publicity.
+Added: The occurrence of any event or penalty described above may inhibit our ability to commercialize CTI-1601 and adversely affect our business, financial condition, results of operations and prospects.
+Added: In addition, the FDA’s policies, and those of equivalent foreign regulatory agencies, may change and additional government regulations may be enacted that could prevent, limit or delay regulatory approval of CTI-1601.
We cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative action, either in the United States or abroad.
−Removed: If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or are not able to maintain regulatory compliance, we may lose any marketing approval that may have been obtained and we may not achieve or sustain profitability, which would adversely affect our business.
+Added: If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing approval that we may have obtained and we may not achieve or sustain profitability, which would materially and adversely affect our business, financial condition, results of operations and prospects.
+Added: Even if we receive marketing approval for CTI-1601 in the United States, we may never receive regulatory approval to market CTI-1601 outside of the United States.
+Added: We may pursue marketing approval for CTI-1601 in the United States, the European Union and in other jurisdictions worldwide.
+Added: In order to market any product outside of the United States, we must establish and comply with the numerous and varying safety, efficacy and other regulatory requirements of other jurisdictions, including potential additional clinical trials and/or nonclinical studies.
+Added: Approval procedures vary among jurisdictions and can involve additional testing and additional administrative review periods.
+Added: The time required to obtain approvals in other jurisdictions might differ from that required to obtain FDA approval.
+Added: The marketing approval processes in other jurisdictions may implicate all of the risks detailed above regarding FDA approval in the United States as well as other risks.
+Added: In particular, in many countries outside of the United States, products must receive pricing and reimbursement approval before the product can be commercialized.
+Added: Obtaining this approval can result in substantial delays in bringing products to market in such countries.
+Added: Marketing approval in one jurisdiction does not necessarily ensure marketing approval in another, but a failure or delay in obtaining marketing approval in one country may have a negative effect on the regulatory process or commercial activities in others.
+Added: Failure to obtain marketing approval in other countries or any delay or other setback in obtaining such approval would impair our ability to market a product candidate in such foreign markets.
+Added: Any such impairment would reduce the size of our potential market, which could have a material adverse impact on our business, financial condition, results of operations and prospects.
Our future growth depends, in part, on our ability to penetrate foreign markets, where we would be subject to additional regulatory burdens and other risks and uncertainties.
−Removed: Our future profitability will depend, in part, on our ability to commercialize a product candidate in foreign markets for which we may rely on collaborations with third parties.
+Added: The prevalence of FA is estimated to be four times greater in the European Union than in the United States, and, therefore, represents our largest potential market for CTI-1601Our future profitability will depend, in part, on our ability to commercialize CTI-1601 and future product candidates in the European Union and other foreign markets for which we may rely on collaborations with third parties.
If we commercialize a product candidate in foreign markets, we would be subject to additional risks and uncertainties, including:
our customers’ ability to obtain reimbursement for a product candidate in foreign markets;
−Removed: our inability to directly control commercial activities because we are relying on third parties;
+Added: compliance with the Foreign Corrupt Practices Act of 1977, or FCPA;
+Added: our inability to directly control commercial activities because we may need to rely on third parties;
the burden of complying with complex and changing foreign regulatory, tax, accounting and legal requirements;
7 unchanged sentences
the interpretation of contractual provisions governed by foreign laws in the event of a contract dispute.
−Removed: Foreign sales of a product candidate could also be adversely affected by the imposition of governmental controls, political and economic instability, trade restrictions and changes in tariffs.
−Removed: We are subject to healthcare laws and regulations, and health information privacy and security laws, which could expose us to criminal sanctions, civil penalties, contractual damages, reputational harm and dimin ished profits and future earnings.
−Removed: Healthcare providers, physicians and others will play a primary role in the recommendation and prescription of any future product candidates, if approved.
−Removed: Our future arrangements with third party payors will expose us to broadly applicable fraud and abuse and other healthcare laws and regulations that may constrain the business or financial arrangements and relationships through which we market, sell and distribute our future product candidates, if any, and if we obtain marketing approval.
−Removed: In addition, we may be subject to patient privacy regulation by both the federal government and the states in which we conduct our business.
−Removed: Restrictions under applicable federal and state healthcare laws and regulations include the following:
−Removed: the federal Anti-Kickback Statute prohibits, among other things, persons from knowingly and willfully soliciting, offering, receiving or paying remuneration, directly or indirectly, in cash or in kind, to induce or reward either the referral of an individual for, or the purchase, order or recommendation of, any good or service, for which payment may be made under federal healthcare programs such as Medicare and Medicaid;
−Removed: the federal false claims laws impose criminal and civil penalties, including those from civil whistleblower or qui tam actions pursuant to the federal False Claims Act, against individuals or entities for knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false or fraudulent or making a false statement to avoid, decrease, or conceal an obligation to pay money to the federal government;
−Removed: the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, imposes criminal and civil liability for executing a scheme to defraud any healthcare benefit program and also imposes obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information;
−Removed: the federal false statements statute prohibits knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement in connection with the delivery of or payment for healthcare benefits, items or services;
−Removed: the federal transparency requirements, sometimes referred to as the “Sunshine Act,” under the Patient Protection and Affordable Care Act, require manufacturers of drugs, devices, biologics, and medical supplies to report to the Department of Health and Human Services information related to physician payments and other transfers of value and physician ownership and investment interests;
−Removed: HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, and their respective implementing regulations, which impose requirements on certain covered healthcare providers, health plans, and healthcare clearinghouses as well as their respective business associates that perform services for them that involve the use, or disclosure of, individually identifiable health information, relating to the privacy, security and transmission of individually identifiable health information;
−Removed: federal consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harm consumers;
−Removed: analogous state laws and regulations, such as state anti-kickback and false claims laws and transparency laws, may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers, and some state laws require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government in addition to requiring drug manufacturers to report information related to payments to physicians and other healthcare providers or marketing expenditures and drug pricing.
−Removed: Ensuring that our future business arrangements with third parties comply with applicable healthcare laws and regulations could be costly.
−Removed: It is possible that governmental authorities will conclude that our business practices do not comply with current or future statutes, regulations or case law involving applicable fraud and abuse or other healthcare laws and regulations.
−Removed: If our operations, including anticipated activities to be conducted by our sales team, were found to be in violation of any of these laws or any other governmental regulations that may apply to us, we may be subject to significant civil, criminal and administrative penalties, damages, fines and exclusion from government funded healthcare programs, such as Medicare and Medicaid, any of which could substantially disrupt our operations.
−Removed: If any of the physicians or other providers or entities with whom we expect to do business is found not to be in compliance with applicable laws, they may be subject to criminal, civil or administrative sanctions, including exclusions from government funded healthcare programs.
−Removed: In addition, regulators globally are also imposing greater monetary fines for privacy violations.
−Removed: For example, in 2016, the EU adopted a new regulation governing data practices and privacy c alled the General Data Protection Regulation, or GDPR, which became effective on May 25, 2018.
−Removed: The GDPR applies to any company established in the EU as well as to those outside the EU if they collect and use personal data in connection with the offering of goods or services to individuals in the EU or the monitoring of their behavior.
−Removed: The GDPR enhances data protection obligations for processors and controllers of personal data, including, for example, expanded disclosures about how personal information is t o be used, limitations on retention of information, mandatory data breach notification requirements and onerous new obligations on service providers.
−Removed: Non-compliance with the GDPR may result in monetary penalties of up to €20 million or 4% of worldwide reve nue, whichever is higher.
−Removed: The GDPR and other changes in laws or regulations associated with the enhanced protection of certain types of personal data, such as healthcare data or other sensitive information, could greatly increase our cost of providing our products and services or even prevent us from offering certain services in jurisdictions that we operate.
+Added: Sales in the EU and other foreign markets of a product candidate could also be adversely affected by the imposition of governmental controls, political and economic instability, trade restrictions and changes in tariffs.
+Added: If we are unable to establish sales and marketing capabilities or enter into agreements with third parties to market and sell CTI-1601, we may not be able to generate any revenue.
+Added: We do not currently have an established infrastructure for the sales, marketing and distribution of biologic or drug products in the United States or foreign countries.
+Added: In order to market a product candidate, if approved by the FDA or any other regulatory authority, we must build our sales, marketing, managerial and other non-technical capabilities or make arrangements with third parties to perform these services.
+Added: If we are unable to establish adequate sales, marketing and distribution capabilities, whether independently or with third parties, or if we are unable to do so on commercially reasonable terms, our business, results of operations, financial condition and prospects will be materially adversely affected.
+Added: Even if we receive marketing approval for CTI-1601, we may not achieve broad market acceptance, which would limit the revenue that we generate from our sales.
+Added: The commercial success of CTI-1601, if developed and approved for marketing by the FDA or EMA or other applicable regulatory authorities, will depend upon the market size for, and the awareness and acceptance of CTI-1601 among the medical community, including physicians, patients, advocacy groups and healthcare payors.
+Added: Market acceptance of CTI-1601, if approved, will depend on a number of factors, including, among others:
+Added: If the actual number of patients with Friedreich’s ataxia is lower than we believe;
+Added: the relative convenience and ease of subcutaneous injections as the necessary method of administration;
+Added: the prevalence and severity of any adverse side effects associated with CTI-1601;
+Added: limitations or warnings contained in the labeling approved for CTI-1601 by the FDA, EMA, or other regulatory authorities, such as a “black box” warning or if any approval that we obtain is based on a narrower definition of possible patient populations;
+Added: availability of alternative treatments, including any competitive Friedreich’s ataxia therapies in development that could be approved or commercially launched prior to approval of CTI-1601;
+Added: the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies;
+Added: the strength of marketing and distribution support and timing of market introduction of competitive products;
+Added: publicity concerning our products or competing products and treatments;
+Added: patient acceptance of the cost and inconvenience associated with refrigerated storage for CTI-1601;
+Added: payor acceptance;
+Added: increased political pressure on pharmaceutical pricing;
+Added: increased pressure on orphan drug pricing for affected patient groups;
+Added: the impact of any future changes in U.S.
+Added: healthcare, including medical financial assistance or a transition to a single-payer system;
+Added: the effectiveness of our sales and marketing strategies;
+Added: our ability to increase awareness of CTI-1601 through marketing efforts;
+Added: our ability to obtain sufficient third-party coverage or reimbursement;
+Added: the willingness or ability of patients to pay out-of-pocket in the absence of third-party coverage;
+Added: the likelihood that the FDA may require development of a REMS, as a condition of approval or post-approval or may not agree with our proposed REMS or may impose additional requirements that limit the promotion, advertising, distribution or sales of our product candidates.
+Added: If CTI-1601 is approved but does not achieve an adequate level of acceptance by patients, advocacy groups, physicians and payors, we may not generate sufficient revenue from CTI-1601 to become or remain profitable and our business, financial condition and results of operations could be materially adversely affected.
+Added: Our efforts to educate the medical community and third-party payors about the benefits of CTI-1601 may require significant resources and may never be successful.
The FDA and other regulatory agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses.
If we are found to have improperly promoted off-label uses, we may become subject to significant liability.
−Removed: The FDA and other regulatory agencies strictly regulate the promotional claims that may be made about prescription products.
−Removed: If we receive marketing approval for our future product candidates physicians may prescribe our product candidates, if any, to their patients in a manner that is inconsistent with the approved label.
+Added: The FDA and other regulatory agencies strictly regulate the promotional claims that may be made about prescription products, such as CTI-1601 or any potential product candidates, if approved.
+Added: If we receive marketing approval for CTI-1601, or any potential product candidates, physicians may prescribe our product candidates to their patients in a manner that is inconsistent with the approved label.
If we are found to have promoted such off-label uses, we may become subject to significant liability.
1 unchanged sentence
The FDA has also requested that companies enter into consent decrees or permanent injunctions under which specified promotional conduct is changed or curtailed.
−Removed: If we cannot successfully manage the promotion of our future product candidates, if approved, we could become subject to significant liability, which would materially adversely affect our business and financial condition.
−Removed: Even if approved, reimbursement policies could limit our ability to sell product candidates, if any, that we elect to sell on our own.
−Removed: If approved by regulatory authorities, market acceptance and sales of product candidates, if any, that we elect to sell on our own will depend on reimbursement policies and may be affected by healthcare reform measures.
−Removed: Government authorities and third party payors, such as private health insurers and health maintenance organizations, decide which medications they will pay for and establish reimbursement levels for those medications.
−Removed: Cost containment is a primary concern in the U.S.
−Removed: healthcare industry and elsewhere.
−Removed: Government authorities and these third party payors have attempted to control costs by limiting coverage and the amount of reimbursement for particular medications.
−Removed: We cannot be sure that reimbursement will be available for product candidates that we elect to sell on our own and, if reimbursement is available, the level of such reimbursement.
−Removed: Reimbursement may impact the demand for, or the price of, product candidates, if any, that we elect to sell on our own.
−Removed: If reimbursement is not available or is available only at limited levels, we may not be able to successfully commercialize product candidates that we elect to sell on our own.
−Removed: In some foreign countries, particularly in Canada and European countries, the pricing of prescription pharmaceuticals is subject to strict governmental control.
−Removed: In these countries, pricing negotiations with governmental authorities can take six to twelve months or longer after the receipt of regulatory approval and product launch.
−Removed: To obtain favorable reimbursement for the indications sought or pricing approval in some countries, we may be required to conduct a clinical trial that compares the cost-effectiveness of product candidates that we elect to sell on our own with other available therapies.
−Removed: If reimbursement for product candidates that we elect to sell on our own is unavailable in any country in which we seek reimbursement, if it is limited in scope or amount, if it is conditioned upon our completion of additional clinical trials, or if pricing is set at unsatisfactory levels, our operating results could be materially adversely affected.
−Removed: Recently enacted and future legislation may increase the difficulty and cost for us to obtain regulatory approval of and commercialize our future drug candidates, if any, and affect the prices we may obtain.
−Removed: The Affordable Care Act, or the ACA, has a significant impact on the healthcare industry.
−Removed: The ACA is a sweeping law intended to broaden access to health insurance, reduce or constrain the growth of healthcare spending, enhance remedies against fraud and abuse, add new transparency requirements for the healthcare and health insurance industries, impose new taxes and fees on the health industry and impose additional health policy reforms.
−Removed: The current presidential administration has indicated that enacting changes to the ACA is a legislative priority and has alternatively discussed repealing and replacing the ACA.
−Removed: While Congress has not passed repeal legislation to date, the 2017 Tax Reform Act includes a provision repealing the individual mandate, effective January 1, 2019.
−Removed: Further, on January 20, 2017, President Trump signed an Executive Order
−Removed: directing federal agencies with authorities and respon sibilities under the ACA to waive, defer, grant exemptions from, or delay the implementation of any provision of the ACA that would impose a fiscal burden on states or a cost, fee, tax, penalty or regulatory burden on individuals, healthcare providers, hea lth insurers, or manufacturers of pharmaceuticals or medical devices.
−Removed: On October 13, 2017, President Trump signed an Executive Order terminating the cost-sharing subsidies that reimburse insurers under the ACA.
−Removed: In addition, the Centers for Medicare and Med icaid Services, or CMS, has proposed regulations that would give states greater flexibility in setting benchmarks for insurers in the individual and small group marketplaces, which may have the effect of relaxing the essential health benefits required unde r the ACA for plans sold through these marketplaces.
−Removed: Congress will likely consider other legislation to replace elements of the ACA.
−Removed: We do not know at this time what implications these changes and other, proposed changes, if enacted, would have on the ACA’ s current requirements or on our future business.
−Removed: Changes to the ACA or other existing health care regulations could significantly impact our business and the pharmaceutical industry.
−Removed: Facilitated regulatory pathways, such as but not limited to Breakthrough Therapy Designation, Fast Track Designation, Regenerative Medicine Advanced Therapy Designation, Priority Review, Accelerated Approval, PRIME, or regulatory incentives, such as but not limited to orphan drug designation, are pathways and incentives that may not be accepted/granted, and even if granted for any of our future product candidates, may not lead to a faster development period, regulatory review or approval process, does not increase the likelihood that any of our future product candidates will receive marketing approval, and does not increase the likelihood of receiving benefits or exclusivities associated with any of these designations or pathways.
−Removed: We may seek one or more facilitated regulatory pathways in the US, EU or other countries for some of our future product candidates.
−Removed: None of these pathways change the standards for product approval in any country.
−Removed: These facilitated regulatory pathways may allow for increased interaction and communication between the health authorities (e.g., FDA and EMA) and the sponsor of clinical trials, may help to identify the most efficient path for clinical development while minimizing the number of patients placed in ineffective control regimens, and may allow for priority review and accelerated approval.
−Removed: Health authorities may not grant the requested designations, expedited pathways or other regulatory incentives.
−Removed: Even if granted, the receipt of the designations or the health authority support for expedited pathways or incentives may not result in a faster development process, review or approval compared to therapies considered for approval under conventional health authority procedures and does not guarantee approval in any country nor does it guarantee granting of any associated exclusivities or other benefits.
−Removed: In addition, even if one or more of our future product candidates qualify for any facilitated regulatory pathways or regulatory incentives, the health authority may later decide that such product candidates no longer meet the conditions for qualification, may decide that the time period for review or approval will not be shortened or may decide that the criteria for receiving exclusivity or other benefits were not adequately met.
−Removed: Our development programs for our future product candidates, if any, may require substantial financial resources and may ultimately be unsuccessful.
−Removed: Satisfaction of FDA and certain European regulatory requirements will entail substantial time, effort and financial resources.
−Removed: We may never satisfy these requirements.
−Removed: We believe that our cash, cash equivalents and marketable securities will be sufficient to fund operations for a period of at least one year from the issuance date of this Annual Report, but we will need to raise more funds to continue development and commercialization of our future product candidates, if any, which may not be easily available.
−Removed: Furthermore, we may never commence clinical trials of such development programs despite expending significant resources in pursuit of their development.
−Removed: If we do commence clinical trials of any future potential product candidates, such product candidates may never be approved by the FDA or other regulatory authorities.
−Removed: Risks Related to Our Financial Position and Need for Capital
−Removed: We have not generated any revenue from product sales.
−Removed: We have incurred significant operating losses since our inception and anticipate that we will incur continued losses for the foreseeable future.
−Removed: Biopharmaceutical product development is a highly speculative undertaking and involves a substantial degree of risk.
−Removed: Our operations to date have been limited primarily to organizing and staffing our company and conducting research and development activities for ZGN-1061, ZGN-1258, ZGN-1345, beloranib, ZGN-839 and additional MetAP2 inhibitors.
−Removed: We have never generated any revenue from product sales.
−Removed: We have not obtained regulatory approvals for any of our product candidates.
−Removed: Since our inception and until July 2016, we focused substantially all of our efforts and financial resources on developing beloranib, which was in Phase 3 clinical development for our lead indication of the treatment of hyperphagia and obesity in patients with PWS and Phase 2 clinical development for the treatment of obesity in patients with hypothalamic injury-associated obesity.
−Removed: In December 2015, the FDA put the beloranib IND application on full clinical hold.
−Removed: uncertaintie s, costs and risks associated with the development of beloranib, in July 2016, we suspended further development of beloranib and directed our efforts and financial resources to developing ZGN-1061.
−Removed: In October 2016, we suspended our development of ZGN-839 i n order to focus all of our resources to developing ZGN-1061 and the discovery and development of novel and highly differentiated MetAP2 inhibitors.
−Removed: In November 2018, we received a letter from the FDA placing a full clinical hold on our IND for the first U .S.
−Removed: clinical trial of ZGN-1061.
−Removed: The FDA cited the possibility of CV safety risks based on similar results seen in our prior compound.
−Removed: In July 2019, we reached agreement with the FDA on an in vivo animal study design and protocol to establish relevant safet y margins for ZGN-1061.
−Removed: The study was designed to translate the data from the our newly developed in vitro assays of human endothelial cells and assessment of tissue factor expression with endothelial cells, along with other supportive assays, as we worked toward resolving the full clinical hold.
−Removed: Based on the preliminary results from the in vivo study, on September 5, 2019, we announced that we believe there is a low probability of resolving the clinical hold in the near-term.
−Removed: Subsequently, all further deve lopment activities of MetAP2 inhibitors were halted and we withdrew the IND for ZGN-1061 in September 2019 .
−Removed: Therefore, we have determined that it is in the best interest of stockholders to expand our internal corporate development efforts and formally eval uate strategic alternatives.
−Removed: Following an extensive process of evaluating strategic alternatives and identifying and reviewing potential candidates for a strategic acquisition or other transaction, on December 17, 2019, we entered into an Agreement and Pla n of Merger, or the Merger Agreement, with Chondrial, pursuant to which a wholly owned subsidiary of the Company will merge with and into Chondrial, with Chondrial continuing as the surviving corporation and a wholly owned subsidiary of the Compan y and the combined publicly traded, clinical-stage biopharmaceutical company will operate under a new name, Larimar Therapeutics, Inc .
−Removed: We expect to devote significant time and resources to completion of this proposed transaction .
−Removed: We have funded our operations to date through proceeds from sales of redeemable convertible preferred stock, convertible debt and proceeds from our IPO and follow-on public offerings, and have incurred losses in each year since our inception.
−Removed: In July 2018, we sold 9,200,000 shares of our common stock at a price of $7.50 per share.
−Removed: Our net losses were $45.4 million for the year ended December 31, 2019 and $61.4 million for the year ended December 31, 2018.
−Removed: As of December 31, 2019, we had an accumulated deficit of $396.4 million.
−Removed: Substantially all of our operating losses resulted from costs incurred in connection with our development programs for ZGN-1061, ZGN-1258, ZGN-1345, beloranib, ZGN-839, early research activities, licensing milestone fees and from general and administrative costs associated with our operations.
−Removed: Our prior losses, combined with expected future losses, have had and will continue to have an adverse effect on our stockholders’ equity and working capital.
−Removed: In addition, if and when we obtain marketing approval for a future product candidate, we will incur significant sales, marketing and manufacturing expenses.
−Removed: We will continue to incur additional costs associated with operating as a public company.
−Removed: As a result, we expect to continue to incur significant operating losses for the foreseeable future.
−Removed: Because of the numerous risks and uncertainties associated with developing pharmaceutical products, we are unable to predict the extent of any future losses or when we will become profitable, if at all.
−Removed: Even if we do become profitable, we may not be able to sustain or increase our profitability on a quarterly or annual basis.
−Removed: Our ability to become profitable depends upon our ability to generate revenue.
−Removed: To date, we have not generated any revenue from any of our product candidates, and we do not know when, or if, we will generate any revenue.
−Removed: We do not expect to generate significant revenue unless and until we obtain marketing approval of, and begin to sell, our product candidates.
−Removed: Our ability to generate revenue depends on a number of factors, including, but not limited to, our ability to:
−Removed: initiate and successfully complete clinical trials that meet their clinical endpoints;
−Removed: successfully submit IND applications that go into effect with the FDA to initiate clinical trials for our future product candidates;
−Removed: initiate and successfully complete all safety studies required to obtain U.S.
−Removed: and foreign marketing approval for our future product candidates in the indications we are pursuing;
−Removed: commercialize our product candidates, if developed and approved, by developing a sales force or entering into collaborations with third parties;
−Removed: achieve market acceptance of our product candidates in the medical community and with third-party payors.
−Removed: Absent our entering into a collaboration or partnership agreement, we expect to incur significant sales and marketing costs when we prepare to commercialize our product candidates.
−Removed: Even if we initiate and successfully complete our clinical trials of our future product candidates, if any, and any product candidates are approved for commercial sale our product candidates, if any, may not be commercially successful drugs.
−Removed: Despite expending these costs.
−Removed: We may not achieve profitability soon after generating product sales, if ever.
−Removed: If we are unable to generate sufficient product revenue, we will not become profitable and may be unable to continue operations without continued funding.
−Removed: We will need to raise additional funding, which may not be available on acceptable terms, or at all.
−Removed: Failure to obtain this necessary capital when needed may force us to delay, limit or terminate our product development efforts or other operations.
−Removed: Developing drugs is expensive.
−Removed: Depending on the status of regulatory approval or, if approved, commercialization of any of our future product candidates, as well as the progress we make in selling any of our future product candidates, we will require additional capital to fund operating needs thereafter.
−Removed: We may also need to raise additional funds sooner if we choose to pursue additional indications and/or geographies for our future product candidates or otherwise expand more rapidly than we anticipate.
−Removed: As of December 31, 2019, our cash, cash equivalents and marketable securities were $70.3 million and we have a Term Loan with an outstanding principal balance of $14.5 million.
−Removed: The Term Loan is collateralized by substantially all of our personal property, other than our intellectual property.
−Removed: Additionally, we, as the borrower, are required to maintain a minimum unrestricted cash, cash equivalents and marketable securities balance at Silicon Valley Bank of no less than 105% of the total outstanding principal balance of the Term Loan, which as of December 31, 2019 and December 31, 2018 was $15.3 million and $21.0 million, respectively.
−Removed: Further, as part of the requirements of the Term Loan, we must maintain a balance of unrestricted cash, cash equivalents and marketable securities at Silicon Valley Bank in an amount not less than the greater of (i) $55.0 million and (ii) sixty-five percent (65%) of all of our cash, cash equivalents and marketable securities.
−Removed: If we do not meet this requirement it will not be considered an event of default provided we immediately secure 87.5% of the principal balance in a restricted cash account.
−Removed: There are negative covenants restricting our activities, including limitations on dispositions, mergers or acquisitions, encumbering or granting a security interest in our intellectual property, incurring indebtedness or liens, paying dividends, making certain investments, limiting the aggregate value of cash maintained by our Australian subsidiary not to exceed $4.0 million and certain other business transactions.
−Removed: The Term Loan also includes events of default, the occurrence and continuation of any of which provides the lenders the right to exercise remedies against us and the collateral securing the amounts due under the Term Loan, including cash in the amount of the outstanding balance.
−Removed: These events of default include, among other things, failure to pay any amounts due under the Term Loan, insolvency, the occurrence of a material adverse event, the occurrence of any default under certain other indebtedness and a final judgment against us in an amount greater than $0.3 million.
−Removed: We have estimated that the risk of subjective acceleration under the material adverse events clause is reasonably possible, however not probable and therefore have classified the outstanding principal in current and long-term liabilities based on contractually scheduled principal payments.
−Removed: However, the assessment of such probability of the debt holder calling the debt is subjective and their actions and/or our related assessment could change in the future, which in turn would impact the classification of the debt balances.
−Removed: We expect that our cash, cash equivalents and marketable securities will be sufficient to fund our current operations for a period of at least one year from the issuance date of this Annual Report.
−Removed: We expect to devote significant time and resources to completion of the proposed merger with Chondrial.
−Removed: However, there can be no assurance that such activities will result in the completion of the Merger.
−Removed: Further, the completion of the Merger ultimately may not deliver the anticipated benefits or enhance shareholder value.
−Removed: In addition, our operating plan may change as a result of many factors currently unknown to us, and we may need to seek additional funds sooner than planned, through public or private equity or debt financings, government or other third-party funding, marketing and distribution arrangements and other collaborations, strategic alliances and licensing arrangements or a combination of these approaches.
−Removed: In any event, we will require additional capital to obtain regulatory approval for, and to commercialize, our future product candidates.
−Removed: Raising funds in the current economic environment may present additional challenges.
−Removed: Even if we believe we have sufficient funds for our current or future operating plans, we may seek additional capital if market conditions are favorable or if we have specific strategic considerations.
−Removed: Any additional fundraising efforts may divert our management from their day-to-day activities, which may adversely affect our ability to develop and commercialize our future product candidates.
−Removed: In addition, we cannot guarantee that future financing will be available in sufficient amounts or on terms acceptable to us, if at all.
−Removed: Moreover, the terms of any financing may adversely affect the holdings or the rights of our stockholders and the issuance of additional securities, whether equity or debt, by us, or the possibility of such issuance, may cause the market price of our shares to decline.
−Removed: The sale of additional equity or convertible securities would dilute all of our stockholders.
−Removed: The incurrence of indebtedness would result in increased fixed payment obligations and we may be required to agree to certain restrictive covenants, such as limitations on our ability to incur additional debt, limitations on our ability to acquire, sell or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business.
−Removed: We could also be required to seek funds through arrangements with collaborative partners or otherwise at an earlier stage than otherwise would be desirable and we may be
−Removed: required to relinquish rights to some of our technologies or product candidate or otherwise agree to terms unfav orable to us, any of which may have a material adverse effect on our business, operating results and prospects.
−Removed: If we are unable to obtain funding on a timely basis, we may be required to significantly curtail, delay or discontinue one or more of our research or development programs or the commercialization of any product candidate or be unable to expand our operations or otherwise capitalize on our business opportunities, as desired, which could materially affect our business, financial condition and results of operations.
−Removed: Raising additional capital may cause dilution to our existing stockholders, restrict our operations or require us to relinquish rights.
−Removed: We may seek additional capital through a combination of private and public equity offerings, debt financings, collaborations and strategic and licensing arrangements.
−Removed: On July 2, 2018, we completed a public offering of our common stock, which resulted in the sale of 9,200,000 shares at a price of $7.50 per share, resulting in net proceeds of approximately $64.6 million after deducting underwriting discounts and commissions, as well as offering costs.
−Removed: On November 9, 2018, we entered into a sales agreement, or the Sales Agreement, with Cowen and Company, LLC, or Cowen, to sell shares of our common stock, with aggregate gross sales proceeds of up to $50.0 million, from time to time, through an at-the-market equity offering program under which Cowen will act as its sales agent.
−Removed: Through December 31, 2019 we have not sold any shares under the Sales Agreement.
−Removed: To the extent that we raise additional capital through the sale of common stock or securities convertible or exchangeable into common stock, a stockholder’s ownership interest in our company will be diluted.
−Removed: In addition, the terms of any such securities may include liquidation or other preferences that materially adversely affect the rights of our stockholders.
−Removed: Debt financing, if available, would increase our fixed payment obligations and may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends.
−Removed: If we raise additional funds through collaboration, strategic partnerships and licensing arrangements with third parties, we may have to relinquish rights to our future product candidates, our intellectual property, future revenue streams or grant licenses on terms that are not favorable to us.
+Added: If we cannot successfully manage the promotion of CTI-1601 or any potential product candidates, if approved, we could become subject to significant liability, which would materially adversely affect our business, financial condition and results of operations.
+Added: Competing technologies could emerge, adversely affecting our opportunity to generate revenue from the sale of CTI-1601.
+Added: The biotechnology and pharmaceutical industries are intensely competitive and subject to rapid and significant technological change.
+Added: Any new product that competes with an approved product may need to demonstrate compelling advantages in efficacy, convenience, tolerability and safety to be commercially successful.
+Added: Other competitive factors, including biosimilar and gene therapy competition, could force us to lower prices or could result in reduced sales.
+Added: In addition, new products developed by others could emerge as competitors to CTI-1601 or any other potential product candidates.
+Added: If we are not able to compete effectively against our current and future competitors, our business will not grow and our financial condition and results of operations will be adversely affected.
+Added: We may face competition from biosimilars and may face increasing competition over time.
+Added: We may face competition from biosimilars in both the United States and Europe, and over time we may face increasing biosimilar competition.
+Added: To the extent that governments adopt more permissive approval frameworks and competitors are able to obtain broader or expedited marketing approval for biosimilars, the rate of increased competition for our biologic drug products could accelerate.
+Added: Expiration or successful challenge of applicable patent rights could trigger such competition, and we could face more litigation regarding the validity and/or scope of our patents.
+Added: Our products may also experience greater competition from lower cost biosimilars or generics that come to market when branded products that compete with our products lose their own patent protection.
+Added: In the EU, the European Commission has granted marketing authorizations for biosimilars pursuant to a set of general and product class-specific guidelines for biosimilar approvals issued in 2005.
+Added: In addition, in an effort to spur biosimilar utilization and/or increase potential healthcare savings, some EU countries have adopted biosimilar uptake measures such as requiring physician prescribing quotas or promoting switching or pharmacy substitution of biosimilars for the corresponding reference products, and other countries may adopt similar measures.
+Added: Some EU countries may impose automatic price reductions upon market entry of the second or third biosimilar competitor.
+Added: In the United States, the ACA authorized the FDA to approve biosimilars via a separate, abbreviated pathway.
+Added: A growing number of companies have announced that they are in varying stages of development of biosimilar versions of existing biotechnology products.
+Added: Some companies pursuing development of biosimilars may challenge our patents well in advance of the expiration of our material patents.
+Added: pathway includes the option for biosimilar products meeting certain criteria to be approved as interchangeable with their reference products.
+Added: Some companies developing biosimilars may seek to register their products as interchangeable biologics, which could make it easier for prescribers or pharmacists to substitute those biosimilars for our products.
+Added: In addition, critics of the 12-year exclusivity period in the biosimilar pathway law will likely continue to seek to shorten the data exclusivity period and/or to encourage the FDA to interpret narrowly the law’s provisions regarding which new products receive data exclusivity.
+Added: While we are unable to predict the precise impact of biosimilars, we expect in the future for there to be greater competition in the United States as a result of biosimilars and downward pressure on product prices and sales.
+Added: This additional competition could have a material adverse effect on our business, financial condition and results of operations.
+Added: Risks Related to Our Business
+Added: If we are unable to manage expected growth in the scale and complexity of our operations, including attracting and hiring additional qualified management, our performance may suffer.
+Added: We are an early-stage clinical biotechnology company with a small number of employees, and our management systems currently in place are not likely to be adequate to support our future growth plans.
+Added: As a result, we are highly dependent on our management and scientific personnel.
+Added: The loss of the services of any of our executive officers, other key employees or consultants and other scientific advisors in the foreseeable future, might impede the achievement of our research, development and commercialization objectives.
+Added: We rely on consultants and advisors, including scientific, nonclinical, manufacturing and clinical advisors, to assist us in formulating our development and commercialization strategy.
+Added: These consultants and advisors may be employed by other employers and may have commitments under consulting or advisory contracts with other entities that may limit their availability to us.
+Added: The loss of the services of our executive officers or other key employees could impede the achievement of our research, development and commercialization objectives and seriously harm our ability to successfully implement our business strategy.
+Added: Furthermore, replacing executive officers and key employees may be difficult and may take an extended period of time because of the competition for talent, particularly with the limited number of individuals in our industry with the breadth of skills and experience required to successfully develop, gain regulatory approval of and commercialize products.
+Added: Recruiting and retaining qualified scientific, medical clinical, manufacturing, quality assurance, regulatory, legal, public company financial, business, sales, marketing and commercial personnel and implementing and improving our operational, financial and management systems will be critical to our ability to grow and succeed.
+Added: These demands also will require the hiring of additional executive or management-level personnel or the development of additional expertise by our senior management personnel.
+Added: Hiring a significant number of additional employees, particularly those at the executive or management level, would increase our expenses significantly.
+Added: In addition, we may not be able to attract and retain these personnel on acceptable terms given the competition among numerous pharmaceutical companies for similar personnel.
+Added: We also experience competition for the hiring of scientific personnel from universities and research institutions.
+Added: Moreover, delays or failures in clinical trials may also make it more challenging to recruit and retain qualified scientific personnel.
+Added: If we are unable to continue to attract and retain high quality personnel, our ability to pursue our business strategy will be limited and our business, financial condition and results of operations would be adversely affected.
+Added: Further, if we fail to expand and enhance our operational, financial and management systems in conjunction with potential future growth, such failure could have a material adverse effect on our business, financial condition and results of operations.
+Added: We may be unable to successfully implement these tasks on a larger scale and, accordingly, may not achieve our research, development, business and growth goals.
+Added: Our internal computer systems, or those of any contractors or consultants, may fail or suffer security breaches, which could result in a material disruption of our product development programs.
+Added: Despite the implementation of security measures, our internal computer systems and those of third parties with which we contract are vulnerable to damage from cyber-attacks, computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures.
+Added: Any system failure, accident or security breach that causes interruptions in our operations could result in a material disruption of our product development programs and business operations, in addition to possibly requiring substantial expenditures of resources to remedy.
+Added: For example, the loss of clinical trial data from completed clinical trials could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data.
+Added: To the extent that any disruption or security breach results in a loss or damage to our data or applications, or inappropriate disclosure of confidential or proprietary information, we may incur liabilities and the further development of our product candidates may be delayed.
+Added: In addition, we may not have adequate insurance coverage to provide compensation for any losses associated with such events.
+Added: We could be subject to risks caused by misappropriation, misuse, leakage, falsification or intentional or accidental release or loss of information maintained in the information systems and networks of our company, including personal information of our employees.
+Added: In addition, outside parties may attempt to penetrate our systems or those of our vendors or fraudulently induce our employees or employees of our vendors to disclose sensitive information in order to gain access to our data.
+Added: Like other companies, we may experience threats to our data and systems, including malicious codes and viruses, and other cyber-attacks.
+Added: The number and complexity of these threats continue to increase over time.
+Added: If a material breach of our security or that of our vendors occurs, the market perception of the effectiveness of our security measures could be harmed, we could lose business and our reputation and credibility could be damaged, all of which would materially adversely affect our business, financial condition and results of operations.
+Added: We could be required to expend significant amounts of money and other resources to repair or replace information systems or networks.
+Added: Although we develop and maintain systems and controls designed to prevent these events from occurring, the development and maintenance of these systems, controls and processes is costly and requires ongoing monitoring and updating as technologies change and efforts to overcome security measures become more sophisticated.
+Added: Moreover, despite our efforts, the possibility of these events occurring cannot be eliminated entirely.
+Added: We may acquire businesses or products, or form strategic alliances, in the future, and we may not realize the benefits of such acquisitions or alliances.
+Added: We may acquire additional businesses or products, form strategic alliances or create joint ventures with third parties that we believe will complement or augment our existing business.
+Added: If we acquire businesses with promising markets or technologies, we may not be able to realize the benefit of such transactions if we are unable to successfully integrate such businesses with our existing operations and company culture.
+Added: We may encounter numerous difficulties in developing, manufacturing and marketing any new products resulting from a strategic alliance or acquisition that delays or prevents us from realizing their expected benefits or enhancing our business.
+Added: We cannot be certain that, following any such transaction, we will achieve the expected synergies to justify the transaction and it could adversely affect our business, financial condition and results of operations.
+Added: We may seek to establish collaborations and, if we are not able to establish them on commercially reasonable terms, we may have to alter our development and commercialization plans or expand our internal efforts and growth.
+Added: Our development programs and the potential commercialization of our product candidates will require substantial additional cash to fund expenses.
+Added: For CTI-1601, and any future product candidates, we may decide to collaborate with pharmaceutical and biotechnology companies for the development and potential commercialization of those product candidates in some or all markets.
+Added: We face significant competition in seeking appropriate collaborators.
+Added: Whether we reach a definitive agreement for a collaboration for CTI-1601 or other potential product candidates will depend, among other things, upon our assessment of the collaborator’s resources and expertise, the terms and conditions of the proposed collaboration and the proposed collaborator’s evaluation of a number of factors.
+Added: Those factors may include the design or results of clinical trials, the likelihood of approval by the FDA or similar regulatory authorities outside the United States, the potential market for the applicable product candidate, the costs and complexities of manufacturing and delivering such product candidate to patients, the potential of competing products, the existence of uncertainty with respect to our ownership of technology, which can exist if there is a challenge to such ownership without regard to the merits of the challenge and industry and market conditions generally.
+Added: The collaborator may also consider alternative product candidates or technologies for similar indications that may be available to collaborate on and whether such collaboration could be more attractive than the one with us for our product candidate.
+Added: The terms of any collaboration or other arrangement that we may establish may not be favorable to us.
+Added: We may also be restricted under existing license agreements from entering into future agreements on certain terms with potential collaborators.
+Added: Collaborations are complex and time-consuming to negotiate and document.
+Added: In addition, there have been a significant number of recent business combinations among large pharmaceutical companies that have resulted in a reduced number of potential future collaborators.
+Added: We may not be able to negotiate collaborations on a timely basis, on acceptable terms, or at all.
+Added: If we are unable or unwilling to do so, we may have to curtail the development potential product candidates for which we are seeking to collaborate, reduce or delay our development program or one or more of our other development programs, delay potential commercialization in some or all markets or reduce the scope of any sales or marketing activities, or increase our expenditures and undertake development or commercialization activities at our own expense, including potentially increasing our infrastructure and investment outside the United States.
+Added: If we elect to increase our expenditures to fund development or commercialization activities on our own, we will need to obtain additional capital, which may not be available to us on acceptable terms or at all.
+Added: If we do not have sufficient funds, we may not be able to further develop our product candidates or bring them to market and generate product revenue.
+Added: In addition, such efforts may require diversion of a disproportionate amount of our attention away from other day-to-day activities and require devotion of a substantial amount of our time to managing these activities.
+Added: In addition, any future collaborations that we enter into may not be successful.
+Added: The success of our collaboration arrangements will depend heavily on the efforts and activities of our collaborators.
+Added: Collaborators generally have significant discretion in determining the efforts and resources that they will apply to these collaborations.
+Added: Disagreements between parties to a collaboration arrangement regarding clinical development and commercialization matters can lead to delays in the development process or commercializing the applicable product candidate and, in some cases, termination of the collaboration arrangement.
+Added: These disagreements can be difficult to resolve if neither of the parties has final decision-making authority.
+Added: Collaborations with pharmaceutical or biotechnology companies and other third parties often are terminated or allowed to expire by the other party.
+Added: Any such termination or expiration could adversely affect our business, financial condition, results of operations and could harm our business reputation.
+Added: We face risks related to health epidemics, including the ongoing COVID-19 pandemic, and other outbreaks of communicable diseases, which could significantly disrupt our operations and may materially and adversely affect our business and financial conditions.
+Added: Our business could be adversely impacted by the effects of the coronavirus or other epidemics.
+Added: In December 2019, a novel strain of the coronavirus, or COVID-19, emerged in China and the virus has now spread to almost every country, including the United States.
+Added: In an effort to halt the outbreak of COVID-19, governments of countries around the world have placed significant travel restrictions or advisories on travel within their respective borders and have instituted shelter-in-place policies that have led to extended business closures.
+Added: The extent to which the coronavirus and global efforts to contain its spread will impact our operations will depend on future developments, which are highly uncertain and cannot be predicted at this time, and include the duration, severity and scope of the outbreak and the actions taken to contain or treat the coronavirus outbreak.
+Added: The continued spread of the coronavirus globally could materially and adversely impact our operations, including without limitation, our manufacturing and supply chain for CTI-1601 and ongoing and planned clinical trials, which have faced, and could continue to face, enrollment difficulties as hospitals or clinical trials sites experience closures.
+Added: The pandemic resulted in the temporary stoppage of our Phase 1 clinical trials studying CTI-1601 in patients with Friedreich’s ataxia after the completion of two cohorts.
+Added: In July 2020, we resumed our Phase 1 clinical trials of CTI-1601.We are conducting the clinical trials at one clinical trial site in New Jersey.
+Added: Because Friedreich’s ataxia is a rare disease, there are a limited number of patients in close proximity to the clinical trial site and clinical trial patients travel from throughout the United States to the clinical trial site to participate.
+Added: The travel advisories and risk of infection related to COVID-19 have presented increased risks to patients traveling to our clinical trial site for dosing.
+Added: While top line results from the Phase 1 clinical trials were originally expected by the end of 2020, the delay in the clinical trial timeline caused by the ongoing impact of COVID-19 has resulted in top line results being delayed until the second quarter of 2021.
+Added: In addition, employee health and availability could be impacted, which may have a material and adverse effect on our business, financial condition and results of operations.
+Added: A significant outbreak of coronavirus could also result in widespread global health crisis that could adversely affect global economies and financial markets resulting in an economic downturn that could have a material adverse effect on our business and prospects.
+Added: Compliance with global privacy and data security requirements could result in additional costs and liabilities to us or inhibit our ability to collect and process data globally, and the failure to comply with such requirements could expose us to criminal sanctions, civil penalties, contractual damages, reputational harm, administrative burdens and diminished profits and future earnings.
+Added: The regulatory framework for the collection, use, safeguarding, sharing, transfer and other processing of information worldwide is rapidly evolving and is likely to remain uncertain for the foreseeable future.
+Added: Globally, virtually every jurisdiction in which we may operate has established its own data security and privacy frameworks with which we must comply.
+Added: For example, the European Union’s General Data Protection Regulation 2016/679, or GDPR, imposes strict obligations on the processing of personal data, including personal health data, and the free movement of such data.
+Added: The GDPR applies to any company established in the European Union as well as any company outside the European Union that processes personal data in connection with the offering of goods or services to individuals in the European Union or the monitoring of their behavior.
+Added: The GDPR enhances data protection obligations for processors and controllers of personal data, including, for example, obligations relating to:
+Added: processing health and other sensitive data;
+Added: obtaining consent of individuals;
+Added: providing notice to individuals regarding data processing activities;
+Added: responding to data subject requests;
+Added: taking certain measures when engaging third-party processors;
+Added: notifying data subjects and regulators of data breaches;
+Added: implementing safeguards to protect the security and confidentiality of personal data;
+Added: and transferring personal data to countries outside the European Union, including the United States.
+Added: The GDPR imposes additional obligations and risks upon our business and substantially increases the penalties to which we could be subject in the event of any non-compliance, including fines of up to €20 million or 4% of total worldwide annual revenue, whichever is higher.
+Added: The GDPR also confers a private right of action on data subjects and consumer associations to lodge complaints with supervisory authorities, seek judicial remedies and obtain compensation for damages.
+Added: Given the breadth and depth of changes in data protection obligations, if we are required to comply with the GDPR’s requirements, we will be required to spend significant time and resources to review our technologies, systems and practices, as well as those of any third-party service providers, contractors or consultants that process or transfer personal data collected in the European Union.
+Added: The GDPR and other changes in laws or regulations associated with the enhanced protection of certain types of sensitive data, such as healthcare data or other personal information from our clinical trials, could require us to change our business practices or lead to government enforcement actions, private litigation or significant fines and penalties against us, reputational harm and could have a material adverse effect on our business, financial condition or results of operations.
+Added: We face potential product liability exposure, and, if claims are brought against us, we may incur substantial liability.
+Added: The use of CTI-1601 and other potential product candidates in clinical trials, if any, and the sale of CTI-1601 and other potential product candidates, if developed and approved, exposes us to the risk of product liability claims.
+Added: Product liability claims might be brought against us by patients, healthcare providers or others selling or otherwise coming into contact with CTI-1601 or other potential product candidates.
+Added: For example, we may be sued if any product we develop allegedly causes injury or death or is found to be otherwise unsuitable during product testing, manufacturing, marketing or sale.
+Added: Any such product liability claims may include allegations of defects in manufacturing, defects in design, a failure to warn of dangers inherent in the product, including as a result of interactions with alcohol or other drugs, negligence, strict liability and a breach of warranties.
+Added: Claims could also be asserted under consumer protection acts in other jurisdictions.
+Added: If we become subject to product liability claims and cannot successfully defend ourselves against them, we could incur substantial liabilities.
+Added: In addition, regardless of merit or eventual outcome, product liability claims may result in, among other things:
+Added: withdrawal of patients from our clinical trials;
+Added: substantial monetary awards to patients or other claimants;
+Added: decreased demand for CTI-1601 or our other potential product candidates following marketing approval, if obtained;
+Added: damage to our reputation and exposure to adverse publicity;
+Added: increased FDA warnings on product labels;
+Added: voluntary product recalls, withdrawals, or labeling restrictions;
+Added: litigation costs;
+Added: distraction of management’s attention from our primary business;
+Added: loss of revenue;
+Added: the inability to successfully commercialize CTI-1601 or other potential product candidates, if approved.
+Added: We maintain product liability insurance coverage for our clinical trials with a $5 million aggregate coverage limit.
+Added: Nevertheless, our insurance coverage may be insufficient to reimburse us for any expenses or losses we may suffer.
+Added: Moreover, in the future, we may not be able to maintain insurance coverage at a reasonable cost or in sufficient amounts to protect us against losses, including if insurance coverage becomes increasingly expensive.
+Added: If we obtain marketing approval for CTI-1601 or other potential product candidates, we intend to expand our insurance coverage to include the sale of commercial products;
+Added: however, we may not be able to obtain this product liability insurance on commercially reasonable terms.
+Added: Large judgments have been awarded in class action lawsuits based on drugs that had unanticipated side effects.
+Added: The cost of any product liability litigation or other proceedings, even if resolved in our favor, could be substantial, particularly in light of the size of our business and financial resources.
+Added: A product liability claim or series of claims brought against us could cause our stock price to decline and, if we are unsuccessful in defending such a claim or claims and the resulting judgments exceed our insurance coverage, our financial condition, business, results of operations and prospects could be materially adversely affected.
+Added: Risks Related to Our Reliance on Third Parties
+Added: We have limited experience in conducting or supervising clinical trials and must outsource all clinical trials.
+Added: As a result, many important aspects of our drug development programs are outside of our direct control.
+Added: We have limited experience in conducting or supervising clinical trials that must be performed to obtain data to submit in concert with applications for approval by the FDA, the EMA or other comparable foreign regulatory authorities.
+Added: As a result, we expect to continue to rely on CROs, clinical data management organizations and consultants to design, conduct, supervise and monitor our nonclinical studies and clinical trials.
+Added: We and our CROs are required to comply with various regulations, including the FDA’s regulations commonly referred to as good clinical practices, or GCPs, which are enforced by regulatory agencies, including the FDA, and comparable foreign regulatory authorities to ensure the health, safety and rights of patients are protected in clinical development and clinical trials, and that trial data integrity is assured.
+Added: Regulatory authorities ensure compliance with these requirements through periodic inspections of trial sponsors, principal investigators and clinical trial sites.
+Added: Our expected reliance on third parties that we do not control does not relieve us of these responsibilities and requirements.
+Added: If we or any of our CROs fail to comply with applicable requirements, the clinical data generated in our clinical trials may be deemed unreliable and the FDA, EMA or other comparable foreign regulatory authorities may require us to perform additional clinical trials before approving our marketing applications.
+Added: We cannot assure you that upon inspection by a given regulatory authority, such regulatory authority will determine that any of our clinical trials comply with such requirements.
+Added: In addition, our clinical trials must be conducted with products produced under cGMP requirements, which mandate, among other things, the methods, facilities and controls used in manufacturing, processing and packaging of a drug product to ensure its safety and identity.
+Added: Failure to comply with these regulations may require us to repeat nonclinical studies and/or clinical trials, which would delay the regulatory approval process, and could also subject us to enforcement action, up to and including, civil and criminal penalties, which would materially adversely affect our business, financial condition and results of operations.
+Added: Our CROs are not our employees, and except for remedies available to us under our agreements with such CROs, we cannot control whether or not they devote sufficient time and resources to our ongoing clinical and preclinical programs.
+Added: If CROs do not successfully carry out their contractual duties or obligations or meet expected deadlines or if the quality or accuracy of the clinical data they obtain is compromised due to the failure to adhere to our clinical protocols, regulatory requirements or for other reasons, our clinical trials may be extended, delayed or terminated and we may not be able to obtain regulatory approval for or successfully commercialize our product candidates.
+Added: As a result, our operations and the commercial prospects for our product candidates would be harmed, our costs could increase and our ability to generate revenue could be delayed or reduced.
+Added: In addition, operations of our CROs could be affected by earthquakes, power shortages, telecommunications failures, water shortages, floods, hurricanes, typhoons, fires, extreme weather conditions, medical epidemics and other natural or man-made disasters or business interruptions.
+Added: If their facilities are unable to operate because of an accident or incident, even for a short period of time, some or all of our research and development programs may be harmed or delayed, and our operations and financial condition could suffer.
+Added: We have less direct control over the conduct, timing and completion of these clinical trials and the management of data developed through the clinical trials than would be the case if we were relying entirely upon our own staff.
+Added: Communicating with outside parties can also be challenging, potentially leading to mistakes as well as difficulties in coordinating activities.
+Added: These factors may materially adversely affect the willingness or ability of third parties to conduct our clinical trials and may subject us to unexpected cost increases that are beyond our control.
+Added: Nevertheless, we are responsible for ensuring that each of our clinical trials is conducted in accordance with the applicable protocol, legal and regulatory requirements and scientific standards, and our reliance on CROs does not relieve us of our regulatory responsibilities.
+Added: Because we have relied on third parties, our internal capacity to perform these functions is limited.
+Added: Outsourcing these functions involves risk that third parties may not perform to our standards, may not produce results in a timely manner or may fail to perform at all.
+Added: We currently have a small number of employees, which limits the internal resources we have available to engage new third-party providers, if necessary, and monitor existing third-party providers.
+Added: To the extent we are unable to engage new third-party providers, if necessary, and successfully manage the performance of third-party service providers in the future, our business may be adversely affected.
+Added: Though we carefully manage our relationships with CROs, there can be no assurance that we will not encounter similar challenges or delays in the future or that these delays or challenges will not have a material adverse impact on our business, financial condition, results of operation and prospects.
+Added: We rely on third-party supply and manufacturing partners for drug supplies for our research and development, nonclinical activities, and clinical activities, and may do the same for any commercial supplies of our product candidates.
+Added: We rely on third-party supply and manufacturing partners to supply the materials and components for, and manufacture, our research and development, nonclinical and clinical study drug substance and product.
+Added: We have not yet manufactured or formulated any product candidate on a commercial scale and may not be able to do so for any of our product candidates.
+Added: We will work to develop and optimize our manufacturing process;
+Added: however, we cannot be sure that the process will result in therapies that are safe, potent or effective.
+Added: We do not own manufacturing facilities or supply sources for such components, nonclinical and clinical study drug substance, product and materials, including devices that may be required for administration, but may develop these capabilities in the future.
+Added: There can be no assurance that our supply of research and development, nonclinical and clinical development of drugs and other materials will not be limited, interrupted, restricted in certain geographic regions or will be of satisfactory quality or continue to be available at acceptable prices.
+Added: In particular, replacement of any product formulation manufacturer we may engage could require significant effort and expertise because there may be a limited number of qualified replacements.
+Added: In the event that any of our suppliers or manufacturers fails to perform its obligations to us in relation to quality, timing or otherwise, or if our supply of components or other materials becomes limited or interrupted for other reasons, we may be forced to manufacture the materials ourselves, for which we currently do not have the capabilities or resources, or enter into an agreement with another third party, which we may not be able to do on reasonable terms, if at all.
+Added: In some cases, the technical skills or technology required to manufacture our product candidates may be unique or proprietary to the original manufacturer and we may have difficulty, or there may be contractual restrictions prohibiting us from, transferring such skills or technology to another third party and a feasible alternative may not exist.
+Added: These factors would increase our reliance on such manufacturer or require us to obtain a license from such manufacturer in order to have another third party manufacture our product candidates.
+Added: If we are required to change manufacturers for any reason, we will be required to verify that the new manufacturer maintains facilities and procedures that comply with quality standards and with all applicable regulations and guidelines.
+Added: The delays associated with the verification of a new manufacturer could negatively affect our ability to develop product candidates in a timely manner or within budget.
+Added: We also rely on third parties to store master and working cell banks.
+Added: We currently have one master cell bank and one working cell bank for CTI-1601 and believe we would have adequate backup should any cell bank be lost in a catastrophic event.
+Added: However, it is possible that we could lose multiple cell banks and have our manufacturing severely impacted by the need to replace the cell banks, which could materially and adversely affect our business, financial condition and results of operations.
+Added: We may rely on third party manufacturers if we receive regulatory approval for any product candidate.
+Added: To the extent that we have existing, or enter into future, manufacturing arrangements with third parties, we will depend on these third parties to perform their obligations in a timely manner consistent with contractual and regulatory requirements, including those related to quality control and assurance.
+Added: If we are unable to obtain or maintain third-party manufacturing for product candidates, or to do so on commercially reasonable terms, we may not be able to develop and commercialize our product candidates successfully.
+Added: Our or a third party’s failure to execute on our manufacturing requirements could adversely affect our business, financial condition and results of operations in a number of ways, including:
+Added: an inability to initiate or continue clinical trials of product candidates under development;
+Added: delay in submitting regulatory applications, or receiving regulatory approvals, for product candidates;
+Added: loss of the cooperation of a collaborator;
+Added: subjecting our product candidates to additional inspections by regulatory authorities;
+Added: requirements to cease distribution or to recall batches of our product candidates;
+Added: in the event of approval to market and commercialize a product candidate, an inability to meet commercial demands for our products.
+Added: We and our contract manufacturers are subject to significant regulation with respect to manufacturing our products.
+Added: The manufacturing facilities on which we rely may not continue to meet regulatory requirements and have limited capacity.
+Added: All entities involved in the preparation of therapeutics for clinical trials or commercial sale, including our existing contract manufacturers for CTI-1601, are subject to extensive regulation.
+Added: Some components of a finished therapeutic product approved for commercial sale or used in late-stage clinical trials must be manufactured in accordance with cGMP.
+Added: These regulations govern manufacturing processes and procedures (including record keeping) and the implementation and operation of quality systems to control and assure the quality of investigational products and products approved for sale.
+Added: Poor control of production processes can lead to the introduction of adventitious agents or other contaminants, or to inadvertent changes in the properties or stability of our product candidates that may not be detectable in final product testing.
+Added: We or our contract manufacturers must supply all necessary documentation in support of a BLA or NDA on a timely basis and where required, must adhere to the FDA’s or other regulator’s good laboratory practices, or GLPs, and cGMP regulations enforced by the FDA or other regulator through facilities inspection programs.
+Added: The facilities and quality systems of some or all of our third-party contractors must pass a pre-approval inspection for compliance with the applicable regulations as a condition of regulatory approval of CTI-1601 or any of our other potential products.
+Added: In addition, the regulatory authorities may, at any time, audit or inspect a manufacturing facility involved with the preparation of CTI-1601 or our other potential products or the associated quality systems for compliance with the regulations applicable to the activities being conducted.
+Added: If these facilities do not pass a pre-approval plant inspection, FDA or other regulatory approval of the products will not be granted.
+Added: The regulatory authorities also may, at any time following approval of a product for sale, audit the manufacturing facilities of our third-party contractors.
+Added: If any such inspection or audit identifies a failure to comply with applicable regulations or if a violation of our product specifications or applicable regulations occurs independent of such an inspection or audit, we or the relevant regulatory authority may require remedial measures that may be costly and/or time-consuming for us or a third party to implement and that may include the temporary or permanent suspension of a clinical trial or commercial sales or the temporary or permanent closure of a facility.
+Added: Any such remedial measures imposed upon us or third parties with whom we contract could materially harm our business.
+Added: If we or any of our third-party manufacturers fail to maintain regulatory compliance, the FDA or other regulators can impose regulatory sanctions including, among other things, refusal to approve a pending application for a biologic product, or revocation of a pre-existing approval.
+Added: As a result, our business, financial condition and results of operations may be materially harmed.
+Added: Additionally, if supply from one approved manufacturer is interrupted, there could be a significant disruption in commercial supply.
+Added: The number of manufacturers with the necessary manufacturing capabilities is limited.
+Added: In addition, an alternative manufacturer would need to be qualified through a BLA or NDA supplement or similar regulatory submission which could result in further delay.
+Added: The regulatory agencies may also require additional studies if a new manufacturer is relied upon for commercial production.
+Added: The delays associated with the verification of a new manufacturer could negatively affect our ability to develop product candidates in a timely manner or within budget.
+Added: These factors could also cause the delay of manufacturing development, clinical trials, regulatory submissions, required approvals or commercialization of CTI-1601 or any other product candidates, cause us to incur higher costs and prevent us from commercializing our products successfully.
+Added: Furthermore, if our suppliers fail to meet contractual requirements, and we are unable to secure one or more replacement suppliers capable of production at a substantially equivalent cost, our clinical trials may be delayed, or we could lose potential revenues.
+Added: Any of the above would materially adversely affect our business, financial condition and results of operations.
+Added: We enter into various contracts in the normal course of our business in which we indemnify the other party to the contract.
+Added: In the event we have to perform under these indemnification provisions, it could materially increase our costs and potential liability.
+Added: In the normal course of business, we periodically enter into academic, commercial, service, collaboration, licensing, consulting and other agreements that contain indemnification provisions.
+Added: With respect to our academic and other research agreements, we typically indemnify the institution and related parties from losses arising from claims relating to the products, processes or services made, used, sold or performed pursuant to the agreements for which we have secured licenses, and from claims arising from our or our sublicensees’ exercise of rights under the agreement.
+Added: With respect to our collaboration and contract service agreements, we indemnify our collaborators from any third-party product liability claims that could result from the production, use or consumption of the product, as well as for alleged infringements of any patent or other intellectual property right by a third party.
+Added: With respect to consulting agreements, we indemnify consultants from claims arising from the good faith performance of their consulting services.
+Added: Should our obligation under an indemnification provision exceed applicable insurance coverage or should we be denied insurance coverage, our business, financial condition and results of operations could be adversely affected.
+Added: Similarly, if we are relying on a collaborator to indemnify us and the collaborator is denied insurance coverage or the indemnification obligation exceeds the applicable insurance coverage, and if the collaborator does not have other assets available to indemnify us, our business, financial condition and results of operations could be adversely affected.
+Added: To the extent we are able to enter into collaborative arrangements or strategic alliances, we may be exposed to risks related to those collaborations and alliances.
+Added: Biotechnology companies sometimes become dependent upon collaborative arrangements or strategic alliances to complete the development and commercialization of product candidates.
+Added: If we elect to enter into collaborative arrangements or strategic alliances, these arrangements may place the development of our product candidates outside our control, may require us to relinquish important rights or may otherwise be on terms unfavorable to us, which could adversely affect our business, financial condition and results of operations.
+Added: Dependence on collaborative arrangements or strategic alliances would subject us to a number of risks, including the risk that:
+Added: we may not be able to control the amount and timing of resources that our collaborators may devote to the relevant product candidates;
+Added: our collaborators may experience financial difficulties;
+Added: we may be required to relinquish important rights, such as marketing and distribution rights;
+Added: business combinations or significant changes in a collaborator’s business strategy may also adversely affect a collaborator’s willingness or ability to complete its obligations under any arrangement;
+Added: a collaborator could independently move forward with a competing drug candidate developed either independently or in collaboration with others, including our competitors;
+Added: collaborative arrangements are often terminated or allowed to expire, which would delay the development and may increase the cost of developing our drug candidates.
Risks Related to Our Intellectual Property Rights
−Removed: If we are unable to adequately protect our proprietary technology or maintain issued patents which are sufficient to protect our future product candidates, if any, others could compete against us more directly, which would have a material adverse impact on our business, results of operations, financial condition and prospects.
−Removed: Because we expect to complete the proposed merger with Chondrial, we are not pursuing additional patents and are not continuing to maintain issued patents or other intellectual property rights in the United States and elsewhere directed to MetAP2 inhibitors.
+Added: If we are unable to adequately protect our proprietary technology or maintain issued patents which are sufficient to protect CTI-1601 or potential product candidates, third parties could compete against us more directly, which would have a material adverse impact on our business, results of operations, financial condition and prospects.
+Added: Our commercial success will depend in part on our success in obtaining and maintaining issued patents and other intellectual property rights in the United States and elsewhere and protecting our proprietary technology.
If we do not adequately protect our intellectual property and proprietary technology, competitors may be able to use our technologies and erode or negate any competitive advantage we may have, which could harm our business and ability to achieve profitability.
−Removed: As of February 29, 2020, we own thirty-eight issued U.S.
−Removed: patents, all of which relate to our internal efforts to discover and discover MetAP2 inhibitors.
+Added: With respect to our patent portfolio, we in-license from WFUHS certain issued U.S.
+Added: patents that relate to CTI-1601 and its use for treating Friedreich’s ataxia.
+Added: We also in-license from IU a pending international and a United States non-provisional application that relates to the composition of CTI-1601 and methods of use, and certain U.S.
+Added: patents relating to materials and methods of use relating to the development of CTI-1601.
+Added: We also own or co-own pending international and United States non-provisional applications and United States provisional applications relating to methods of use of CTI-1601, biomarkers and to our platform technology.
+Added: In some cases, we have only filed provisional patent applications on certain aspects of our technologies and each of these provisional patent applications is not eligible to become an issued patent until, among other things, we file a non-provisional patent application within 12 months of the filing date of the applicable provisional patent application.
+Added: Any failure to file a non-provisional patent application within this timeline could cause us to lose the ability to obtain patent protection for the inventions disclosed in the associated provisional patent applications.
+Added: With respect to both in-licensed and owned intellectual property, 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.
+Added: We cannot provide any assurances that any of our pending patent applications that mature into issued patents will include claims with a scope sufficient to protect CTI-1601, or other potential product candidates.
+Added: Other parties have developed technologies that may be related or competitive to our approach and may have filed or may file patent applications and may have received or may receive patents that may overlap or conflict with our patent applications, either by claiming the same methods or formulations or by claiming subject matter that could dominate our patent position.
The patent positions of biotechnology and pharmaceutical companies, including our patent position, involve complex legal and factual questions, and, therefore, the issuance, scope, validity and enforceability of any patent claims that we may obtain cannot be predicted with certainty.
5 unchanged sentences
Thus, any patents that we may own or exclusively license may not provide any protection against competitors.
−Removed: Furthermore, an adverse decision in an interference proceeding can result in a third party receiving the patent right sought by us, which in turn could affect our ability to develop, market or otherwise commercialize our future product candidates .
+Added: Furthermore, an adverse decision in an interference proceeding can result in a third party receiving the patent right sought by us, which in turn could affect our ability to develop, market or otherwise commercialize CTI-1601, and other potential product candidates.
Furthermore, though an issued patent is presumed valid and enforceable, its issuance is not conclusive as to its validity or its enforceability and it may not provide us with adequate proprietary protection or competitive advantages against competitors with similar products.
1 unchanged sentence
Other parties may develop and obtain patent protection for more effective technologies, designs or methods.
−Removed: The laws of some foreign countries do not protect our proprietary rights to the same extent as the laws of the United States, and we may encounter significant problems
−Removed: in protecting our proprietary rights in these countries.
+Added: The laws of some foreign countries do not protect our proprietary rights to the same extent as the laws of the United States, and we may encounter significant problems in protecting our proprietary rights in these countries.
If these developments were to occur, they could have a material adverse effect on our potential future sales.
6 unchanged sentences
Such proceedings could also provoke third parties to assert claims against us, including that some or all of the claims in one or more of our patents are invalid or otherwise unenforceable.
−Removed: If any of our patents covering our future product candidates , are invalidated or found unenforceable, our financial position and results of operations would be materially and adversely impacted.
−Removed: In addition, if a court found that valid, enforceable patents held by third parties covered our future product candidates , our financial position and results of operations would also be materially and adversely impacted.
+Added: If any of our patents covering CTI-1601 are invalidated or found unenforceable, our financial position and results of operations would be materially and adversely impacted.
+Added: In addition, if a court found that valid, enforceable patents held by third parties covered CTI-1601, our financial position and results of operations would also be materially and adversely impacted.
The degree of future protection for our proprietary rights is uncertain, and we cannot ensure that:
−Removed: any of our patents include claims having a scope sufficient to protect our future product candidates;
−Removed: we will be able to successfully develop and commercialize any future product candidates, if approved, before our relevant patents expire;
−Removed: we were the first to make the inventions covered by each of our patents;
+Added: any of our patents, or any of our pending patent applications, if issued, will include claims having a scope sufficient to protect CTI-1601 or any other products or product candidates;
+Added: any of our pending patent applications will issue as patents;
+Added: we will be able to successfully develop and, if approved, commercialize CTI-1601 before our relevant patents expire;
+Added: we were the first to make the inventions covered by each of our patents and pending patent applications;
we were the first to file patent applications for these inventions;
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we will develop additional proprietary technologies or product candidates that are separately patentable;
−Removed: that our commercial activities or products, if any, will not infringe upon the patents of others.
−Removed: We rely upon unpatented trade secrets, unpatented know-how and continuing technological innovation to develop and maintain our competitive position, which we seek to protect, in part, by confidentiality agreements with our employees and our collaborators and consultants.
+Added: that our commercial activities or products will not infringe upon the patents of others.
+Added: We rely upon unpatented trade secrets, unpatented know-how and continuing technological innovation to develop and maintain our competitive position, which we seek to protect, in part, by confidentiality agreements with our employees and consultants.
We also have agreements with our employees and selected consultants that obligate them to assign their inventions to us and have non-compete agreements with some, but not all, of our consultants.
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Further, our trade secrets could otherwise become known or be independently discovered by our competitors.
−Removed: We may infringe the intellectual property rights of others, which may prevent or delay our product development efforts and stop us from commercializing or increase the costs of commercializing any future product candidates, if approved.
+Added: If we are unable to adequately protect our proprietary technology or maintain issued patents which are sufficient to protect CTI-1601 or potential future product candidates, third parties could compete against us more directly, which would have a material adverse impact on our business, results of operations, financial condition and prospects.
+Added: Certain of the patents we license relating to CTI-1601 will expire by 2025 and we will lose our ability to rely upon the se patents to prevent competing products, which may impair our ability to generate revenue.
+Added: We have in-licensed certain patents relating to CTI-1601 from WFUHS.
+Added: patents relating to CTI-1601 and its use for the treatment of Friedreich’s ataxia expire in 2024 and 2025, respectively.
+Added: When these patents expire, we will be unable to use these patents to try to block others from marketing CTI-1601 in the United States We have also in-licensed an international and a United States non-provisional patent application relating to the composition of CTI-1601 and methods of use from IU, which, if issued as a patent, would expire at the earliest in 2040.
+Added: We cannot predict whether these 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.
+Added: When these various patents, if issued, expire, we will be unable to use the patents to try to block others from marketing CTI-1601 in the United States.
+Added: We own certain United States provisional applications and United States and international non-provisional applications relating to our platform technology which, if issued as patents, would be expected to expire in 2040-2041.
+Added: The provisional applications may not be timely converted into non-provisional applications, and we cannot predict whether these provisional applications and non-provisional patent applications will issue as patents in any particular jurisdiction, or whether the claims of any issued patents will provide sufficient protection from competitors or third parties for potential product candidates.
+Added: When these various patents expire, we will be unable to use the patents to try to block others from marketing products pertaining to our platform technology.
+Added: In addition, given the amount of time required for the development, testing, and regulatory review of new product candidates, patents protecting such product candidates might expire before or shortly after such product candidates are commercialized.
+Added: As a result, our intellectual property may not provide us with sufficient rights to exclude others from commercializing products similar or identical to ours.
+Added: Once our patents expire, we will be subject to competition from third parties who will be able to use the intellectual property covered by these patents, which could impair our ability to generate revenue and could adversely affect our business, financial condition and results of operations.
+Added: We may infringe the intellectual property rights of others, which may prevent or delay our product development efforts and stop us from commercializing or increase the costs of commercializing CTI-1601 or other potential product candidates, if approved.
Our success will depend in part on our ability to operate without infringing the intellectual property and proprietary rights of third parties.
−Removed: We cannot assure you that our business, products and methods do not or will not infringe the patents or other intellectual property rights of third parties.
+Added: We cannot ensure that our business, products and methods do not or will not infringe the patents or other intellectual property rights of third parties.
The pharmaceutical industry is characterized by extensive litigation regarding patents and other intellectual property rights.
−Removed: Other parties may allege that our future product candidates, if any, or the use of our technologies infringes patent claims or other intellectual property rights held by them or that we are employing their proprietary technology without authorization.
+Added: Third parties may allege that CTI-1601 or our other potential product candidates or the use of our technologies infringes patent claims or other intellectual property rights held by them or that we are employing their proprietary technology without authorization.
Patent and other types of intellectual property litigation can involve complex factual and legal questions, and their outcome is uncertain.
−Removed: Any claim relating to intellectual property infringement that is successfully asserted against us
−Removed: may require us to pay substantial damages, including treble damages and attorneys’ fees if we are found to be willfully infringing another party’s patents, for past use of the asserted intellectual property and royalties and other consideration going forward if we are forced to take a license.
−Removed: In addition, if any such claim were successfully as serted against us and we could not obtain such a license, we may be forced to stop or delay developing, manufacturing, selling or otherwise commercializing our future product candidates, if any.
+Added: Any claim relating to intellectual property infringement that is successfully asserted against us may require us to pay substantial damages, including treble damages and attorneys’ fees if we are found to be willfully infringing another party’s patents, for past use of the asserted intellectual property and royalties and other consideration going forward if we are forced to take a license.
+Added: In addition, if any such claim were successfully asserted against us and we could not obtain such a license, we may be forced to stop or delay developing, manufacturing, selling or otherwise commercializing CTI-1601.
Even if we are successful in these proceedings, we may incur substantial costs and divert management time and attention in pursuing these proceedings, which could have a material adverse effect on us.
3 unchanged sentences
In addition, intellectual property litigation or claims could force us to do one or more of the following:
−Removed: cease developing, selling or otherwise commercializing our future product candidates, if any;
−Removed: cease preparations or developing of any future product candidates;
+Added: cease developing, selling or otherwise commercializing CTI-1601;
+Added: cease preparations or development of our other potential product candidates;
pay substantial damages for past use of the asserted intellectual property;
3 unchanged sentences
We may be subject to claims challenging the inventorship or ownership of our patents and other intellectual property.
−Removed: We may also be subject to claims that former employees, collaborators or other third parties have an ownership interest in our patents or other intellectual property.
+Added: We may also be subject to claims that former employees or other third parties have an ownership interest in our patents or other intellectual property.
Litigation may be necessary to defend against these and other claims challenging inventorship or ownership.
If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights, such as exclusive ownership of, or right to use, valuable intellectual property.
−Removed: Such an outcome could have a material adverse effect on our business.
+Added: Such an outcome could have a material adverse effect on our business, financial condition and results of operations.
Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees.
Obtaining and maintaining our patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements.
−Removed: Patent and Trademark Office, or U.S.
−Removed: PTO, and various foreign governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other provisions during the patent process.
−Removed: There are situations in which noncompliance can result in abandonment or lapse of a patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction.
−Removed: In such an event, competitors might be able to enter the market earlier than would otherwise have been the case.
+Added: We have systems in place to remind us to pay periodic maintenance fees, renewal fees, annuity fees and various other patent and application fees, and we employ an outside law firm to pay these fees.
+Added: Patent and Trademark Office and various foreign governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other similar provisions during the patent application process.
+Added: We employ an outside law firm and other professionals to help us comply, and in many cases, an inadvertent lapse can be cured by payment of a late fee or by other means in accordance with the applicable rules.
+Added: However, there are situations in which noncompliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction.
+Added: If this occurs, our competitors may be able to enter the market, which would have a material adverse effect on our business.
We may be involved in lawsuits to protect or enforce our patents or the patents of our licensors, which could be expensive, time-consuming and unsuccessful.
−Removed: Competitors may infringe our patents or the patents of our licensors.
+Added: Competitors may infringe on our patents or the patents of our licensors.
To counter infringement or unauthorized use, we may be required to file infringement claims, which can be expensive and time-consuming.
−Removed: In addition, in an infringement proceeding, a court may decide that a patent of ours or our licensors is not valid, is unenforceable and/or is not infringed, or may refuse to stop the other party from using the technology at issue on the grounds that our patents do not cover the technology in question.
−Removed: An adverse result in any litigation or defense proceedings could put one or more of our patents at risk of being invalidated or interpreted narrowly and could put our patent applications at risk of not issuing.
+Added: In addition, in an infringement proceeding, a court may decide that a patent of our or our licensors is not valid, is unenforceable and/or is not infringed, or may refuse to stop the other party from using the technology at issue on the grounds that our patents do not cover the technology in question.
+Added: An adverse result in any litigation or defense proceedings could put one or more of our patents at risk of being invalidated or interpreted narrowly and could put our patent applications at risk of not issuing which could materially adversely affect our business, financial condition and results of operations.
Interference proceedings provoked by third parties or brought by us may be necessary to determine the priority of inventions with respect to our patents or patent applications or those of our licensors.
−Removed: An unfavorable outcome could require us to cease using the related technology or to attempt to license rights to it from the prevailing party.
−Removed: Our business could be
−Removed: harmed if the prevailing party does not offer us a license on commercially reasonable terms.
−Removed: Our defense of litigation or interference proceedings may fail and, even if successful, may resul t in substantial costs and distract our management and other employees.
−Removed: We may not be able to prevent, alone or with our licensors, misappropriation of our intellectual property rights, particularly in countries where the laws may not protect those rights as fully as in the United States.
+Added: An unfavorable outcome could require us to cease using the related technology or to attempt to license rights to us from the prevailing party.
+Added: Our business, financial condition and results of operations could be harmed if the prevailing party does not offer us a license on commercially reasonable terms.
+Added: Our defense of litigation or interference proceedings may fail and, even if successful, may result in substantial costs and distract our management and other employees.
+Added: We may not be able to prevent, alone or with our licensors, misappropriation of our intellectual property rights, particularly in countries where the laws may not protect those rights as fully as in the United States, which could adversely affect our business, financial condition and results of operations.
Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation.
There could also be public announcements of the results of hearings, motions or other interim proceedings or developments.
−Removed: If securities analysts or investors perceive these results to be negative, it could have a material adverse effect on the price of our common stock.
−Removed: Issued patents covering our future product candidates, if any, could be found invalid or unenforceable if challenged in court.
+Added: If investors perceive these results to be negative, it could have a material adverse effect on the price of our common stock.
+Added: Issued patents covering our product candidates could be found invalid or unenforceable if challenged in court.
If we or one of our licensing partners initiated legal proceedings against a third party to enforce a patent covering our product candidate, the defendant could counterclaim that the patent covering our product candidate is invalid and/or unenforceable.
7 unchanged sentences
The outcome following legal assertions of invalidity and unenforceability is unpredictable.
−Removed: With respect to validity, for example, we cannot be certain that there is no invalidating prior act, of which we and the patent examiner were unaware during prosecution.
+Added: With respect to validity, for example, we cannot ensure that there is no invalidating prior act, of which we and the patent examiner were unaware during prosecution.
If a defendant were to prevail on a legal assertion of invalidity and/or unenforceability, we would lose at least part, and perhaps all, of the patent protection on our product candidates.
−Removed: Such a loss of patent protection would have a material adverse impact on our business.
+Added: Such a loss of patent protection would have a material adverse impact on our business, financial condition, and results of operations.
We do not seek to protect our intellectual property rights in all jurisdictions throughout the world and we may not be able to adequately enforce our intellectual property rights even in the jurisdictions where we seek protection.
10 unchanged sentences
We may not prevail in any lawsuits that we initiate, and the damages or other remedies awarded, if any, may not be commercially meaningful.
−Removed: Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license.
−Removed: We are dependent on licensed intellectual property for certain early-stage product candidates.
−Removed: If we were to lose our rights to licensed intellectual property, we may not be able to continue developing or commercializing such product ca ndidates, if approved.
−Removed: We have an exclusive license with Children’s Medical Center Corporation, which we have elected to terminate in the first quarter of 2020, pursuant to which we exclusively licensed certain patent rights relating to decreasing the growth of fat tissue, on a worldwide basis.
−Removed: We may enter into additional licenses for third-party intellectual property that are necessary or useful to our business.
−Removed: Current or future licensors may also allege that we have breached our license agreement and may accordingly seek to terminate our license with them.
−Removed: In addition, current or future licensors may decide to terminate our license at will.
−Removed: If successful, this could result in our loss of the right to use the licensed intellectual property, which could materially adversely affect our ability to develop and commercialize a product candidate or product, if approved, as well as harm our competitive business position and our business prospects.
−Removed: We have not yet registered trademarks for a commercial trade name for our future product candidates, if any, and failure to secure such registrations could adversely affect our business.
−Removed: We have not yet registered trademarks for a commercial trade name for our future product candidates, if any.
+Added: Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license, which would materially adversely affect our business, financial condition and results of operations.
+Added: We are dependent on licensed intellectual property for CTI-1601.
+Added: If we were to lose our rights to licensed intellectual property, we may not be able to continue developing or commercializing CTI-1601, if approved.
+Added: We have an exclusive license with WFUHS, pursuant to which we exclusively license certain patent rights relating to the TAT-frataxin fusion protein and its use, on a worldwide basis.
+Added: We have an exclusive license with IU, pursuant to which we exclusively license certain patent rights relating to CTI-1601 and its use for the treatment of mitochondrial diseases, on a worldwide basis.
+Added: Our license agreements with WFUHS and IU impose, and we expect our future license agreements will impose, various development, diligence, commercialization, and other obligations on us in order to maintain the licenses.
+Added: In spite of our efforts, WFUHS, IU, or a future licensor might conclude that we have materially breached our obligations under such license agreements and seek to terminate the license agreements, thereby removing or limiting our ability to develop and commercialize products and technology covered by these license agreements.
+Added: If these licenses are terminated, or if the underlying patent rights licensed thereunder fail to provide the intended exclusivity, competitors or other third parties would have the freedom to seek regulatory approval of, and to market, products identical to ours and we may be required to cease our development and commercialization of certain of our product candidates or of CTI-1601.
+Added: Any of the foregoing could have a material adverse effect on our competitive position, business, financial conditions, results of operations, and prospects.
+Added: Moreover, disputes may arise regarding intellectual property subject to a licensing agreement, including:
+Added: the scope of rights granted under the license agreement and other interpretation-related issues;
+Added: the extent to which our technology and processes infringe on intellectual property of the licensor that is not subject to the licensing agreement;
+Added: the sublicensing of patent and other rights under our collaborative development relationships;
+Added: our diligence obligations under the license agreement and what activities satisfy those diligence obligations;
+Added: the inventorship and ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our licensors and us and our partners;
+Added: whether and the extent to which inventors are able to contest the assignment of their rights to our licensors;
+Added: the priority of invention of patented technology.
+Added: The agreements under which we currently license intellectual property or technology from third parties are complex, and certain provisions in such agreements may be susceptible to multiple interpretations.
+Added: The resolution of any contract interpretation disagreement that may arise could narrow what we believe to be the scope of our rights to the relevant intellectual property or technology or increase what we believe to be our financial or other obligations under the relevant agreement, either of which could have a material adverse effect on our business, financial condition, results of operations, and prospects.
+Added: Moreover, if disputes over intellectual property that we have licensed prevent or impair our ability to maintain our current licensing arrangements on commercially acceptable terms, we may be unable to successfully develop and commercialize CTI-1601, which could have a material adverse effect on our business, financial conditions, results of operations, and prospects.
+Added: Some intellectual property may have been discovered through government funded programs and thus may be subject to federal regulations such as “march-in” rights, certain reporting requirements and a preference for U.S.-based companies.
+Added: Compliance with such regulations may limit our exclusive rights, and limit our ability to contract with non-U.S.
+Added: manufacturers.
+Added: Our in-licensed patent rights from WFUHS and IU were funded in part by the U.S.
+Added: government and are therefore subject to certain federal regulations.
+Added: When new technologies are developed with U.S.
+Added: government funding, the U.S.
+Added: government generally obtains certain rights in any resulting patents, including a non-exclusive license authorizing the U.S.
+Added: government to use the invention or to have others use the invention on its behalf.
+Added: government’s rights may also permit it to disclose the funded inventions and technology to third parties and to exercise march-in rights to use or allow third parties to use the technology we have licensed that was developed using U.S.
+Added: government funding.
+Added: government may exercise its march-in rights if it determines that action is necessary because we fail to achieve practical application of the government-funded technology, or because action is necessary to alleviate health or safety needs, to meet requirements of federal regulations, or to give preference to U.S.
+Added: In addition, our rights in such inventions may be subject to certain requirements to manufacture products embodying such inventions in the United States in certain circumstances and if this requirement is not waived.
+Added: Any exercise by the U.S.
+Added: government of such rights or by any third party of its reserved rights could have a material adverse effect on our competitive position, business, financial condition, results of operations, and prospects.
+Added: We have not yet registered trademarks for a commercial trade name for CTI-1601 or other potential product candidates and failure to secure such registrations could adversely affect our business, financial condition and results of operations.
+Added: We have not yet registered trademarks for a commercial trade name for CTI-1601 or other potential product candidates.
Any future trademark applications may be rejected during trademark registration proceedings.
Although we would be given an opportunity to respond to those rejections, we may be unable to overcome such rejections.
−Removed: In addition, in the U.S.
−Removed: PTO and in comparable agencies in many foreign jurisdictions, third parties are given an opportunity to oppose pending trademark applications and to seek to cancel registered trademarks.
+Added: In addition, the U.S.
+Added: PTO and comparable agencies in many foreign jurisdictions give third parties an opportunity to oppose pending trademark applications and to seek to cancel registered trademarks.
Opposition or cancellation proceedings may be filed against our trademarks, and our trademarks may not survive such proceedings.
2 unchanged sentences
If the FDA objects to any of our proposed proprietary product names, we may be required to expend significant additional resources in an effort to identify a suitable substitute name that would qualify under applicable trademark laws, not infringe the existing rights of third parties and be acceptable to the FDA.
−Removed: If we do not obtain additional protection under the Hatch-Waxman Amendments and similar foreign legislation by extending the patent terms and obtaining data exclusivity for our future product candidates, our business may be materially harmed.
−Removed: Depending upon the timing, duration and specifics of development and FDA marketing approval of our future product candidates, if any, one or more of our U.S.
−Removed: patents may be eligible for limited patent term restoration under the Drug Price Competition and Patent Term Restoration Act of 1984, referred to as the Hatch-Waxman Amendments.
+Added: Any trademarks we have obtained or may obtain may be infringed or successfully challenged, resulting in harm to our business.
+Added: We expect to rely on trademarks as one means to distinguish any of our products that are approved for marketing from the products of our competitors.
+Added: Once we select new trademarks and apply to register them, our trademark applications may not be approved.
+Added: Third parties may oppose or attempt to cancel our trademark applications or trademarks, or otherwise challenge our use of the trademarks.
+Added: In the event that our trademarks are successfully challenged, we could be forced to rebrand our drugs, which could result in loss of brand recognition and could require us to devote resources to advertising and marketing new brands.
+Added: Our competitors may infringe our trademarks and we may not have adequate resources to enforce our trademarks.
+Added: If we do not obtain additional protection under the Hatch-Waxman Amendments and similar foreign legislation by extending the patent terms and obtaining data exclusivity for CTI-1601, our business may be materially harmed.
+Added: Depending upon the timing, duration and specifics of development and FDA marketing approval of CTI-1601 or our other potential product candidates, one or more of our U.S.
+Added: patents may be eligible for limited patent term restoration under the Drug Price Competition and Patent Term Restoration Act of 1984, or the Hatch-Waxman Amendments.
The Hatch-Waxman Amendments permit a patent restoration term of up to five years as compensation for patent term lost during product development and the FDA regulatory review process.
1 unchanged sentence
Moreover, the applicable time period or the scope of patent protection afforded could be less than we request.
−Removed: If we are unable to obtain patent term extension or restoration or the term of any such extension is less than we request, our competitors may obtain approval of competing products following our patent expiration, and our ability to generate revenues could be materially adversely affected.
+Added: If we are unable to obtain a patent term extension or restoration or the term of any such extension is less than we request, our competitors may obtain approval of competing products following our patent expiration, and our ability to generate revenues, business, financial condition and results of operations could be materially adversely affected.
+Added: Our proprietary rights may not adequately protect our technologies, which may adversely affect our position in the market, business, financial condition and results of operations.
+Added: We rely on unpatented trade secrets, know-how, and technology, which are difficult to protect, especially in the pharmaceutical industry, where much of the information about a product must be made public during the regulatory approval process.
+Added: We seek to protect trade secrets, in part, by entering into confidentiality agreements with employees, consultants and others.
+Added: These parties may breach or terminate these agreements or may refuse to enter into such agreements with us, and we may not have adequate remedies for such breaches.
+Added: Furthermore, these agreements may not provide meaningful protection for our trade secrets or other proprietary information or result in the effective assignment to us of intellectual property and may not provide an adequate remedy in the event of unauthorized use or disclosure of confidential information or other breaches of the agreements.
+Added: Despite our efforts to protect our trade secrets, we or our board members, employees, consultants, contractors or scientific and other advisors may unintentionally or willfully disclose our proprietary information to competitors.
+Added: If we fail to maintain trade secret protection, our competitive position may be adversely affected.
+Added: Competitors may also independently discover our trade secrets.
+Added: Enforcement of claims that a third party has illegally obtained and is using trade secrets is expensive, time consuming and uncertain.
+Added: If our competitors independently develop equivalent knowledge, methods and know-how, we would not be able to assert our trade secrets against them and our business, financial condition and results of operations could be harmed.
Changes in U.S.
2 unchanged sentences
Obtaining and enforcing patents in the biopharmaceutical industry involves both technological and legal complexity and is therefore costly, time consuming and inherently uncertain.
−Removed: Changes in either the patent laws or interpretation of the patent laws in the United States could increase the uncertainties and costs surrounding the prosecution of patent applications and the enforcement or defense of issued patents.
−Removed: Patent reform legislation in the United States and other countries, including the Leahy-Smith America Invents Act, or the Leahy-Smith Act, signed into law in September 2011, could increase those uncertainties and costs.
−Removed: The Leahy-Smith Act includes a number of significant changes to U.S.
−Removed: These include provisions that affect the way patent applications are prosecuted, redefine prior art and provide more efficient and cost-effective avenues for competitors to challenge the validity of patents.
−Removed: For example, the Leahy-Smith Act allows third-party submission of prior art to the U.S.
−Removed: PTO during patent prosecution and additional procedures to attack the validity of a patent by U.S.
−Removed: PTO administered post-grant proceedings, including post-grant review, inter partes review, and derivation proceedings.
−Removed: In addition, the Leahy-Smith Act has transformed the U.S.
−Removed: patent system from a “first-to-invent” system to a “first-to-file” system in which, assuming that other requirements for patentability are met, the first inventor to file
−Removed: a patent application will be entitled to the patent on an invention regardless of whether a third party was the first to invent the claimed invention.
−Removed: The first-to-file provisions, however, only became ef fective on March 16, 2013.
−Removed: Accordingly, it is not yet clear what, if any, impact the Leahy-Smith Act will have on the operation of our business.
−Removed: However, the Leahy-Smith Act and its implementation could make it more difficult to obtain patent protection fo r our inventions and increase the uncertainties and costs surrounding the prosecution of our or our collaboration partners’ patent applications and the enforcement or defense of our or our collaboration partners’ issued patents, all of which could harm our business, results of operations, financial condition and prospects.
+Added: Patent reform legislation could increase the uncertainties and costs surrounding the prosecution of patent applications and the enforcement or defense of issued patents.
+Added: The Leahy Smith America Invents Act, or the Leahy Smith Act, enacted in September 2011, brought significant changes to the U.S.
+Added: patent law system.
+Added: These include provisions that affect the way patent applications are prosecuted and may affect patent litigation.
+Added: The United States Patent Office continues to develop and implement new regulations and procedures to govern administration of the Leahy Smith Act, and many of the substantive changes to patent law associated with the Leahy Smith Act became effective on March 16, 2013.
+Added: The Leahy Smith Act and its implementation could increase the uncertainties and costs surrounding the prosecution of patent applications and the enforcement or defense of our issued patents, all of which could harm our business, results of operations, financial condition and prospects.
+Added: In addition, the U.S.
Supreme Court has ruled on several patent cases in recent years, either narrowing the scope of patent protection available in certain circumstances or weakening the rights of patent owners in certain situations.
4 unchanged sentences
PTO and the relevant law-making bodies in other countries, the laws and regulations governing patents could change in unpredictable ways that would weaken our ability to obtain new patents or to enforce our existing patents and patents that we might obtain in the future.
−Removed: We may be subject to damages resulting from claims that we or our employees have wrongfully used or disclosed alleged trade secrets of their former employers.
−Removed: Our employees have been previously employed, and may be employed in the future, at other biotechnology or pharmaceutical companies, including our competitors or potential competitors.
−Removed: Although we are not aware of any claims currently pending against us, we may be subject to claims that these employees or we have inadvertently or otherwise used or disclosed trade secrets or other proprietary information of the former employers of our employees.
+Added: We may be subject to damages resulting from claims that we or our employees have wrongfully used or disclosed alleged trade secrets of our employees’ former employers.
+Added: Our employees have been previously employed at other biotechnology or pharmaceutical companies, including our competitors or potential competitors.
+Added: Although we are not aware of any claims currently pending against us, we may be subject to claims that we or our employees inadvertently or otherwise used or disclosed the trade secrets or other proprietary information of our employees’ former employers.
Litigation may be necessary to defend against these claims.
1 unchanged sentence
If we fail in defending such claims, in addition to paying money claims, we may lose valuable intellectual property rights or personnel.
−Removed: A loss of key personnel or their work product could hamper or prevent our ability to develop and commercialize our future product candidates, which would materially adversely affect our business, financial condition and results of operations.
+Added: A loss of key personnel or their work product could hamper or prevent our ability to develop and commercialize CTI-1601 or our other potential product candidates, which would materially adversely affect our business, financial condition and results of operations.
+Added: Risks Related to Our Common Stock
+Added: Our stock price could be highly volatile, and purchasers of our common stock could incur substantial losses.
+Added: The market price of our common stock could be subject to significant fluctuations.
+Added: Market prices for securities of early-stage pharmaceutical, biotechnology, and other life sciences companies have historically been particularly volatile.
+Added: Some of the factors that may cause the market price of our common stock to fluctuate include:
+Added: Our ability to obtain regulatory approvals for product candidates, and delays or failures to obtain such approvals;
+Added: the results of current, and any future, nonclinical or clinical trials of CTI-1601 or any of our future product candidates;
+Added: the entry into, or termination of, key agreements, including key licensing or collaboration agreements;
+Added: the failure of CTI-1601 or any of our future product candidates, if approved for marketing and commercialization, to achieve commercial success;
+Added: issues in manufacturing our approved products, if any, or product candidates;
+Added: the initiation of material developments in, or conclusion of, disputes or litigation to enforce or defend any of our intellectual property rights or defend against the intellectual property rights of others;
+Added: announcements by commercial partners or competitors of new commercial products, clinical progress (or the lack thereof), significant contracts, commercial relationships, or capital commitments;
+Added: adverse publicity relating to our markets, including with respect to other products and potential products in such markets;
+Added: the introduction of technological innovations or new therapies competing with our potential products;
+Added: the loss of key employees;
+Added: general and industry-specific economic conditions potentially affecting our research and development expenditures;
+Added: changes in the structure of health care payment systems;
+Added: adverse regulatory decisions;
+Added: trading volume of our common stock;
+Added: period-to-period fluctuations in our financial results.
+Added: Moreover, the stock markets in general have experienced substantial volatility that has often been unrelated to the operating performance of individual companies or the biotechnology sector.
+Added: These broad market fluctuations may also adversely affect the trading price of our common stock.
+Added: In the past, following periods of volatility in the market price of a company’s securities, stockholders have often instituted class action securities litigation against those companies.
+Added: Such litigation, if instituted, could result in substantial costs and diversion of management’s attention and resources, which could significantly impact our profitability and reputation.
+Added: We must maintain effective internal controls over financial reporting, and if we are unable to do so, the accuracy and timeliness of our financial reporting may be adversely affected, which could have a material adverse effect on our business and stock price.
+Added: We must maintain effective internal control over financial reporting in order to accurately and timely report our results of operations and financial condition.
+Added: In addition, as a public company, the Sarbanes-Oxley Act requires, among other things, that we assess the effectiveness of our disclosure controls and procedures quarterly and the effectiveness of our internal control over financial reporting at the end of each fiscal year.
+Added: The rules governing the standards that must be met for our management to assess our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act are complex and require significant documentation, testing and possible remediation.
+Added: These stringent standards require that our audit committee be advised and regularly updated on management’s review of internal control over financial reporting.
+Added: Our management may not be able to effectively and timely implement controls and procedures that adequately remediate our material weaknesses and respond to the increased regulatory compliance and reporting requirements that are applicable to us as a public company.
+Added: If we fail to staff our accounting, finance and information technology functions adequately or maintain internal control over financial reporting adequate to meet the demands that are placed upon us as a public company, including the requirements of the Sarbanes-Oxley Act, or to otherwise remediate our existing or any future material weaknesses in internal control over financial reporting, or identify any additional material weaknesses, our business and reputation may be harmed and our stock price may decline.
+Added: Furthermore, investor perceptions of us may be adversely affected, which could cause a decline in the market price of our common stock.
+Added: Ownership of our common stock is highly concentrated, and it may prevent other stockholders from influencing significant corporate decisions.
+Added: Entities affiliated with Deerfield Management Company beneficially own or control approximately 32.2% of our outstanding common stock (assuming full exercise of our outstanding pre-funded warrants and no exercise of outstanding options) as of December 31, 2020, on a fully-diluted basis.
+Added: Accordingly, such entities have substantial influence over the outcome of a corporate action by us requiring stockholder approval, including the election of directors, any merger, consolidation or sale of all or substantially all of our assets or any other significant corporate transaction.
+Added: These stockholders also may exert influence in delaying or preventing a change in control of the combined company, even if such change in control would benefit our other stockholders.
+Added: We are a smaller reporting company.
+Added: We cannot be certain whether the reduced disclosure requirements applicable to smaller reporting companies will make our common shares less attractive to investors or otherwise limit our ability to raise additional funds.
+Added: We are currently a “smaller reporting company” as defined in the Securities Exchange Act of 1934, as amended, or the Exchange Act, and have elected to take advantage of certain of the scaled disclosures available to smaller reporting companies, including simplified executive compensation disclosures in our filings, exemption from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that an independent registered accounting firm provide an attestation report on the effectiveness of internal control over financial reporting and certain other decreased disclosure obligations in our SEC filings, including, among other things, only being required to provide two years of audited financial statements in annual reports.
+Added: Reduced disclosure in our SEC filings due to our status as a smaller reporting company may make it harder for investors to analyze our results of operations and financial prospects.
+Added: We cannot predict whether investors will find our common stock less attractive because of our reliance on any of these exemptions.
+Added: If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.
+Added: Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of us more difficult and may prevent attempts by our stockholders to replace or remove our management.
+Added: Provisions in our certificate of incorporation and bylaws may delay or prevent an acquisition or a change in management.
+Added: These provisions include a classified board of directors, a prohibition on actions by written consent of our stockholders, and the ability of the board of directors to issue preferred stock without stockholder approval.
+Added: In addition, because we are in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporations Law, or DGCL, which prohibits stockholders owning in excess of 15% of our outstanding voting stock from merging or combining with us.
+Added: Although we believe these provisions collectively will provide for an opportunity to receive higher bids by requiring potential acquirers to negotiate with our board of directors, they would apply even if the offer may be considered beneficial by some stockholders.
+Added: In addition, these provisions may frustrate or prevent any attempts by our stockholders to replace or remove then current management by making it more difficult for stockholders to replace members of the board of directors, which is responsible for appointing the members of management.
+Added: We do not anticipate that we will pay any cash dividends in the foreseeable future.
+Added: The current expectation is that we will retain our future earnings to fund the development and growth of our business.
+Added: As a result, capital appreciation, if any, of our common stock will be stockholders’ sole source of gain, if any, for the foreseeable future.
+Added: General Risk Factors
+Added: Our failure to meet the continued listing requirements of The Nasdaq Stock Market LLC could result in a delisting of our Common Stock.
+Added: If we fail to satisfy the continued listing requirements of The Nasdaq Stock Market LLC, or Nasdaq, such as the corporate governance requirements or the minimum closing bid price requirement, Nasdaq may take steps to delist our common stock.
+Added: Such a delisting would likely have a negative effect on the price of our common stock and would impair your ability to sell or purchase shares of common stock when you wish to do so.
+Added: In the event of a delisting, we can provide no assurance that any action taken by us to restore compliance with listing requirements would allow the common stock to become listed again, stabilize the market price or improve the liquidity of the common stock, prevent the common stock from dropping below the Nasdaq minimum bid price requirement or prevent future noncompliance with Nasdaq’s listing requirements.
+Added: Financial reporting obligations of being a public company in the United States are expensive and time-consuming, and our management will be required to devote substantial time to new compliance matters.
+Added: The obligations of being a public company in the United States requires significant expenditures and will place significant demands on our management and other personnel, including costs resulting from public company reporting obligations under the Securities Exchange Act of 1934, as amended, and the rules and regulations regarding corporate governance practices, including those under the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, or the Dodd-Frank Act, and the listing requirements of Nasdaq on which our securities are listed.
+Added: These rules require the establishment and maintenance of effective disclosure and financial controls and procedures, internal control over financial reporting and changes in corporate governance practices, among many other complex rules that are often difficult to implement, monitor and maintain compliance with.
+Added: Moreover, despite recent reforms made possible by the Tax Act, the reporting requirements, rules, and regulations will make some activities more time-consuming and costly.
+Added: As a result, our management and other personnel will need to devote a substantial amount of time to remedy the identified material weaknesses and otherwise ensure that we comply with all of these requirements and to keep pace with new regulations, otherwise we may fall out of compliance and risk becoming subject to litigation or being delisted, among other potential problems.
+Added: Our employees may engage in misconduct or other improper activities, including violating applicable regulatory standards and requirements or engaging in insider trading, which could significantly impact our business.
+Added: We are exposed to the risk of employee fraud or other misconduct.
+Added: Misconduct by employees could include intentional failures to comply with the regulations of the FDA and applicable non-U.S.
+Added: regulators, provide accurate information to the FDA and applicable non-U.S.
+Added: regulators, comply with healthcare fraud and abuse laws and regulations in the United States and abroad, report financial information or data accurately or disclose unauthorized activities to us.
+Added: Employees may also unintentionally or willfully disclose our proprietary and/or confidential information to competitors.
+Added: In particular, sales, marketing and business arrangements in the healthcare industry are subject to extensive laws and regulations intended to prevent fraud, misconduct, kickbacks, self-dealing and other abusive practices.
+Added: These laws and regulations restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other business arrangements.
+Added: Employee misconduct could also involve the improper use of, including trading on, information obtained in the course of clinical trials, which could result in regulatory sanctions and serious harm to our reputation.
+Added: We have adopted a code of conduct, but it is not always possible to identify and deter employee misconduct, and the precautions we take to detect and prevent this activity may be ineffective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to comply with these laws or regulations.
+Added: If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including the imposition of significant fines or other sanctions.
+Added: Unfavorable global economic conditions could adversely affect our business, financial condition or results of operations.
+Added: Our results of operations could be adversely affected by general conditions in the global economy and in the global financial markets.
+Added: A severe or prolonged economic downturn, including due to the impact of any potential new outbreaks related to the COVID-19 pandemic, could result in a variety of risks to our business, including, weakened demand for our product candidates and our ability to raise additional capital when needed on acceptable terms, if at all.
+Added: A weak or declining economy could also strain our suppliers, possibly resulting in supply disruption, or cause our customers to delay making payments for our services.
+Added: Any of the foregoing could harm our business and we cannot anticipate all of the ways in which the current economic climate and financial market conditions could adversely impact our business.
UNRESOLVED STAFF COMMENTS
−Removed: Not applicable.
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.