What changed in this filing

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Item 1A. Risk Factors

2024-05-07 compared with 2023-11-06 · 50 added, 20 removed, 1 unchanged (99% of the section changed)

Risk Factors.

Except as set forth below, there have been no material changes to the risk factors included in detail in the “Risk Factors” sections appearing in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on February 23, 2023 and in Part II, Item 1A of our Quarterly Report on Form 10-Q for the quarter ended June 30, 2023, filed with the SEC on August 8, 2023.

Our internal computer systems, or those of our third-party collaborators, service providers, contractors or consultants, may fail or suffer security incidents, which could result in a material disruption of our operations or development programs and could have a material adverse effect on our reputation, business, financial condition or results of operations.

Our internal computer systems and those of our current or future third-party collaborators, service providers, contractors and consultants are vulnerable to damage from computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures.

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.

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, including ransom demands, to affect service reliability and/or threaten the confidentiality, integrity and availability of information.

The prevalent use of mobile devices also increases the risk of data security incidents.

If such a material 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 operations or development programs and/or produce significant reputational, financial, legal, regulatory, business or operational harm.

For example, any 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.

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 product candidates could be delayed.

For example, on September 26, 2023, we became aware of unauthorized access to part of our information technology network.

As part of our investigation into this incident, we engaged and consulted with outside cyber-security professionals and notified relevant law enforcement authorities.

We believe, based on our assessment as of the date of this Form 10-Q filing, that:

there has been no interruption to our operations or business;

there is no evidence that the exfiltrated data was publicly released or is at further risk;

and this event had no material adverse effect on the Company.

Although we have taken steps after this event, and will take further steps, to further enhance our cybersecurity protections and minimize the impact of any future event, we cannot provide any assurances that future cyber events will not occur, that these security safeguards will be successful, and that future cyber events, to the extent they occur, will not impact our operations or have any material adverse impact on our business.

As a result, we may not in the future successfully prevent service interruptions, exfiltrations or data security incidents that could materially adversely affect our business including the events and potential ramifications described in the succeeding paragraph.

In addition, our insurance may not cover or be sufficient in type or amount to cover us against claims related to this data exfiltration or any security breaches, cyberattacks and other related breaches, including the costs of responding to and remediating this incident or any other incidents or any other liability that may arise from this incident or any such incident.

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, litigation, regulatory enforcement actions, fines, sanctions or other penalties, injunctive relief requiring costly compliance measures, required notification and credit monitoring, public statements against us, third parties to lose trust in us, or 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.

Except as set forth below, there have been no material changes to the risk factors included in detail in the “Risk Factors” sections appearing in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 28, 2024 (the “Annual Report”)

In order to execute our business plan and achieve profitability, we need to effectively commercialize Rezdiffra, which received FDA approval in March 2024 for the treatment of adults with NASH with moderate to advanced liver fibrosis.

We may not be able to meet expectations with respect to sales of Rezdiffra or attain profitability and positive cash-flow from operations.

Rezdiffra is our only drug that has been approved for sale and it has been approved only for the treatment of adults with noncirrhotic NASH with moderate to advanced liver fibrosis in the United States.

We are focusing a significant portion of our activities and resources on Rezdiffra, and we believe our prospects are highly dependent on, and a significant portion of the value of our company relates to, our ability to successfully commercialize Rezdiffra for the treatment of adults with NASH with moderate to advanced liver fibrosis in the United States.

Successful commercialization of Rezdiffra is subject to many risks.

We have never, as an organization, launched or commercialized any product, and there is no guarantee that we will be able to successfully commercialize Rezdiffra for its approved indication.

There are numerous examples of failures to meet high expectations of market potential, including by pharmaceutical companies with more experience and resources than us.

We are in the process of building our commercial organization and hiring our U.S.

sales force and will need to refine and further develop our commercial organization in order to successfully commercialize Rezdiffra.

We expect that the initial commercial success of Rezdiffra for the treatment of NASH will depend on many factors, including the following:

• the efficacy, cost, approved use, and side-effect profile of Rezdiffra regimens relative to competitive treatment regimens for the treatment of NASH;

• Rezdiffra may compete with the off-label use of currently marketed products and other therapies in development that may in the future obtain approval for NASH;

• the effectiveness of our commercial strategy for the marketing of Rezdiffra, including our pricing strategy and the effectiveness of our efforts to obtain adequate third-party reimbursements;

• developing, maintaining and successfully monitoring commercial manufacturing arrangements for Rezdiffra with third-party manufacturers to ensure they meet our standards and those of regulatory authorities, including the FDA, which extensively regulate and monitor pharmaceutical manufacturing facilities;

• our ability to negotiate and enter into any additional commercial, supply and distribution contracts to support commercialization efforts, and to hire and manage additional qualified personnel;

• our ability to meet the demand for commercial supplies of Rezdiffra at acceptable costs;

• the acceptance of Rezdiffra by physicians, patients and third-party payors;

• our ability to remain compliant with laws and regulations that apply to us and our commercial activities;

• the actual market-size, ability to identify targeted patients and the demographics of patients eligible for Rezdiffra, which may be different than what we currently expect;

• the occurrence of any side effects, adverse reactions or misuse, or any unfavorable publicity in these areas;

• our ability to obtain, maintain or enforce our patents and other intellectual property rights;

• the effect of recent or potential health care legislation in the United States.

While we believe that Rezdiffra for the treatment of NASH should have a commercially competitive profile, we cannot accurately predict the amount of time needed to attain a commercially successful profile or the amount of revenue that would be generated from the sale of Rezdiffra.

If we do not effectively commercialize Rezdiffra, we will not be able to execute our business plan and may not be able to achieve profitability.

If our revenues, market share and/or other indicators

of market acceptance of Rezdiffra do not meet the expectations of investors or public market analysts, the market price of our common stock would likely decline.

Rezdiffra has received accelerated approval from the FDA, and therefore faces future post-approval development and regulatory requirements, which present additional challenges for us to successfully navigate.

The FDA granted accelerated approval of Rezdiffra for the treatment of adults with noncirrhotic NASH with moderate to advanced liver fibrosis in the United States in March 2024.

Under the accelerated approval pathway, continued approval may be contingent upon verification of a clinical benefit in confirmatory trials.

These post- approval requirements and commitments may not be feasible and/or could impose significant burdens and costs on us;

could negatively impact our development, manufacturing and supply of our products;

and could negatively impact our financial results.

Drugs granted accelerated approval must meet the same statutory standards for safety and effectiveness as those granted traditional approval.

Failure to meet post-approval commitments and requirements, including completion of enrollment of—and in particular, any failure to obtain positive data from—any confirmatory studies required by the FDA, could result in negative regulatory action from the FDA and/or withdrawal of such accelerated approval.

The recently enacted Food and Drug Omnibus Reform Act has expanded FDA’s expedited withdrawal procedures for drugs approved through the accelerated approval pathway if a sponsor fails to conduct any required post-approval study with due diligence.

Unless otherwise informed by the FDA, an applicant must submit to the FDA for consideration during the preapproval review period copies of all promotional materials, including promotional labeling as well as advertisements, intended for dissemination or publication within 120 days following marketing approval.

After 120 days following marketing approval, unless otherwise informed by the FDA, the applicant must submit promotional materials at least 30 days prior to the intended time of initial dissemination of the labeling or initial publication of the advertisement.

If we or the manufacturing facilities for our products fail to comply with applicable regulatory requirements, the FDA may, among other actions:

issue warning letters or untitled letters;

seek an injunction or impose civil or criminal penalties or monetary fines;

suspend or withdraw or alter the conditions of our marketing approval;

suspend any ongoing clinical trials;

refuse to approve pending applications or supplements to applications submitted by us;

suspend or impose restrictions on operations, including costly new manufacturing requirements;

and seize or detain products, refuse to permit the import or export of products or require us to initiate a product recall.

Unregistered Sales of Equity Securities and Use of Proceeds.

Defaults Upon Senior Securities.

Mine Safety Disclosures.

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.

What changed 10-Q

Item 1A. Risk Factors