4 unchanged sentences
If that happens, the trading price of our common stock could decline and you may lose part or all of the value of any of our shares held by you.
−Removed: Risks Related to Our Business
+Added: Risks Relating to Our Business
We have limited operating history, we have incurred significant operating losses since inception and we expect to incur significant operating losses for the foreseeable future.
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If we are unable to obtain regulatory approval for and successfully commercialize resmetirom, or we experience significant delays in doing so, our business will be materially harmed.
−Removed: The primary focus of our product development since mid- 2018 has been resmetirom, a liver-directed selective thyroid hormone receptor beta agonist for potential use in non-alcoholic
−Removed: steatohepatitis, or NASH.
+Added: The primary focus of our product development since mid- 2018 has been resmetirom, a liver-directed selective thyroid hormone receptor beta agonist for potential use in non-alcoholic steatohepatitis, or NASH.
Successful continued development and ultimate regulatory approval of resmetirom for NASH is critical to the future success of our business.
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other differences in the design of our ongoing and planned Phase 3 clinical trials of the treatment of NASH, including the use of a new tablet formulation of resmetirom and/or the inclusion of patients with more advanced NASH, could cause the results of our Phase 3 trials to be less favorable than the results we observed in our Phase 2 trials in NASH;
−Removed: if we obtain Subpart H approval of resmetirom based on a surrogate endpoint, consistent with our ongoing Phase 3 trial, we will be required to conduct a post-approval clinical outcomes trial to confirm the clinical benefit of the product candidate and if the post-approval trial is not successful we may not be able to continue marketing the product;
−Removed: we cannot be certain of the number and type of clinical trials and non-clinical
−Removed: studies that FDA or other regulatory agencies will require in order to approve resmetirom for NASH;
−Removed: if approved for NASH, resmetirom will likely compete with the off-label
−Removed: use of currently marketed products and other therapies in development that may reach approval for NASH prior to resmetirom;
+Added: if we obtain Subpart H approval of resmetirom based on a surrogate endpoint, consistent with our ongoing Phase 3 trial, we will be required to conduct a post-approval clinical outcomes trial under conditions set by FDA to confirm the clinical benefit of the product candidate and if the post-approval trial is not successful we may not be able to continue marketing the product;
+Added: we cannot be certain of the number and type of clinical trials and non-clinical studies that FDA or other regulatory agencies will require in order to approve resmetirom for NASH;
+Added: if approved for NASH, resmetirom will likely compete with the off-label use of currently marketed products and other therapies in development that may reach approval for NASH prior to resmetirom;
we may not be able to obtain, maintain or enforce our patents and other intellectual property rights.
We could also encounter delays if a clinical trial is placed on clinical hold, suspended or terminated by us, the IRBs of the institutions in which such trials are being conducted, or the FDA, the competent authorities and/or ethics committees of the EU Member States or other regulatory authorities, if a clinical trial is recommended for suspension or termination by the Data Safety Monitoring Board, or DSMB, for such trial, or on account of changes to federal, state, or local laws.
−Removed: A suspension or termination may be imposed due to a number of factors, including failure to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols, inspection of the clinical trial operations or trial site by the FDA, EMA, competent authorities and/or ethics committees of the EU Member States or other regulatory authorities resulting in the imposition of a clinical hold,
−Removed: unforeseen safety issues or adverse side effects, failure to demonstrate a benefit from using a product or treatment, failure to establish or achieve clinically meaningful trial endpoints, changes in governmental regulations or administrative actions or lack of adequate funding to continue the clinical trial.
+Added: A suspension or termination may be imposed due to a number of factors, including failure to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols,
+Added: inspection of the clinical trial operations or trial site by the FDA, EMA, competent authorities and/or ethics committees of the EU Member States or other regulatory authorities resulting in the imposition of a clinical hold, unforeseen safety issues or adverse side effects, failure to demonstrate a benefit from using a product or treatment, failure to establish or achieve clinically meaningful trial endpoints, changes in governmental regulations or administrative actions or lack of adequate funding to continue the clinical trial.
Many of the factors that cause, or lead to, a delay in the commencement or completion of clinical trials may also ultimately lead to the denial of regulatory approval of our product candidates.
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Drug development has inherent risk.
−Removed: We will be required to demonstrate through adequate and well-controlled clinical trials that our product candidates are safe and effective, with a favorable benefit-risk profile, for use in our target indications before we can seek regulatory approvals for its commercial sale.
+Added: We will be required to demonstrate through adequate and well-controlled clinical trials that our product candidates are safe and effective, with a favorable benefit-risk profile, for use in our target indications before we can seek regulatory approvals for commercial sale.
Clinical studies are expensive, difficult to design and implement, can take many years to complete and are uncertain as to outcome.
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Resmetirom has neither received Subpart H or full regulatory approval for the treatment of NASH or any other indication, and unexpected problems may arise that could cause us to delay, suspend or terminate our development efforts in any or all indications.
+Added: Even if resmetirom receives Subpart H approval for the treatment of NASH or any other indication, we will be required to conduct post-approval confirmatory trials under conditions specified by FDA.
+Added: Failure to complete the post-approval trial may jeopardize our ability to market resmetirom.
Further, the long-term safety consequences of a liver-directed thyroid hormone receptor beta agonist are not known.
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We have no experience in obtaining foreign regulatory approvals.
−Removed: The time required to obtain approvals outside the United States may differ from that
−Removed: required to obtain FDA approval.
+Added: The time required to obtain approvals outside the United States may differ from that required to obtain FDA approval.
We may not obtain foreign regulatory approvals on a timely basis, if at all.
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We depend on enrollment of patients in our clinical trials for our product candidates.
−Removed: If we encounter difficulties enrolling patients in our clinical trials, including those arising out of COVID-19,
−Removed: our clinical development activities could be delayed or otherwise adversely affected.
+Added: If we encounter difficulties enrolling patients in our clinical trials, our clinical development activities could be delayed or otherwise adversely affected.
Identifying and qualifying patients to participate in clinical trials of our product candidates is critical to our success.
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Although we have satisfied Subpart H patient enrollment for MAESTRO-NASH, clinical enrollment is not complete as of December 31, 2022 and significant additional enrollment will be necessary and will be ongoing for some time.
−Removed: A significant factor in the timing to conduct and complete clinical trials, is affected by many factors, including the size and nature of the patient population, the proximity of patients to clinical sites, the eligibility criteria for the trial, the design of the clinical trial, competing clinical trials, and clinicians’ and patients’ perceptions as to the potential advantages and disadvantages of the product candidate being studied in relation to other available therapies, including any new drugs that may be approved for the indications we are investigating.
+Added: The timing to conduct and complete clinical trials, is affected by many factors, including the size and nature of the patient population, the proximity of patients to clinical sites, the eligibility criteria for the trial, the design of the clinical trial, competing clinical trials, and clinicians’ and patients’ perceptions as to the potential advantages and disadvantages of the product candidate being studied in relation to other available therapies, including any new drugs that may be approved for the indications we are investigating.
For instance, we are aware that other companies conducting clinical trials in NASH patients have had delays in recruiting patients for their trials.
−Removed: In the MAESTRO-NASH Phase 3 trial, patients’ willingness to undergo a liver biopsy involve risk factors.
+Added: In the MAESTRO-NASH Phase 3 trial, patients’ willingness to undergo a liver biopsy involves risk factors.
In addition, potential patients for resmetirom may not be adequately diagnosed or identified with the diseases which we are targeting or may not meet the entry criteria for our studies.
−Removed: The global coronavirus pandemic has presented significant challenges in the enrollment and conduct of MAESTRO-NASH.
−Removed: Screening for MAESTRO-NASH was negatively impacted due to the outbreak of the COVID-19
−Removed: pandemic, and the resulting governmental quarantine restrictions and shelter-in-place
−Removed: guidelines that influenced the closing or suspension of many European and U.S.
−Removed: trial sites and a decline in U.S.
−Removed: patients seeking screening biopsies.
−Removed: In addition, because MAESTRO-NASH is focused on specific patient populations with protocol-specified biopsy requirements, our ability to enroll eligible patients was limited and enrollment was slower than we anticipated before the pandemic.
−Removed: While we believe our COVID-19
−Removed: mitigation efforts have positioned us to overcome past enrollment challenges, the pace of new enrollment cannot be guaranteed and ultimately will be dependent on our target study patients becoming comfortable initiating protocol-prescribed procedures, including biopsies, during the COVID-19
−Removed: If the COVID-19
−Removed: pandemic continues or worsens, our patient recruitment and enrollment efforts may be adversely affected, delayed or interrupted.
−Removed: In addition, patients may choose to withdraw from our studies or we may choose to (or be required) to pause enrollment and or patient dosing in our trial in order to preserve health resources and protect trial participants, as applicable.
−Removed: It is unknown whether or how long pauses, delays or disruptions could occur or continue.
−Removed: Our ability to successfully complete enrollment and study objectives in the midst of the COVID-19
−Removed: pandemic is subject to circumstances beyond our control and also is subject to the enhanced risks and uncertainties that are described in our other Risk Factors.
−Removed: In addition, he FDA typically requires sponsors of lipid-lowering product candidates to conduct drug-drug interaction studies with statins because statins may have increased safety risks when administered together with other drug therapies that affect their pharmacokinetic profile.
+Added: In addition, the FDA typically requires sponsors of lipid-lowering product candidates to conduct drug-drug interaction studies with statins because statins may have increased safety risks when administered together with other drug therapies that affect their pharmacokinetic profile.
We have completed two Phase 1 clinical drug interaction studies of resmetirom and statins in 39 normal healthy volunteers, which showed resmetirom to have a favorable safety profile and to be well-tolerated.
−Removed: We have completed a Phase 2 clinical trial in NASH including
−Removed: patients taking low dose statins.
+Added: We have completed a Phase 2 clinical trial in NASH including patients taking low dose statins.
We have also completed a Phase 2 clinical trial in HeFH including patients taking high dose statins.
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Even if we receive regulatory approval to market a particular product candidate, the manufacturing, labeling, packaging, distribution, adverse event reporting, storage, advertising, promotion, sampling, and record keeping related to the product will remain subject to extensive regulatory requirements.
−Removed: These requirements include submissions of safety and other post-marketing information and reports, registration, as well as continued compliance with cGMP regulations, and GCPs for any clinical trials that we conduct post-approval, all of which
−Removed: may result in significant expense and limit our ability to commercialize such products.
+Added: These requirements include submissions of safety and other post-marketing information and reports, registration, as well as continued compliance with cGMP regulations, and GCPs for any clinical trials that we conduct post-approval, all of which may result in significant expense and limit our ability to commercialize such products.
As such, we and our contract manufacturers will be subject to periodic review and inspections to assess compliance with cGMP and adherence to commitments made in any NDA or other marketing application and previous responses to inspection observations.
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Once an NDA or marketing authorization application outside the United States is approved, the product covered thereby becomes a “listed drug” that can, in turn, be cited by potential competitors in support of approval of an abbreviated new drug application in the United States.
−Removed: Agency regulations and other applicable regulations and policies provide incentives to manufacturers to create modified, non-infringing
−Removed: versions of a drug to facilitate the approval of an abbreviated new drug application or other application for generic substitutes in the United States and in nearly every pharmaceutical market around the world.
−Removed: These manufacturers might only be required to conduct a relatively inexpensive study to show that their product has the same active ingredient(s), dosage form, strength, route of administration and conditions of use, or labeling, as our product and that the generic product is bioequivalent to our product, meaning it is absorbed in the body at the same rate and to the same extent as our product.
+Added: Agency regulations and other applicable regulations and policies provide incentives to manufacturers to create modified, non-infringing versions of a drug to facilitate the approval of an abbreviated new drug application or other application for generic substitutes in the United States and in nearly every pharmaceutical market around the world.
+Added: These manufacturers might only be required to conduct a
+Added: relatively inexpensive study to show that their product has the same active ingredient(s), dosage form, strength, route of administration and conditions of use, or labeling, as our product and that the generic product is bioequivalent to our product, meaning it is absorbed in the body at the same rate and to the same extent as our product.
These generic equivalents, which must meet the same quality standards as branded pharmaceuticals, would be significantly less costly than our product to bring to market, and companies that produce generic equivalents are generally able to offer their products at lower prices.
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If any of our product candidates do not achieve an adequate level of acceptance, we may not generate significant product revenue or any profits from operations.
−Removed: Physicians may decide not to recommend its treatments for a variety of reasons including:
+Added: Physicians may decide not to recommend our treatments for a variety of reasons including:
timing of market introduction of competitive products;
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If any of our product candidates are approved, but fail to achieve market acceptance or such market is smaller than anticipated, we may not be able to generate significant revenue and our business would suffer.
−Removed: The continuation or worsening of the COVID-19
−Removed: pandemic, could affect our ability to complete our ongoing clinical trials, disrupt regulatory activities and delay or disrupt commercialization of resmetirom, and may have other adverse effects on our stock price and business operations.
−Removed: pandemic has caused, and may continue to cause many governments to implement measures to slow the spread of the outbreak of the virus and its multiple variations.
−Removed: These measures include quarantines, travel restrictions, heightened border security, shelter-in
−Removed: place guidelines, social distancing restrictions and other measures.
−Removed: This outbreak and the resulting governmental measures have had a significant impact, both direct and indirect, on businesses and commerce in the life sciences industry generally, as supply chains and manufacturing process have been disrupted;
−Removed: facilities and production have been suspended;
−Removed: available personnel has declined;
−Removed: and demand for certain third-party goods and services, such as medical services and supplies, has spiked.
−Removed: The future progression of the pandemic and its effects on our business and operations are extremely uncertain and subject to the risks described below.
−Removed: We and our contract research organizations (“CROs”) and contract manufacturing organizations (“CMO”) may face disruptions that have affected and may continue to affect our ability to conduct and timely complete ongoing clinical trials including disruptions in procuring items that are essential for our development activities, such as materials and intermediates used in the manufacturing of resmetirom.
−Removed: We and our CROs and CMOs, as well as clinical trial sites, have faced and may continue to face disruptions related to our ongoing clinical trials arising from staffing disruptions and limitations on our activities and the activities of our CROs and CMOs, and delays in the ability to obtain necessary institutional review board or other necessary site approvals or delays in site initiations or site monitoring visits, as well as other delays at clinical trial sites.
−Removed: We may also face limitations on enrollment and patients withdrawing from our clinical trials or not complying with the protocol procedures, which could delay completion of our clinical trials or adversely affect the data generated by our clinical trials.
−Removed: For instance, patient screening and enrollment has been impacted and study patients may not be able to comply with clinical trial protocols (including biopsy testing), in each case where quarantines or shelter-in-place
−Removed: restrictions impede patient movement or interrupt patient demand for, or a medical facility’s delivery of, protocol-required services and procedures.
−Removed: Additionally, our ability to recruit and retain patients and principal investigators and site staff who may have heightened risks if exposed to COVID-19
−Removed: may adversely impact the Company’s clinical trial operations.
−Removed: The response to the COVID-19
−Removed: pandemic also could redirect resources with respect to regulatory and intellectual property matters in a way that could adversely impact our ability to progress regulatory approvals and protect our intellectual property.
−Removed: In addition, we may face impediments to regulatory meetings and approvals due to measures that are intended to limit in-person
−Removed: interactions.
−Removed: The pandemic has significantly impacted economies worldwide, which could result in adverse effects on our business and operations.
−Removed: Moreover, the pandemic has also caused significant disruptions in the financial markets, and may continue to cause such disruptions, which has led to increased trading volatility and significant stock price declines, particularly in the first quarter of 2020, and the pandemic or related consequences may adversely impact the future volatility and value of our stock and future trading in our stock.
−Removed: In accordance with governmental pronouncements, we have instituted policies to facilitate working remotely.
−Removed: The continuation of personnel working from home (not only at Madrigal, but also at CROs, CMOs, clinical sites and governmental and supervisory bodies) has negatively impacted our productivity and our business plans.
−Removed: Past and future disruptions adversely impacted and could impact our business operations and/or delay necessary interactions with regulators, ethics committees, manufacturing sites, research or clinical trial sites and other important agencies and contractors, including our CROs and CMOs.
−Removed: We cannot be certain what the overall impact of the COVID-19
−Removed: pandemic will be on our business.
−Removed: However, it has the potential to adversely affect our business, financial condition, results of operations, and prospects.
As we evolve from a company that is primarily involved in clinical development to a company that is also involved in commercialization, we may encounter difficulties in expanding our operations successfully.
−Removed: As we advance our product candidates through clinical trials, we will need to expand our development, regulatory, manufacturing, and marketing and sales capabilities and may need to further contract with third
−Removed: parties to provide these capabilities.
+Added: As we advance our product candidates through clinical trials, we will need to expand our development, regulatory, manufacturing, and marketing and sales capabilities and may need to further contract with third parties to provide these capabilities.
As our operations expand, we likely will need to manage additional relationships with such third parties, as well as additional collaborators, distributors, marketers and suppliers.
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The goal of the ACA is to reduce the cost of healthcare and substantially change the way healthcare is financed by both government and private insurers.
−Removed: While we cannot predict what impact on federal reimbursement policies this legislation will have in general or on our business specifically, the ACA may result in downward pressure on pharmaceutical reimbursement, which could negatively affect market acceptance of, and the price we may charge for, any products we develop that receives regulatory approval.
+Added: The ACA may result in downward pressure on pharmaceutical reimbursement, which could negatively affect market acceptance of, and the price we may charge for, any products we develop that receives regulatory approval.
Additional legislative changes to and regulatory changes under the ACA remain possible, but the nature and extent of such potential additional changes are uncertain at this time.
−Removed: We expect that the ACA, its implementation, efforts to
−Removed: repeal or replace, or invalidate the ACA, or portions thereof, and other healthcare reform measures that may be adopted in the future, could have a material adverse effect on our industry generally and on our ability to maintain or increase sales of existing products or to successfully commercialize product candidates, if approved.
+Added: We expect that the ACA, its implementation, efforts to challenge or modify the ACA or its implementing regulations, or portions thereof, and other healthcare reform measures including those that may be adopted in the future, could have a material adverse effect on our industry generally and on our ability to maintain or increase sales of existing products or to successfully commercialize product candidates, if approved.
+Added: On August 16, 2022, President Biden signed into law the IRA, which, among other things, establishes Medicare Part B and Part D inflation rebate schemes.
+Added: Failure to timely pay a Part B or Part D inflation rebate is subject to a civil monetary penalty.
+Added: The IRA also creates a drug price negotiation program under which the prices for Medicare units of certain high Medicare spend drugs and biologics without generic or biosimilar competition will be capped by reference to, among other things, a specified non-federal average manufacturer price, starting in 2026.
+Added: Failure to comply with requirements under the drug price negotiation program is subject to an excise tax and/or a civil monetary penalty.
+Added: The IRA further makes changes to the Medicare Part D benefit, including a limit on annual out-of-pocket costs, and a change in manufacturer liability under a new discount program which could negatively affect the profitability of our product candidates.
+Added: Failure to pay a discount under this new program will be subject to a civil monetary penalty.
+Added: Congress continues to examine various policy proposals that may result in pressure on the prices of prescription drugs in the government health benefit programs.
+Added: The IRA or other legislative changes could impact the market conditions for our product candidate.
If any product liability lawsuits are successfully brought against us or any of our collaborative partners, we may incur substantial liabilities and may be required to limit commercialization of our product candidates.
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Although the development and commercialization of resmetirom is our primary focus, as part of our longer-term growth strategy, we plan to evaluate the development and commercialization of other therapies related to thyroid hormone, orphan and other diseases.
−Removed: We will evaluate internal opportunities from our compound libraries, and also may choose to in-license
−Removed: or acquire other product candidates as well as commercial products to treat patients suffering from thyroid hormone, orphan or other disorders with high unmet medical needs and limited treatment options.
+Added: We will evaluate internal opportunities from our compound libraries, and also may choose to in-license or acquire other product candidates as well as commercial products to treat patients suffering from thyroid hormone, orphan or other disorders with high unmet medical needs and limited treatment options.
These other product candidates may require additional, time-consuming development efforts prior to commercial sale, including preclinical studies, clinical trials and approval by the FDA and/or applicable foreign regulatory authorities.
All product candidates are prone to the risks of failure that are inherent in pharmaceutical product development, including the possibility that the product candidate will not be shown to be sufficiently safe and effective for approval by regulatory authorities.
−Removed: In addition, we cannot assure you that any such products that are approved will be manufactured or produced economically, be successfully commercialized, be widely accepted in the marketplace, or be more effective than other commercially available alternatives.
+Added: In addition, we cannot assure you that
+Added: any such products that are approved will be manufactured or produced economically, be successfully commercialized, be widely accepted in the marketplace, or be more effective than other commercially available alternatives.
If we lose key management personnel, or if we fail to recruit additional highly skilled personnel, our ability to identify, develop and commercialize products will be impaired.
20 unchanged sentences
With respect to our existing and future product candidates, we may choose to collaborate with third parties that have direct sales forces and established distribution systems, either to augment our own sales force and distribution systems or as an alternative to our own sales force and distribution systems.
−Removed: To the extent that we enter into co-promotion
−Removed: or other licensing arrangements, our product revenue may be lower than if we directly marketed or sold any approved products.
+Added: To the extent that we enter into co-promotion or other licensing arrangements, our product revenue may be lower than if we directly marketed or sold any approved products.
In addition, any revenue we receive will depend in whole or in part upon the efforts of these third parties, which may not be successful and are generally not within our control.
3 unchanged sentences
In order to market any products outside of the United States, we must establish and comply with numerous and varying regulatory requirements of other countries regarding clinical trial design, safety and efficacy.
−Removed: Clinical trials conducted in one country may not be accepted by regulatory authorities in other countries, and
−Removed: regulatory approval in one country does not mean that regulatory approval will be obtained in any other country.
+Added: Clinical trials conducted in one country may not be accepted by regulatory authorities in other countries, and regulatory approval in one country does not mean that regulatory approval will be obtained in any other country.
Approval procedures vary among countries and can involve additional product testing and validation and additional administrative review periods.
16 unchanged sentences
Under the Orphan Drug Act, the FDA may grant orphan drug designation to a drug or biologic intended to treat a rare disease or condition, which is defined as one occurring in a patient population of fewer than 200,000 in the United States, or a patient population greater than 200,000 in the United States where there is no reasonable expectation that the cost of developing the drug or biologic will be recovered from sales in the United States.
−Removed: In the United States, orphan drug designation entitles a party to financial incentives such as opportunities for grant funding towards clinical trial costs, tax advantages and user-fee
+Added: In the United States, orphan drug designation entitles a party to financial incentives such as opportunities for grant funding towards clinical trial costs, tax advantages and user-fee waivers.
In addition, if a product 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 a full NDA, to market the same drug or biologic for the same indication for seven years, except in limited circumstances, such as a showing of clinical superiority to the product with orphan drug exclusivity or where the manufacturer is unable to assure sufficient product quantity.
We have not obtained orphan designation for any product candidates to date, although we believe some of the potential indications of our product candidates could qualify for orphan drug designation and the related benefits if approved for such indications and we may file for orphan drug designation with respect to such indications.
−Removed: Even if we obtain such designations, we may not be the first to obtain regulatory approval of a product candidate for the orphan-designated indication due to the uncertainties associated with developing
−Removed: pharmaceutical products.
+Added: Even if we obtain such designations, we may not be the first to obtain regulatory approval of a product candidate for the orphan-designated indication due to the uncertainties associated with developing pharmaceutical products.
In addition, exclusive marketing rights in the United States may be limited if we seek approval for an indication broader than the orphan-designated indication or may be lost if the FDA later determines that the request for designation was materially defective or if we are unable to assure sufficient quantities of the product to meet the needs of patients with the orphan-designated disease or condition.
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We and/or our partners may be subject to administrative, civil and criminal sanctions for violations of any of these federal and state laws.
−Removed: Pharmaceutical
−Removed: and other healthcare companies have been sued or found to have violated these laws for a variety of promotional and marketing and other activities, such as:
+Added: Pharmaceutical and other healthcare companies have been sued or found to have violated these laws for a variety of promotional and marketing and other activities, such as:
providing free trips, free goods, sham consulting fees and grants and other monetary benefits to prescribers;
−Removed: reporting to pricing services inflated average wholesale prices that were then used by federal programs to set reimbursement rates;
−Removed: engaging in off-label
+Added: reporting to pricing services average prices that are then used by federal programs to set reimbursement rates, rebates, and discounts;
+Added: engaging in off-label promotion;
and knowingly submitting false pricing information to the federal government, knowingly misrepresenting that information, or failing to timely submit that information.
Pharmaceutical companies may further be found liable for civil monetary penalties for knowing and intentionally overcharging covered entities under the 340B Drug Pricing Program.
+Added: Additionally, in order to be eligible to have its products paid for with federal funds under the Medicaid and Medicare Part B programs and purchased by the Department of Veterans Affairs (“VA”), Department of Defense (“DoD”), Public Health Service, and Coast Guard (the “Big Four agencies”) and certain federal grantees, a manufacturer is required to list its innovator products on a VA Federal Supply Schedule (“FSS”) contract and charge a price to the Big Four agencies that is no higher than the Federal Ceiling Price (“FCP”), which is a price calculated pursuant to a statutory formula.
+Added: In addition, manufactures must submit to the VA quarterly and annual “non federal average manufacturer price” (“Non FAMP”) calculations for each NDC-11 of their innovator drugs.
+Added: Under Section 703 of the National Defense Authorization Act for FY 2008, the manufacturer is required to pay quarterly rebates to DoD on utilization of its innovator products that are dispensed through DoD’s Tricare network pharmacies to Tricare beneficiaries.
Ensuring that our internal operations and future business arrangements with third parties comply with applicable healthcare laws and regulations will involve substantial costs.
It is possible that governmental authorities will conclude that our business practices do not comply with current or future statutes, regulations, agency guidance or case law involving applicable fraud and abuse or other healthcare laws and regulations.
−Removed: If our operations are found to be in violation of any of the federal and state laws described above or any other governmental regulations that apply to us, we may be subject to penalties, including (depending on the applicable law) criminal and significant civil monetary penalties, damages, fines, imprisonment, exclusion from participation in government programs, injunctions, recall or seizure of products, total or partial suspension of production, denial or withdrawal of pre-marketing
−Removed: product approvals, private ‘‘qui tam’’ actions brought by individual whistleblowers in the name of the government or refusal to allow us to enter into supply contracts, including government contracts, and the curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and our results of operations.
+Added: If our operations are found to be in violation of any of the federal and state laws described above or any other governmental regulations that apply to us, we may be subject to penalties, including (depending on the applicable law) criminal and significant civil monetary penalties, damages, fines, imprisonment, exclusion from participation in government programs, injunctions, recall or seizure of products, total or partial suspension of production, denial or withdrawal of pre-marketing product approvals, private ‘‘qui tam’’ actions brought by individual whistleblowers in the name of the government or refusal to allow us to enter into supply contracts, including government contracts, and the curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and our results of operations.
If the third parties on which we rely for the conduct of our clinical trials and results do not perform our clinical trial activities in accordance with good clinical practices and related regulatory requirements, we may be unable to obtain regulatory approval for or commercialize our product candidates.
12 unchanged sentences
We do not own or operate manufacturing facilities for the production of clinical or commercial quantities of our product candidates, and we lack the resources and the capabilities to do so.
−Removed: As a result, we currently rely, and
−Removed: expect to rely on third-party manufacturers to supply our product candidates.
+Added: As a result, we currently rely, and expect to rely on third-party manufacturers to supply our product candidates.
Reliance on third-party manufacturers entails risks to which we would not be subject if we manufactured our product candidates or products ourselves.
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Attacks on information technology systems are increasing in their frequency, levels of persistence, sophistication and intensity, and they are being conducted by increasingly sophisticated and organized groups and individuals with a wide range of motives and expertise.
−Removed: In addition to extracting sensitive information, such attacks could include the deployment of harmful malware, ransomware, denial-of-service
−Removed: attacks, social engineering and other means to affect service reliability and threaten the confidentiality, integrity and availability of information.
+Added: In addition to extracting sensitive information, such attacks could include the deployment of harmful malware, ransomware, denial-of-service attacks, social engineering and other means to affect service reliability and threaten the confidentiality, integrity and availability of information.
The prevalent use of mobile devices also increases the risk of data security incidents.
−Removed: While we have not experienced any material system failure, accident or security breach to date, if such an event were to occur and cause interruptions in our operations or the operations of third-party collaborators, service providers, contractors and consultants, it could result in a material disruption of our development programs and significant reputational, financial, legal, regulatory, business or operational harm.
+Added: While we have not experienced any material system failure, accident or security breach to date, if such an event were to occur and cause interruptions in our operations or the operations of third-party collaborators, service providers, contractors and consultants, it could result in a material disruption of our development programs and significant reputational, financial, legal, regulatory, business or
+Added: operational harm.
For example, the loss of clinical trial data for our product candidates could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data.
1 unchanged sentence
In addition, our liability insurance may not be sufficient in type or amount to cover us against claims related to security breaches, cyberattacks and other related breaches.
−Removed: Any failure or perceived failure by us or any third-party collaborators, service providers, contractors or consultants to comply with our privacy, confidentiality, data security or similar obligations to third parties, or any data security incidents or other security breaches that result in the unauthorized access, release or transfer of sensitive information, including personally identifiable information, may result in governmental investigations, enforcement actions, regulatory fines, litigation or public statements against us, could cause third parties to lose
−Removed: trust in us or could result in claims by third parties asserting that we have breached our privacy, confidentiality, data security or similar obligations, any of which could have a material adverse effect on our reputation, business, financial condition or results of operations.
+Added: Any failure or perceived failure by us or any third-party collaborators, service providers, contractors or consultants to comply with our privacy, confidentiality, data security or similar obligations to third parties, or any data security incidents or other security breaches that result in the unauthorized access, release or transfer of sensitive information, including personally identifiable information, may result in governmental investigations, enforcement actions, regulatory fines, litigation or public statements against us, could cause third parties to lose trust in us or could result in claims by third parties asserting that we have breached our privacy, confidentiality, data security or similar obligations, any of which could have a material adverse effect on our reputation, business, financial condition or results of operations.
Moreover, data security incidents and other security breaches can be difficult to detect, and any delay in identifying them may lead to increased harm.
−Removed: While we have implemented data security measures intended to protect our information technology systems and infrastructure, there can be no assurance that such measures will successfully prevent service interruptions or data security incidents.
+Added: While we have implemented data security measures intended to protect our information technology systems and infrastructure, there can be no assurance that such measures will successfully prevent service interruptions or data security incidents that could adversely affect our business.
Failure to comply with health and data protection laws and regulations could lead to government enforcement actions (which could include civil or criminal penalties), private litigation and/or adverse publicity, and could negatively affect our operating results and business.
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HIPAA imposes privacy and security obligations on covered entity health care providers, health plans, and health care clearinghouses, as well as their “business associates” – certain persons or covered entities that create, receive, maintain, or transmit protected health information in connection with providing a specified service or performing a function on behalf of a covered entity.
−Removed: We could potentially be subject to criminal penalties if we, our affiliates, or our agents knowingly use or disclose individually identifiable health information maintained by a HIPAA-covered entity in a manner that is not authorized or permitted by HIPAA.
+Added: We could potentially be subject to criminal penalties if we, our affiliates, or our agents knowingly receive individually identifiable health information maintained by a HIPAA-covered entity in a manner that is not authorized or permitted by HIPAA.
To the extent we collect California resident personal information, we may also be subject to the CCPA.
−Removed: The CCPA, which became effective on January 1, 2020, created new transparency requirements and granted California residents several new rights with regard to their personal information.
−Removed: In addition, in November 2020, California voters approved the California Privacy Rights Act (“CPRA”) ballot initiative which introduced significant amendments to the CCPA and established and funded a dedicated California privacy regulator, the California Privacy Protection Agency (“CPPA”).
−Removed: The amendments introduced by the CPRA go into effect on January 1, 2023, and new implementing regulations are expected to be introduced by the CPPA.
+Added: The CCPA, created new transparency requirements and granted California residents several new rights with regard to their personal information.
+Added: In addition, California voters approved the California Privacy Rights Act (“CPRA”) ballot initiative which introduced significant amendments to the CCPA and established and funded a dedicated California privacy regulator, the California Privacy Protection Agency (“CPPA”).
+Added: The amendments introduced by the CPRA went into effect on January 1, 2023, and new implementing regulations are expected to be introduced by the CPPA.
Failure to comply with the CCPA may result in, among other things, significant civil penalties and injunctive relief, or statutory or actual damages.
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These claims may result in significant liability and damages.
+Added: Virginia and Colorado also adopted laws, effective January 1, 2023, and July 1, 2023, respectively, introducing new privacy obligations for which we may need to take additional steps to comply.
Similarly, there are a number of legislative proposals in the United States, at both the federal and state level, that could impose new obligations or limitations in the area of consumer protection.
+Added: For example, Utah and Connecticut have enacted privacy laws similar to the CCPA that impose new obligations or limitations in areas affecting our business.
These laws and regulations are evolving and may impose limitations on our business activities.
The obligations to comply with new privacy laws may require us, among other things, to update our notices and develop new processes internally and with our third-party collaborators, service providers, contractors or consultants to facilitate consumer rights requests, and such laws may impose restrictions on our processing of personal information that may impact the way we operate our business.
−Removed: We may be subject to fines, penalties, or private actions in the event of non-compliance
−Removed: with such laws.
+Added: We may be subject to fines,
+Added: penalties, or private actions in the event of non-compliance with such laws.
The CCPA, the CPRA or other domestic privacy and data protection laws and regulations may increase our compliance costs and potential liability.
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The GDPR, together with the national legislation of the EU member states governing the processing of personal data, impose strict obligations and restrictions on the ability to collect, analyze and transfer personal data, including health data and samples from clinical trials and adverse event reporting.
−Removed: In particular, these obligations and restrictions concern the consent of the individuals to whom the personal data relates, the information provided to the individuals, the sharing of personal data with third parties, the transfer of personal data out of the EU,
−Removed: security breach notifications, security and confidentiality of the personal data and imposition of substantial potential fines for violations of the data protection obligations.
+Added: In particular, these obligations and restrictions concern the consent of the individuals to whom the personal data relates, the processing details disclosed to the individuals, the sharing of personal data with third parties, the transfer of personal data out of the EU, security breach notifications, as well as substantial potential fines for violations of the data protection obligations.
Specifically regarding the transfer of personal data outside of the EU, while there are legal mechanisms available to lawfully transfer personal data outside of the EU, including to the United States, there are certain unsettled legal issues regarding such data transfers, the resolution of which may adversely affect our ability to transfer personal data or otherwise may cause us to incur significant costs to come into compliance with applicable data transfer impact assessments and implementation of legal data transfer mechanisms.
−Removed: On July 16, 2020, the European Court of Justice ruled the EU-US
−Removed: Privacy Shield to be an invalid data transfer mechanism and confirmed that the Model Clauses remain valid, and in June 2021, the European Commission published updated versions of the Model Clauses, which must be incorporated into new and existing agreements within prescribed timeframes in order to continue to lawfully transfer personal data outside of the EU.
+Added: On July 16, 2020, the European Court of Justice ruled the EU-US Privacy Shield to be an invalid data transfer mechanism and confirmed that the Model Clauses remain valid, and in June 2021, the European Commission published updated versions of the Model Clauses, which must be incorporated into new and existing agreements within prescribed timeframes in order to continue to lawfully transfer personal data outside of the EU.
Data protection authorities from the different EU member states, as well as in the United Kingdom and Switzerland, have promulgated national privacy laws that impose additional requirements, which add to the complexity of processing and transferring EU personal data, with the United Kingdom and Switzerland following the EU with the publication of new Model Clauses to be incorporated in all applicable contracts within a specified timeframe in order to legitimize data transfers from those jurisdictions.
+Added: The UK adopted versions of their Model Clauses during 2022.
Our ability to continue to transfer personal data outside of the EU, United Kingdom, or Switzerland may become significantly more expensive and may subject us to increased scrutiny and liability under the GDPR or similar local laws, and we may experience operating disruptions if we are unable to conduct these transfers in the future.
+Added: On December, 13 2022, the European Commission adopted a draft adequacy decision for the EU-U.S.
+Added: Data Privacy Framework, which reflects the assessment by the European Commission of the US legal framework.
+Added: The draft decision concludes that the United States ensures an adequate level of protection for personal data transferred from the EU to U.S.
+Added: After an approval process, the European Commission is expected to adopt the final adequacy decision, which will allow data to flow freely from the EU to the U.S.
Risks Relating to Our Intellectual Property
Our rights to develop and commercialize our product candidates are subject in part to the terms and conditions of a license to resmetirom granted to us by Roche.
−Removed: We entered into a Research, Development and Commercialization Agreement, or the Roche Agreement, with Hoffmann-La
−Removed: Roche, or Roche, on December 18, 2008.
+Added: We entered into a Research, Development and Commercialization Agreement, or the Roche Agreement, with Hoffmann-La Roche, or Roche, on December 18, 2008.
Pursuant to the terms of the Roche Agreement, we assumed control of all development and commercialization of resmetirom and hold exclusive worldwide rights for all potential indications.
−Removed: Under the Roche Agreement, Roche exclusively licensed certain patent rights and know-how
−Removed: relating to resmetirom in exchange for consideration consisting of an upfront payment, milestone payments tied to the achievement of product development and regulatory milestones, and royalty payments based on net sales of products containing resmetirom or another licensed product, subject to certain reductions.
+Added: Under the Roche Agreement, Roche exclusively licensed certain patent rights and know-how relating to resmetirom in exchange for consideration consisting of an upfront payment, milestone payments tied to the achievement of product development and regulatory milestones, and royalty payments based
+Added: on net sales of products containing resmetirom or another licensed product, subject to certain reductions.
The Roche Agreement will expire, unless earlier terminated pursuant to other provisions thereof, on the last to occur of (i) the expiration of the last valid claim of a licensed patent covering the manufacture, use or sale of products containing resmetirom, or (ii) ten years after the first sale of a product containing resmetirom.
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our diligence obligations under the license agreement and what activities satisfy those diligence obligations;
−Removed: the ownership of inventions and know-how
−Removed: resulting from the joint creation or use of intellectual property by us and our licensors and collaborators;
+Added: the ownership of inventions and know-how resulting from the joint creation or use of intellectual property by us and our licensors and collaborators;
the priority of invention of patented technology.
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This failure to properly protect the intellectual property rights relating to our product candidates could have a material adverse effect on our financial condition and results of operations.
−Removed: While we have licensed rights to issued patents in the United States and other jurisdictions for resmetirom, we cannot be certain that the claims in issued patents will not be found invalid or unenforceable if challenged.
+Added: While we have licensed rights to issued patents in the United
+Added: States and other jurisdictions for resmetirom, we cannot be certain that the claims in issued patents will not be found invalid or unenforceable if challenged.
We cannot be certain that the claims in owned and licensed patent applications covering our product candidates will be considered patentable by the United States Patent and Trademark Office, or USPTO, and valid by courts in the United States or by the patent offices and courts in foreign jurisdictions.
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For example, a formulation patent may not be enforced against those making and marketing a product that has the same active pharmaceutical ingredient in a different formulation that is not claimed in the formulation patent.
−Removed: Method-of-use
−Removed: patents protect the use of a product for the specified method or for treatment of a particular indication.
+Added: Method-of-use patents protect the use of a product for the specified method or for treatment of a particular indication.
This type of patent may not be enforced against competitors making and marketing a product that has the same active pharmaceutical ingredient but is used for a method not claimed in the patent.
−Removed: Moreover, even if competitors do not actively promote their product for our targeted indications, physicians may prescribe these products “off-label.”
−Removed: Although off-label
−Removed: prescriptions may infringe or contribute to the infringement of method-of-use
−Removed: patents, the practice is common and such infringement is difficult to prevent or prosecute.
−Removed: Our composition-of-matter
−Removed: patent licensed from Roche relating to resmetirom is scheduled to expire in the United States in 2026.
−Removed: patents and pending patent applications that cover our particular solid form, dosage, method of manufacturing, and uses of resmetirom to treat various indications are scheduled to expire in 2033.
+Added: Moreover, even if competitors do not actively promote their product for our targeted indications, physicians may prescribe these products “off-label.” Although off-label prescriptions may infringe or contribute to the infringement of method-of-use patents, the practice is common and such infringement is difficult to prevent or prosecute.
+Added: Our composition-of-matter patent licensed from Roche relating to resmetirom is scheduled to expire in the United States in 2026.
+Added: Our co-owned patents and pending patent applications that cover our particular solid form, dosage, method of manufacturing, and uses of resmetirom to treat various indications are scheduled to expire in 2033.
Our exclusively-owned pending patent applications that cover companion diagnostics, various solid forms of resmetirom, combination therapy, method of use, and method of manufacturing, if issued, are expected to expire between 2037 and 2042.
Our exclusively-owned pending patent application that covers other THR beta analogs and uses thereof, if issued, is expected to expire in 2043.
−Removed: While patent term adjustments or patent term extensions could result in later expiration dates for each of these patents, there can be no assurances that we will
−Removed: receive any patent adjustments or patent term extensions.
+Added: While patent term adjustments or patent term extensions could result in later expiration dates for each of these patents, there can be no assurances that we will receive any patent adjustments or patent term extensions.
The patent application process and patent maintenance and enforcement are subject to numerous risks and uncertainties, and there can be no assurance that we or any of our future development partners will be successful in protecting our product candidates by obtaining and defending patents.
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In addition, we rely on the protection of our trade secrets and proprietary know-how.
−Removed: Although we have taken steps to protect our trade secrets and unpatented know-how,
−Removed: including entering into confidentiality agreements with third parties, and confidential information and inventions agreements with employees, consultants and advisors, we cannot provide any assurances that any of these parties would not breach the agreements to disclose any proprietary information, including trade secrets, and we may not be able to obtain adequate remedies for such breaches.
+Added: Although we have taken steps to protect our trade secrets and unpatented know-how, including entering into confidentiality agreements with third parties, and confidential information and inventions agreements with employees, consultants and advisors, we cannot provide any assurances that any of these parties would not breach the agreements to disclose any proprietary information, including trade secrets, and we may not be able to obtain adequate remedies for such breaches.
Further, third parties may still obtain this information by other means, such as breaches of our physical or computer security systems.
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Moreover, third parties may come upon this or similar information lawfully and independently.
−Removed: We would have no right to prevent them, or those to whom they communicate it, from using that technology or information to
−Removed: compete with us.
+Added: We would have no right to prevent them, or those to whom they communicate it, from using that technology or information to compete with us.
Further, intellectual property rights have limitations and do not necessarily address all potential threats to our competitive position.
−Removed: If any of these events occurs or if we otherwise lose protection for our trade secrets or proprietary know-how,
−Removed: our business may be harmed.
+Added: If any of these events occurs or if we otherwise lose protection for our trade secrets or proprietary know-how, our business may be harmed.
Recent patent reform legislation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents.
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In particular, under the Leahy-Smith Act, the United States transitioned in March 2013 to a “first inventor to file” system in which the first inventor to file a patent application will be entitled to the patent.
−Removed: Third parties are allowed to submit prior art before the issuance of a patent by the USPTO, and a patent may become subject to post-grant proceedings including opposition, derivation, reexamination, inter partes
−Removed: review or interference proceedings challenging our patent rights or the patent rights of others.
+Added: Third parties are allowed to submit prior art before the issuance of a patent by the USPTO, and a patent may become subject to post-grant proceedings including opposition, derivation, reexamination, inter partes review or interference proceedings challenging our patent rights or the patent rights of others.
An adverse determination in any such submission, proceeding or litigation could reduce the scope or enforceability of, or invalidate, our patent rights, which could adversely affect our competitive position.
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Because patent applications are maintained in secrecy until the application is published, we may be unaware of third party patents that may be infringed by commercialization of resmetirom or our other product candidates.
−Removed: Moreover, because patent applications can take many years to issue, there may be currently-pending patent applications that may later result in issued patents that our product candidates may infringe.
+Added: Moreover, because patent applications can
+Added: take many years to issue, there may be currently-pending patent applications that may later result in issued patents that our product candidates may infringe.
In addition, identification of third party patent rights that may be relevant to our technology is difficult because patent searching is imperfect due to differences in terminology among patents, incomplete databases and the difficulty in assessing the meaning of patent claims.
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prevent us from commercializing resmetirom for NASH or our other product candidates until the asserted patent expires or is held finally invalid or not infringed in a court of law;
−Removed: require us to develop non-infringing
−Removed: technology, which may not be possible on a cost-effective basis;
+Added: require us to develop non-infringing technology, which may not be possible on a cost-effective basis;
require us to enter into royalty or licensing agreements.
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We cannot predict whether we would prevail in any such actions or that any license required under any of these patents would be made available on commercially acceptable terms, if at all.
−Removed: In addition, we cannot be sure that
−Removed: we could redesign our product candidate or processes to avoid infringement, if necessary.
+Added: In addition, we cannot be sure that we could redesign our product candidate or processes to avoid infringement, if necessary.
Accordingly, an adverse determination in a judicial or administrative proceeding, or the failure to obtain necessary licenses, could prevent us from developing and commercializing resmetirom or our other product candidates, which could harm our business, financial condition and operating results.
−Removed: Moreover, we may be subject to a third party preissuance submission of prior art to the USPTO or in addition to interference proceedings, may become involved in opposition, derivation, reexamination, inter partes
−Removed: review, post-grant review or other post-grant proceedings challenging our patent rights or the patent rights of others.
+Added: Moreover, we may be subject to a third party preissuance submission of prior art to the USPTO or in addition to interference proceedings, may become involved in opposition, derivation, reexamination, inter partes review, post-grant review or other post-grant proceedings challenging our patent rights or the patent rights of others.
An adverse determination in any such submission, proceeding or litigation could reduce the scope of, or invalidate, our patent rights, allow third parties to commercialize our technology or products and compete directly with us, without payment to us, or result in our inability to manufacture or commercialize products without infringing third party patent rights.
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In patent litigation in the United States, defendant counterclaims alleging invalidity and/or unenforceability are commonplace.
−Removed: Grounds for a validity challenge could be an alleged failure to meet any of several statutory requirements, including lack of novelty, obviousness, non-enablement
−Removed: or insufficient written description.
+Added: Grounds for a validity challenge could be an alleged failure to meet any of several statutory requirements, including lack of novelty, obviousness, non-enablement or insufficient written description.
Grounds for an unenforceability assertion could be an allegation that someone connected with prosecution of the patent withheld relevant information from the USPTO or made a misleading statement during prosecution.
Third parties may also raise similar claims before the USPTO, even outside the context of litigation.
−Removed: The outcome following legal assertions of invalidity and unenforceability is unpredictable.
+Added: The outcome following legal assertions of invalidity and
+Added: unenforceability is unpredictable.
With respect to the validity question, for example, we cannot be certain that there is no invalidating prior art of which we and the patent examiner were unaware during prosecution.
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We may not be successful in obtaining or maintaining necessary rights to our product candidates through acquisitions and in-licenses.
−Removed: We currently have rights to the intellectual property, through licenses from third parties and under patents that we own or co-own,
−Removed: to develop our product candidates.
−Removed: Because our programs may require the use of proprietary rights held by third parties, the growth of our business may depend in part on our ability to acquire, in-license,
−Removed: or use these proprietary rights.
+Added: We currently have rights to the intellectual property, through licenses from third parties and under patents that we own or co-own, to develop our product candidates.
+Added: Because our programs may require the use of proprietary rights held by third parties, the growth of our business may depend in part on our ability to acquire, in-license, or use these proprietary rights.
For example, our product candidates may require specific formulations to work effectively and efficiently and the rights to these formulations may be held by others.
−Removed: We may be unable to acquire or in-license
−Removed: any compositions, methods of use, processes, or other third party intellectual property rights from third parties that we identify as necessary for our product candidates.
+Added: We may be unable to acquire or in-license any compositions, methods of use, processes, or other third party intellectual property rights from third parties that we identify as necessary for our product candidates.
The licensing and acquisition of third party intellectual property rights is a competitive area, and a number of more established companies are also pursuing strategies to license or acquire third party intellectual property rights that we may consider attractive.
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In the future we may also conduct joint research and development programs that may require us to share trade secrets under the terms of our research and development or similar agreements.
−Removed: Despite our efforts to protect our trade secrets, our competitors may discover our trade secrets, either through breach of our agreements with third parties,
−Removed: independent development or publication of information by any of our third party collaborators.
+Added: Despite our efforts to protect our trade secrets, our competitors may discover our trade secrets, either through breach of our agreements with third parties, independent development or publication of information by any of our third party collaborators.
A competitor’s discovery of our trade secrets would impair our competitive position and have an adverse impact on our business.
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Consequently, we may not be able to prevent third parties from practicing their inventions in all countries outside the United States, or from selling or importing products made using our inventions in and into the United States or other jurisdictions.
−Removed: Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products and, further, may export otherwise infringing products to territories where we have patent protection but enforcement is not as strong as that in the United States.
+Added: Competitors may
+Added: use our technologies in jurisdictions where we have not obtained patent protection to develop their own products and, further, may export otherwise infringing products to territories where we have patent protection but enforcement is not as strong as that in the United States.
These products may compete with resmetirom, and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing.
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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: Risks Related to Our Financial Position and Need for Capital
+Added: Risks Relating to Our Financial Position and Need for Capital
If we fail to obtain the capital necessary to fund all of our planned operations, we may be unable to successfully develop and commercialize resmetirom and other future product candidates.
−Removed: Although we believe that our existing cash and cash equivalents will be sufficient to fund our current operations through at least the next 12 months, we will require additional working capital in the next twelve-
−Removed: months and on a long-term basis in order to complete the remaining clinical development primarily for resmetirom and potentially for other product candidates through potential regulatory approval and through potential commercialization of these product candidates.
+Added: Although we believe that our existing cash and cash equivalents will be sufficient to fund our current operations through at least the next 12 months, we will require additional working capital in order to complete the remaining clinical development primarily for resmetirom and potentially for other product candidates through potential regulatory approval and through potential commercialization of these product candidates.
We expect our spending levels overall to increase in connection with our clinical trials of resmetirom as well as other corporate activities.
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the terms and timing of establishing and maintaining collaborations, license agreements and other partnerships, including for ex-US resmetirom opportunities;
−Removed: costs associated with any new product candidates that we may develop, in-license
+Added: costs associated with any new product candidates that we may develop, in-license or acquire;
the effect of competing technological and market developments.
Some of these factors are outside of our control.
−Removed: Our existing capital resources may not be sufficient to enable us to fund the completion of all planned clinical trials and commercialization objectives for our product candidates.
−Removed: These and other circumstances may cause to delay certain research activities and related clinical expenses, but such delays will not alter our need to raise additional funding.
+Added: Our existing capital resources may not be sufficient to enable us to fund the completion of all planned clinical trials and commercialization objectives for our product
+Added: These and other circumstances may cause us to delay certain research activities and related clinical expenses, but such delays will not alter our need to raise additional funding.
As a result, we will need to raise substantial additional funds in the future.
We have not sold any products, and we do not expect to sell or derive revenue from any product sales for the foreseeable future.
−Removed: We may seek additional funding through future debt and equity financings, as well as potential additional collaborations or strategic partnerships with other companies or through non-dilutive
+Added: We may seek additional funding through future debt and equity financings, as well as potential additional collaborations or strategic partnerships with other companies or through non-dilutive financings.
Additional funding may not be available to us on acceptable terms or at all.
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We also could be required to seek funds through arrangements with collaborative partners or otherwise that may require us to relinquish rights to our product candidates or otherwise agree to terms unfavorable to us.
−Removed: Our ability to use net operating loss and tax credit carryforwards and certain built-in
−Removed: losses to reduce future tax payments may be limited by provisions of the Internal Revenue Code.
+Added: Our ability to use net operating loss and tax credit carryforwards and certain built-in losses to reduce future tax payments may be limited by provisions of the Internal Revenue Code.
Our net operating losses have been fully offset by a valuation allowance due to uncertainties surrounding our ability to realize these tax benefits.
−Removed: Under Section 382 of the Internal Revenue Code of 1986, as amended, if
−Removed: 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
−Removed: net operating loss carryforwards and other pre-change
−Removed: tax attributes to offset its post-change income may be limited.
+Added: Under Section 382 of the Internal Revenue Code of 1986, as amended, 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 loss carryforwards and other pre-change tax attributes to offset its post-change income may be limited.
Similar rules may apply under state tax laws.
We have not performed a detailed analysis to determine whether an ownership change under Section 382 of the Code, or similar state provisions, has previously occurred.
−Removed: As a result, if we earn net taxable income, our ability to use our pre-change
−Removed: net operating loss carryforwards to offset U.S.
+Added: As a result, if we earn net taxable income, our ability to use our pre-change net operating loss carryforwards to offset U.S.
federal taxable income may become subject to limitations, which could potentially result in increased future tax liability to us and may be substantial.
+Added: Risks Relating to our Indebtedness
+Added: Our Loan and Security Agreement contains restrictive and financial covenants that may limit our operating flexibility.
+Added: On May 6, 2022, we and our subsidiary, Canticle Pharmaceuticals, Inc.
+Added: (“Canticle”) entered into a Loan and Security Agreement with Hercules, as amended on February 3, 2023 (as amended, the “Loan Agreement”), providing for an aggregate of $250.0 million in term loans that will be available to us in four tranches subject to the conditions set forth in the Loan Agreement (collectively, the “Term Loans”).
+Added: Our obligations under the Loan Agreement are secured by a security interest in substantially all of our assets, other than intellectual property.
+Added: Until we have repaid such indebtedness, the Loan Agreement subjects us to various terms, conditions and covenants.
+Added: These include financial reporting obligations, and certain limitations on indebtedness, liens (including a negative pledge on intellectual property and other assets), investments, distributions (including dividends), collateral, investments, distributions, transfers, mergers or acquisitions, taxes, corporate changes, and deposit accounts.
+Added: Additionally, the Loan Agreement contains affirmative and restrictive financial covenants commencing on January 1, 2023, including maintenance of a minimum cash, cash equivalents and liquid funds covenant of $35.0 million, which may decrease in certain circumstances if the Company achieves both a certain FDA approval for resmetirom and a revenue milestone (the “Minimum Cash Covenant”).
+Added: The Loan Agreement also includes a revenue-based covenant (the “Revenue Covenant”) that could apply commencing at or after the
+Added: time that financial reporting is due for the quarter ending September 30, 2024;
+Added: however, the Revenue Covenant will be waived at any time in which the Company maintains, as measured monthly (i) a certain level of cash, cash equivalents and liquid funds relative to outstanding Hercules debt or (ii) a market capitalization of at least $1.2 billion.
+Added: The Revenue Covenant, as and when effective on or after November of 2024, would require the Company to maintain a minimum amount of trailing three-month net product revenue.
+Added: Our business may be adversely affected by these restrictions on our ability to operate our business.
+Added: If we raise any additional debt financing, as permitted by the Loan Agreement and if pursued and secured by the Company, the terms of such additional debt could further restrict our operating and financial flexibility.
+Added: We may not be able to generate sufficient cash flow or sales to meet the financial covenants or pay the principal and interest under the Term Loans.
+Added: Furthermore, our future working capital, borrowings or equity financing could be unavailable to repay or refinance the amounts outstanding under the Term Loans.
+Added: In the event of a liquidation, the lender under the facility would be repaid all outstanding principal and interest prior to distribution of assets to unsecured creditors, and the holders of our common stock would receive a portion of any liquidation proceeds only if all of our creditors then existing, including the lender under the Term Loans, were first repaid in full.
+Added: Our failure to comply with the covenants or other terms of the Loan Agreement, including as a result of events beyond our control, could result in a default under the Loan Agreement that could materially and adversely affect our business.
+Added: Additionally, we may be required to repay the outstanding indebtedness under the loan if an event of default occurs under the Loan Agreement or, if applicable, any future debt facility.
+Added: The Loan Agreement includes customary events of default, including payment defaults, breaches of covenants following any applicable cure period, the occurrence of certain events that could reasonably be expected to have a “material adverse effect” as set forth in the Loan Agreement, and cross acceleration.
+Added: We may not have enough available cash or be able to raise additional funds through equity or debt financings to repay such indebtedness at the time any such event of default occurs.
+Added: In this case, we may be required to delay, limit, reduce or terminate our product development or commercialization efforts or grant to others rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.
+Added: Our business, financial condition and results of operations could be materially adversely affected as a result of any of these events.
Risks Relating to Ownership of Our Common Stock
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The market price of our common stock could be impacted due to a variety of factors, including:
−Removed: global market or financial developments (whether due to the COVID pandemic or otherwise);
−Removed: US market events (including the potential for unusual market trading activity following external short interest developments or social media activity, such as those that have impacted certain stocks such as AMC Entertainment Holdings, Inc.
−Removed: and GameStop Corp.
−Removed: in 2021, and which in any case generally would be beyond our control);
+Added: global market or financial developments;
+Added: prevailing macroeconomic conditions, including potential recession or economic downturns;
+Added: US market events (including the potential for unusual market trading activity following external short interest developments or social media activity);
the outbreak of war or hostilities;
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We may sell common stock, convertible securities or other equity securities in one or more transactions at prices and in a manner we determine from time to time.
−Removed: In June 2021 we established a new “at-the-market”
−Removed: (“ATM”) program in the amount of $200 million.
−Removed: As of December 31, 2021, $159.2 million remained reserved and available for sale under this ATM program.
−Removed: We may, from time to time, issue and sell shares of our common stock under this ATM program to or through a sales agent up to established limits.
−Removed: To the extent we raise additional capital by issuing equity securities, through the ATM program or otherwise, our stockholders may experience substantial dilution.
−Removed: If we sell common stock, convertible securities or other equity securities in more than one transaction, investors may be materially diluted by subsequent sales.
−Removed: Such sales may also result in material dilution to our existing stockholders, and new investors could gain rights superior to our existing stockholders.
−Removed: Please see Note 6 within the Consolidated Financial Statements of this Annual Report on Form 10-K
−Removed: for more details regarding potential sales of our common stock under the ATM program.
+Added: We have in the past utilized an “at-the-market” (“ATM”) sales program to raise capital by selling our securities through a sales agent up to established limits, and have also issued shares of our common stock in registered offerings and shares of convertible preferred equity to institutional investors in registered and private direct offerings.
We expect that significant additional capital will be needed in the future to continue our planned operations.
−Removed: To the extent we raise additional capital by issuing equity securities, our stockholders may experience substantial dilution.
−Removed: We may sell common stock, convertible securities or other equity securities in one or more transactions at prices and in a manner we determine from time to time.
−Removed: If we sell common stock, convertible securities or other equity securities in more than one transaction, investors may be materially diluted from a beneficial ownership standpoint and value may be diluted by subsequent sales.
+Added: To the extent we raise additional capital or convertible securities, through any ATM program, public equity offering, direct offering, private offering or otherwise, our stockholders may experience substantial dilution.
+Added: If we sell common stock, convertible securities or other equity securities in more than one transaction, investors may be materially diluted by subsequent sales.
Such sales may also result in material dilution to our existing stockholders, and new investors could gain rights superior to our existing stockholders.
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As of December 31, 2022, there were a number of investors or investor groups that held a significant beneficial ownership interest in our common stock, including:
−Removed: 2,037,140 shares of our outstanding common stock (the “Bay City Affiliate Holdings”) beneficially owned by Dr.
+Added: 2,049,629 shares of our outstanding common stock
+Added: (the “Bay City Affiliate Holdings”) beneficially owned by Dr.
Fred Craves, our Lead Director, which includes 1,511,782 shares beneficially owned by Bay City Capital LLC (“Bay City”);
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Paul Friedman and Becky Taub (the “Friedman/Taub Holdings”), our Chairman and Chief Executive Officer and President of R&D and Chief Medical Officer, respectively;
−Removed: 1,969,797 shares of outstanding Series A Convertible Preferred stock, a common stock equivalent with no voting rights, that is convertible into shares of Common Stock on a 1-for-1
−Removed: basis only to the extent that after giving effect to such conversion the holders thereof and their affiliates and any persons who are members of a Section 13(d) group with the holders or their affiliates would beneficially own (in the aggregate, for purposes of Rule 13d-3
−Removed: under the Exchange Act) no more than 4.99% of the outstanding Common Stock (the “Beneficial Ownership
−Removed: Limitation”);
−Removed: and 2,301,574 shares of our common stock issuable upon the exercise of outstanding stock options under our 2015 Stock Plan, as amended (the “Common Shares Underlying Our Stock Options”).
−Removed: The Bay City Affiliate Holdings and the Friedman/Taub Holdings collectively represent approximately 19.22% of our outstanding common stock as of December 31, 2021, and are capable of being sold directly (including by Bay City or its affiliated funds) or indirectly (following any future distribution to Bay City from affiliated funds, to Bay City fund limited partners, or by Bay City to its partners), and any material sale of such shares could significantly reduce the market price of our common stock and impair our ability to raise adequate capital.
+Added: 1,969,797 shares of outstanding Series A Convertible Preferred stock and 400,000 shares of outstanding Series B Convertible Preferred Stock (collectively, the “Common Shares Underlying Our Preferred Stock”), each of which are common stock equivalents with no voting rights, that are convertible into shares of Common Stock on a 1-for-1 basis only to the extent that after giving effect to such conversion the holders thereof and their affiliates and any persons who are members of a Section 13(d) group with the holders or their affiliates would beneficially own (in the aggregate, for purposes of Rule 13d-3 under the Exchange Act) no more than 4.99% of the outstanding Common Stock, subject to adjustment with 61 days’ notice and certain limitations (the “Beneficial Ownership Limitation”);
+Added: and 2,857,054 shares of our common stock issuable upon the exercise of outstanding stock options under our 2015 Stock Plan, as amended and 14,899 shares of our common stock issuable upon the exercise of outstanding vested warrants held by our creditors (the “Common Shares Underlying Our Stock Options and Warrants”).
+Added: In addition, there are other institutional investors who from time to time file Schedule 13Gs (or amendments thereto) or Form 13Fs reflecting substantial beneficial ownership of outstanding common stock (“Our Other Shares Beneficially Owned by Institutional Investors”).
+Added: The Bay City Affiliate Holdings and the Friedman/Taub Holdings collectively represent beneficial ownership of approximately 21.9% of our outstanding common stock as of December 31, 2022, and are capable of being sold directly (including by Bay City or its affiliated funds) or indirectly (following any future distribution to Bay City from affiliated funds, to Bay City fund limited partners, or by Bay City to its partners), and any material sale of such shares could significantly reduce the market price of our common stock and impair our ability to raise adequate capital.
As of December 31, 2022, the 2,369,797 Common Shares Underlying Our Preferred Stock (disregarding the Beneficial Ownership Limitation and assuming the full conversion of all currently outstanding preferred shares) owned by entities affiliated with Baker Bros.
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Fully Converted Interest”).
−Removed: In addition, we have six institutional investors who have filed Schedule 13Gs (or amendments thereto) reflecting collective beneficial ownership, as of December 31, 2021, of approximately 34.8% of our outstanding common stock (“Our Other Shares Beneficially Owned by Institutional Investors”).
−Removed: Sales of a substantial number of shares of our common stock by one or more of the investors of groups listed above (such as the Common Shares Underlying Our Stock Options, the Bay City Affiliate Holdings, the Friedman/Taub Holdings, the Baker Bros.
−Removed: Fully Converted Interest, the Common Shares Underlying Our Stock Options, or Our Other Shares Beneficially Owned by Institutional Investors) or other equity-related securities in the public markets, could depress the market price of our common stock.
+Added: Sales of a substantial number of shares of our common stock by one or more of the investors or groups listed above (such as the Common Shares Underlying Our Preferred Stock, the Bay City Affiliate Holdings, the Friedman/Taub Holdings, the Baker Bros.
+Added: Fully Converted Interest, the Common Shares Underlying Our Stock Options and Warrants and Our Other Shares Beneficially Owned by Institutional Investors) or other equity-related securities in the public markets, could depress the market price of our common stock.
If there are significant sales or short sales of our stock, the price decline that could result from this activity may cause the share price to decline further, which, in turn, may cause long holders of the common stock to sell their shares, thereby contributing to sales of common stock in the market.
See “Risk Factors;
−Removed: Risks Relating to Ownership of Our Common Stock —
−Removed: The price of our common stock has been, and may continue to be, volatile .
+Added: Risks Relating to Ownership of Our Common Stock — The price of our common stock has been, and may continue to be, volatile .
” Such sales or short sales also may impair our ability to raise capital through the sale of additional shares in the future at a time and price that our management deems acceptable, if at all.
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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.