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Item 1. Business

2023-02-09 compared with 2022-01-28 · 565 added, 455 removed, 567 unchanged (64% of the section changed)

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and its wholly owned subsidiaries.

We are a clinical stage biopharmaceutical company focused on the discovery, development and commercialization of small molecule therapies designed to modulate cellular protein levels as a novel treatment approach for cancer and other challenging diseases.

We are a clinical stage biopharmaceutical company focused on the discovery, development and commercialization of small molecule and cell therapies based on the modulation of cellular protein levels as a novel treatment approach for cancer and other challenging diseases.

Leveraging our extensive expertise in E3 ligases together with our proprietary DNA-encoded libraries, we have built DELigase, an integrated discovery platform to identify and advance novel drug candidates targeting E3 ligases, a broad class of enzymes that can modulate proteins within the cell.

Our drug discovery approach is to either harness or inhibit the natural function of E3 ligases within the ubiquitin-proteasome system to selectively decrease or increase cellular protein levels.

Our wholly owned pipeline comprises four clinical stage drug candidates including targeted protein degraders of Bruton’s tyrosine kinase (BTK), a B-cell signaling protein, and inhibitors of Casitas B-lineage lymphoma proto-oncogene B (CBL-B), an E3 ligase that regulates T-cell activation.

Our lead drug candidate from our protein degradation portfolio, NX-2127, is an orally bioavailable BTK degrader for the treatment of relapsed or refractory B-cell malignancies.

Our wholly owned, clinical stage pipeline includes targeted protein degraders of Bruton’s tyrosine kinase (BTK), a B-cell signaling protein, and inhibitors of Casitas B-lineage lymphoma proto-oncogene B (CBL-B), an E3 ligase that regulates activation of multiple immune cell types including T cells and NK cells.

Our partnered drug discovery pipeline consists of ten programs under collaboration agreements with Sanofi S.A.

(Sanofi) and Gilead Sciences, Inc.

(Gilead), within which we retain options for co-development and co-commercialization rights in the United States for up to four drug candidates.

Our Clinical Development Pipeline

Our wholly owned pipeline of Targeted Protein Modulation drug candidates comprises four clinical stage programs in our Targeted Protein Degradation and Targeted Protein Elevation portfolios.

These two portfolios demonstrate our ability to either decrease or increase protein levels in cells through the modulation of E3 ligases.

The following chart summarizes our clinical pipeline and ongoing clinical studies:

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Targeted Protein Degradation

Our portfolio of targeted protein degraders of BTK, a B‑cell signaling protein, comprises NX‑2127, an orally bioavailable BTK degrader for the treatment of relapsed or refractory B‑cell malignancies, and NX‑5948, an orally bioavailable BTK degrader for the treatment of relapsed or refractory B-cell malignancies and potentially autoimmune diseases.

We are currently enrolling patients in a Phase 1 trial for patients with relapsed or refractory B-cell malignancies which comprises a Phase 1a dose-escalation study and a Phase 1b cohort expansion study.

We have initiated the first of several potential Phase 1b expansion cohorts for patients with relapsed chronic lymphocytic leukemia (CLL), and enrollment continues in the Phase 1a dose-escalation portion of the trial for patients with several types of non-Hodgkin lymphoma (NHL).

We are currently enrolling patients in the Phase 1a portion of a Phase 1a/1b dose-escalation and cohort expansion study in patients with relapsed or refractory B-cell malignancies.

Our second drug candidate from our protein degradation portfolio, NX-5948, is also an orally bioavailable BTK degrader for the treatment of relapsed or refractory B-cell malignancies and potentially autoimmune diseases.

We anticipate enrolling our first patient in the first half of 2022 in the Phase 1a portion of a Phase 1a/1b dose-escalation and cohort expansion study in patients with relapsed or refractory B-cell malignancies.

Our lead drug candidate from our E3 ligase inhibitor portfolio, NX-1607, is an orally bioavailable CBL-B inhibitor for immuno-oncology indications.

Targeted Protein Elevation

Our portfolio of inhibitors of CBL-B, an E3 ligase that regulates the activation of multiple immune cell types including T cells and NK cells, comprises NX-1607, an orally bioavailable CBL-B inhibitor for immuno-oncology indications, and NX-0255, for ex vivo use to enhance adoptive T-cell therapy including our drug-enhanced tumor infiltrating lymphocyte (TIL) therapy, DeTIL-0255.

We are currently enrolling patients in the Phase 1a portion of a Phase 1a/1b dose-escalation and cohort expansion study in patients with solid tumors and lymphomas.

We are also advancing the development of a CBL-B inhibitor, NX-0255, for ex vivo use to enhance adoptive T-cell therapy.

We are currently recruiting patients in a Phase 1 clinical trial for our first cell therapy candidate, DeTIL‑0255, in patients with gynecologic cancers including ovarian, endometrial, and cervical cancer.

Beyond these clinical candidates, we are advancing additional wholly owned, preclinical programs that may expand our therapeutic areas beyond oncology and autoimmune disease to viral diseases, including COVID-19.

Our therapeutic areas may be further expanded through our established strategic collaborations with Sanofi S.A.

(Sanofi) and Gilead Sciences, Inc.

In disease settings where currently available treatments are limited by suboptimal efficacy or safety, or where relevant protein targets are not druggable by conventional means, we believe targeted protein modulation represents a novel treatment paradigm with the potential to improve upon or become the standard of care.

Recent advances in the field have highlighted the significant therapeutic potential of E3 ligases in promoting targeted protein degradation.

In addition, we believe the largely unexplored area of inhibiting E3 ligases directly to increase protein levels represents an equally promising approach.

Using our powerful DELigase platform, we have the ability to discover small molecule drug candidates to decrease or increase protein levels by either harnessing or inhibiting the activity of the appropriate E3 ligase, depending on the desired therapeutic effect.

We have carefully selected and are progressing over 30 E3 ligases to expand the universe of E3 ligases that can be modulated beyond cereblon and von Hippel-Lindau (VHL), the two predominantly used in the field today.

Our DNA-encoded library (DEL) collection consists of billions of small molecule compounds used to identify potential binders to ligases and protein targets as critical starting points in our drug discovery process.

The differentiation of our protein modulation platform is in its breadth and versatility, enabling us to alter protein levels either upward or downward for both clinically validated targets, such as BTK, and for targets previously thought to be “undruggable”;

that is, proteins that could not be addressed by conventional pharmacological means such as CBL-B.

Our protein degradation portfolio includes two clinical-stage chimeric targeting molecules (CTMs) that catalyze potent and specific degradation of BTK, a well validated target for B-cell malignancies.

Our two BTK degrader drug candidate s , NX-2127 and NX-5948 , are orally available CTM s for the treatment of relapsed or refractory B-cell malignancies including non-Hodgkin lymphoma (NHL) and chronic lymphocytic leukemia (CLL).

In addition, we plan to develop NX-5948 in certain autoimmune indications.

In preclinical studies, we have demonstrated the ability of both NX-2127 and NX-5948 to degrade BTK in tumor cell lines harboring either wild type BTK and the C481S mutation in BTK that confers resistance to currently marketed BTK inhibitors.

In these models, BTK degradation correlates with anti-tumor activity.

In addition to degrading BTK, NX-2127 was also designed to have IMiD activity.

Based on our preclinical data, we believe NX-2127 and NX-5948 has the potential to demonstrate improved clinical benefit over current standard-of-care in multiple oncology indications.

We are currently enrolling Phase 1 trials for NX-2127 and we anticipate enrolling our first patient in the first half of 2022 for NX-5948 in patients with relapsed and refractory B-cell malignancies .

Initial findings from the first six patients treated at the two lowest doses in the Phase 1 trial of NX-2127 confirmed oral bioavailability and BTK degradation in circulating B cells , including a clinical response observed in patient number one , providing the first proof-of-mechanism data for a CTM in hematologic malignancies.

Our E3 ligase inhibitor portfolio includes two clinical-stage small molecule inhibitors of CBL-B, which functions as an intracellular checkpoint regulating activation of T cells, B cells and NK cells.

In preclinical studies, primary human T cells exposed to our lead oral CBL-B ligase inhibitor drug candidate NX-1607 demonstrated increased T-cell activation in the absence of co-stimulation with CD3 and CD28, a potential advantage in a suppressive tumor microenvironment.

In addition, NX-1607 has been shown in preclinical models to increase T‑cell proliferation and result in increased secretion of interleukin-2 (IL-2) a key cytokine involved in immune activation.

We believe that oral delivery of CBL-B inhibitors has the potential to drive immune cell activation and stimulation of localized IL-2 secretion, leading to enhanced anti-tumor response.

As an intracellular immune checkpoint inhibitor, we believe NX-1607 has potential utility across a wide range of oncology indications.

We are currently enrolling patients in the Phase 1a portion of a Phase 1a/1b dose-escalation and cohort expansion study in patients with a variety of solid tumors and lymphoma.

We are also developing a second CBL-B ligase inhibitor, NX‑0255, for ex vivo use.

We believe incorporating NX-0255 into adoptive cell therapy (ACT) has the potential to enhance T‑cell proliferation and phenotype to improve anti-tumor activity.

Our lead cellular therapy drug candidate incorporates NX-0255 into the manufacturing process for the production of therapeutic drug-enhanced tumor infiltrating lymphocytes (TIL), which we call drug-enhanced tumor infiltrating lymphocyte (DeTIL).

We are currently recruiting patients in a Phase 1 trial of DeTIL-0255 in patients with gynecologic malignancies including ovarian, endometrial, and cervical cancer.

Beyond our current programs, we are extending our degrader and inhibitor portfolios both on our own and with partners by developing new CTM degraders and ligase inhibitors for a number of targets for which we believe the protein modulation modality can be clinically advantageous over existing therapies.

These programs and future programs may have the potential to address diseases with significant unmet need, including autoimmune disease, viral diseases, cancer and neurodegeneration.

NX-1607 was awarded an Innovative Passport from the UK Medicines and Healthcare products Regulatory Agency to accelerate time to market and facilitate patient access to novel drugs to treat serious and life-threatening diseases.

We completed the safety run-in portion of a Phase 1 trial in patients with advanced gynecologic malignancies, which included three patients with advanced epithelial ovarian cancer (EOC) who have been dosed with DeTIL-0255 and have cleared the initial safety evaluation.

The timing of the expansion of the Phase 1 trial will be established following a determination regarding the potential inclusion of NX-1607 in future cohorts.

Drug Discovery Pipeline

In addition to our clinical stage drug candidates, we are extending our protein modulation portfolio, both on our own and with partners by developing new targeted protein degraders and ligase inhibitors for a number of targets for which we believe the protein modulation modality can be clinically advantageous over existing therapies.

These existing and future programs may have the potential to address diseases with significant unmet need, including cancer and other challenging diseases.

We have entered into several revenue generating collaborations with large biopharmaceutical companies to leverage our DELigase platform for drug discovery.

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We retain options for co-development and co-commercialization rights in the United States for up to four drug candidates discovered under these collaborations.

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Corporate Strategy

Our strategy is to leverage our DELigase platform to discover breakthrough therapies to improve upon existing drugs and address targets that are thought to be undruggable with current modalities.

Our strategy is to leverage our DELigase platform to discover breakthrough therapies to not only improve upon existing drugs, but also address targets that are thought to be undruggable with current modalities.

The key elements of our strategy are to:

• Advance our lead programs through clinical development .

We have four targeted cancer therapy and immune modulating drug candidates in Phase 1 clinical development that we are advancing in 2022.

We expect to identify our Phase 1b expansion dose for NX-2127 and commence enrollment in disease-specific expansion cohorts in mid-2022.

We also anticipate providing a clinical update on the patients enrolled in the Phase 1a dose escalation study in the second half of 2022.

During 2022, we will be enrolling patients across our other three proprietary programs and anticipate reporting initial findings in mid-2022 for NX-1607 and in the second half of 2022 for NX-5948 and DeTIL-0255, including pharmacokinetic and biomarker data for NX-1607 and NX-5948 and initial clinical response assessments for DeTIL-0255.

We have four drug candidates in Phase 1 clinical development and anticipate the following advancements in 2023.

Enrollment is ongoing in our Phase 1a/1b clinical trial of NX-2127 in adults with relapsed or refractory B-cell malignancies.

We expect to provide a clinical update for the NX-2127 trial in the second half of 2023 and further anticipate defining a regulatory strategy for NX-2127 in the second half of 2023 based on emerging clinical data and feedback from the U.S.

Food and Drug Administration (FDA).

Enrollment is ongoing in our Phase 1a/1b clinical trial of NX-5948 in adults with relapsed or refractory B-cell malignancies.

We anticipate presenting initial clinical data from the Phase 1a portion of the NX-5948 trial in the second half of 2023.

In addition, we seek to define a dose for Phase 1b cohort expansion in the second half of 2023.

Enrollment is ongoing in our Phase 1 trial for NX-1607 in adults with a variety of oncology indications.

We expect to present clinical data from the Phase 1a portion of the NX-1607 trial and to define a dose for Phase 1b cohort expansion in the second half of 2023.

• Enhance and expand our DELigase platform.

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We select new targets for which we have evidence that modulation of protein levels may provide a distinct therapeutic advantage over traditional small molecule inhibitors, or which have been considered undruggable by existing modalities.

We have multiple additional wholly owned and partnered targets in DEL screening, lead optimization and preclinical research.

We plan to use our DELigase platform to continue to explore new targets with potential applications in autoimmune, cancer, neurodegeneration and viral diseases.

We have multiple additional wholly owned and partnered targets in DNA-encoded library (DEL) screening, lead optimization and preclinical research.

We plan to use our DELigase platform to continue to explore new targets with potential applications in cancer and other challenging diseases.

We expect to select a new targeted protein degrader development candidate in 2023.

• Explore additional strategic collaborations to maximize the commercial potential of our DELigase platform and our drug candidates .

We have received $300.5 million in non-dilutive funding to date from our partnerships to support our research and development activities and to create new targeted protein modulation drugs with our partners.

Under our Sanofi and Gilead partnerships as of November 30, 2021, we have the opportunity to receive up to $4.8 billion in potential future fees and milestone payments, as well as royalties on future sales while retaining certain commercialization options.

We have received $316.0 million in non-dilutive funding to date from our collaborations to support our research and development activities and to create new targeted protein modulation drugs with our partners.

Under our Sanofi and Gilead collaborations, as of November 30, 2022, we have the opportunity to receive up to $4.8 billion in potential future fees and milestone payments, as well as royalties on future sales while retaining certain commercialization options.

We currently retain worldwide development and commercialization rights to our BTK and CBL-B portfolios.

While we intend to become a fully integrated biopharmaceutical company and build a targeted sales force in the United States to support the commercialization of our drug candidates, if approved, we intend to selectively evaluate technology collaborations and commercialization partnerships for our drug candidates with partners whose capabilities complement our own while retaining meaningful commercial rights in key geographic territories.

Expand our development organization to support advancing multiple programs.

We have expanded and continue to expand our organization to support four wholly owned clinical programs.

These investments in human capital include clinical operations, chemistry, manufacturing and controls, regulatory affairs, and medical affairs.

Role of proteins in disease and ubiquitin-proteasome system biology

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Targeted Protein Modulation

Recent advances in the field have highlighted the significant therapeutic potential of harnessing E3 ligases to promote targeted protein degradation.

In addition, we believe the largely unexplored area of inhibiting E3 ligases directly to increase protein levels represents an equally promising approach.

Using our powerful DELigase platform, we have demonstrated our ability to discover and advance small molecule drug candidates to decrease or increase protein levels by either harnessing or inhibiting the activity of the appropriate E3 ligase, depending on the desired therapeutic effect.

We have carefully selected and are advancing over 60 E3 ligases in our DELigase platform, expanding the universe of E3 ligases that can be modulated beyond cereblon and von Hippel-Lindau (VHL), the two predominantly used in the field of targeted protein degradation today.

Our DEL collection consists of billions of small molecule compounds used to identify potential binders to ligases and protein targets as critical starting points in our drug discovery process.

that is, proteins that could not be addressed by conventional pharmacological means, such as CBL-B.

Proteins as targets in treating disease

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Because dysregulation and disease are not restricted to these “druggable” proteins, a significant number of therapeutically relevant proteins have not been addressed by traditional small molecule drugs.

Other modalities including antibody and protein - based therapies, genetic medicines and cell therapies have emerged to address these issues but are still limited by their modes of delivery, scalability and their therapeutic applications.

Other modalities, including antibody and protein-based therapies, genetic medicines and cell therapies, have emerged to address these issues but are still limited by their modes of delivery, their scalability and their therapeutic applications.

Leveraging E3 ligases and the ubiquitin proteasome system as a new treatment modality

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One of the most exquisitely ordered cellular systems governing cellular proteins is the ubiquitin proteasome system (UPS).

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As depicted above, the UPS is responsible for regulating and maintaining normal protein levels in the cell.

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Modulating protein levels through small molecule therapeutics targeting E3 ligases

Advances in our understanding of the UPS suggest broad potential for development of new therapies that modulate E3 ligases in context of diseases such as cancer and autoimmune disorders.

An example are the IMiDs, which include the approved cancer drugs Revlimid (lenalidomide) and Pomalyst (pomalidomide).

IMiDs exert their therapeutic effects by targeting the E3 ligase cereblon and redirecting its activity toward proteins it would not normally degrade such as Aiolos, a transcription factor regulating immune cell function.

Advances in our understanding of the UPS suggest broad potential for the development of new therapies that modulate E3 ligases in the context of diseases such as cancer and autoimmune disorders.

An example are the so-called immunomodulatory drugs, Revlimid (lenalidomide) and Pomalyst (pomalidomide), which are approved cancer drugs.

These drugs exert their therapeutic effects by targeting the E3 ligase cereblon and redirecting its activity toward proteins it would not normally degrade such as Ikaros and Aiolos (also known as IKZF1 and IKZF3), transcription factors regulating immune cell function.

Elucidation of this mechanism led to the recognition that pharmacological control of E3 ligase activity could more generally represent a promising new paradigm for small molecule drug action.

This idea has since translated into the development of targeted protein degraders, which we believe have significant therapeutic potential.

In addition, the largely unexplored area of inhibiting E3 ligases directly to increase cellular protein levels may represent an equally promising approach.

Harnessing E3 ligases .

Targeted protein degradation harnesses the natural activity of ligases to remove specific proteins from the cell.

In addition, the largely unexplored area of inhibiting E3 ligases directly to increase cellular protein levels, which we call Targeted Protein Elevation, may represent an equally promising approach.

Targeted Protein Modulation is the term we use to describe our ability to either decrease target protein levels by harnessing E3 ligases for targeted protein degradation or increase protein levels through the inhibition of E3 ligases for targeted protein elevation.

• Targeted Protein Degradation (Harnessing E3 ligases).

Targeted protein degradation (TPD) harnesses the natural activity of ligases to remove specific proteins from the cell.

Targeted protein degradation is accomplished by using bifunctional small molecules, which are composed of an E3 ligase binding element, or harness, linked to a target protein binding element.

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In addition, since the effect is mediated through the binding of a small molecule drug rather than through functional inhibition, proteins lacking active sites are potentially targetable, greatly expanding the spectrum of both proteins and diseases amenable to small molecule therapeutic intervention.

Inhibiting E3 ligases .

By inhibiting the function of E3 ligases, it is possible to rapidly increase specific proteins levels to control biological pathways.

• Targeted Protein Elevation (Inhibiting E3 ligases) .

By inhibiting the function of E3 ligases in targeted protein elevation (TPE), it is possible to rapidly increase specific protein levels to control biological pathways.

Increasing the levels of distinct sets of proteins could be a powerful approach to blocking pathological processes and restoring normal physiology.

While there is enthusiasm in the scientific community around the therapeutic potential of E3 ligase inhibition, the discovery of such inhibitors has been impeded by the limited understanding of this biochemically and structurally complex class of enzymes.

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Targeted Protein Modulation

We believe that targeting E3 ligases to modulate protein levels represents a new therapeutic frontier that retains the favorable attributes of small molecule treatment modalities while addressing some major limitations.

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Development and manufacturing of small molecules utilizes established, cost-efficient processes that are readily scalable.

Our approach leverages the specificity of E3 ligases and the natural function of the UPS to regulate the cellular proteome for therapeutic effect.

Development of therapies that modulate E3 ligases has been historically limited by the inherent difficulties in building biochemical and cellular assays relevant for measuring E3 ligase function, as well as by the relative lack of mechanistic understanding of this critical class of proteins.

Through our focused efforts and investment over the past several years, we have developed proprietary tools, in-depth knowledge and expertise relating to E3 ligases as targets for drug discovery.

In addition, we have assembled a team that has extensive experience applying DEL discovery technologies to a wide variety of proteins including targets previously considered undruggable.

Together, these capabilities and insights have allowed us to develop a powerful platform technology called DELigase to identify and advance novel drug candidates that either selectively increase or decrease protein levels within the cell.

Our DELigase platform combines our proprietary DELs and E3 ligase expertise to empower efficient drug discovery.

DEL technology is well suited to finding new binders for targets thought to be undruggable, which include the vast majority of proteins encoded in the human genome including E3 ligases.

Our DELigase platform

DEL technology taps enormous chemical space to overcome “druggability” limits

Our DEL collection comprises several billion compounds whereas typical screening collections contain less than a few million.

This increased scale provides the necessary chemical diversity to identify chemical starting points for more challenging protein targets that have been considered undruggable by other approaches.

DEL technology evaluates each library compound simultaneously in a single experiment, enabling a more accurate assessment of compound function.

In addition, because DEL drug discovery is performed by measuring compound binding rather than biochemical activity it allows inclusion of proteins for which biochemical assays are lacking or not feasible.

Further, the relative ease with which binding screens can be performed and interpreted provides sufficient flexibility to allow evaluation of structurally complicated proteins like E3 ligases, which display distinct conformations and activity states and are often part of large multi-protein complexes.

Lastly, a chemical linker attaches each DEL compound to a strand of DNA, which functions as a structure barcode allowing screening hits to be easily identified.

DEL’s built in chemical linker is also an advantage in the context of identifying bifunctional degraders, as it allows the discovery of compounds that can effectively bind proteins when linked to a partner molecule.

Our DELigase platform was designed for E3 ligase discovery

Our integrated DELigase platform relies on proprietary DELs we have specifically engineered to identify and select binders against a diverse group of target protein classes, including some considered to be undruggable, as well as binders to E3 ligases.

Key features of our DELigase platform include:

Custom-synthesized scaffold-based DELs.

Our custom-synthesized chemical scaffolds impart desirable, drug-like chemical properties, like solubility, into each library compound in a manner that cannot be achieved when building DEL collections solely from commercial inputs.

In addition, these scaffolds are ideally suited for binding to the shallow binding pockets on the surfaces of proteins like E3 ligases.

Covalent small molecule discovery using DELs .

Our expertise in aqueous synthetic chemistry and affinity screening technology has allowed us to integrate covalent drug discovery into our DELigase platform through the introduction of covalent DELs.

The formation of a covalent bond enables more efficient identification of binders to transient or cryptic binding pockets on a protein’s surface, making covalent DELs an ideal discovery tool for challenging protein targets like E3 ligases.

In addition, covalent and reversible covalent compounds have begun to show promise in augmenting performance of targeted protein degraders, suggesting that our covalent DELs may have additional utility.

Proprietary data analysis and hit confirmation technologies .

We have built a suite of custom analytical tools including machine learning for interpretation and prioritization of our DEL binder outputs, which routinely contain thousands of productive hits.

We have also developed high throughput methods for nanoscale hit resynthesis and affinity selection mass spectroscopy that allow a more comprehensive and industrialized process for identifying the best chemical starting points for future pipeline programs.

Many screens, one protein target .

E3 ligases can exist in multiple potential conformation states.

Our approach uses comprehensive parallel screening campaigns to interrogate numerous states and surfaces of the target protein.

An illustration of how we probe the surface of an E3 ligase by DEL screening is depicted in the graphic below.

An E3 Ligase protein complex bound to a DEL molecule representing just one of several possible protein conformations

Our DELigase discovery platform enables us to address multiple therapeutic applications

We have expanded the universe of E3 ligases available for therapeutic manipulation from the two predominantly used in the field, cereblon and VHL, by screening over 30 additional E3 ligases to date.

We have carefully selected these E3 ligases for use in drug discovery across our four core areas of therapeutic expertise:

oncology, immuno-oncology, adoptive cell therapy and immune disorders.

We consider the unique biological function of each ligase and the therapeutic requirements of the disease state for inhibitor programs.

For ligases that direct targeted protein degradation, we take into account the biochemical specificity of the E3 ligase as well as tissue specificity of action and cellular localization of the target protein.

E3 ligases that are required for cancer cell survival are also of high interest for cancer indications to reduce the risk of intrinsic resistance to degrader action.

We are growing our set of E3 ligases for use in our DELigase platform tailored to our core therapeutic areas.

DELigase for E3 ligase harnesses

We apply our platform to utilize the ubiquitination function of E3 ligases for targeted protein degradation.

Our DELigase platform enables us to identify binders to E3 ligases, which we refer to as harnesses, as well as binders to degradation targets.

We use these molecular starting points to design compounds using a modular approach that connects an E3 ligase harness to a target protein binder with a linker.

We refer to these bifunctional molecules as CTMs, which function by bringing the E3 ligase into proximity of the target protein to catalyzing its ubiquitination and degradation.

The process of designing CTMs and their activity is shown in the graphic below.

DELigase allows the discovery of small molecule binders in the context of a chemical linker, enabling CTM design

DELigase for E3 ligase inhibitors

By inhibiting the function of E3 ligases, it is possible to rapidly increase specific protein levels to control biological pathways.

Increasing the levels of distinct sets of proteins could be a powerful approach to blocking pathological processes and restoring normal physiology.

Our DELigase platform enables the identification of inhibitors through parallel screening of distinct E3 ligase activity states using chemical matter tailored specifically for binding to E3 ligases.

Our substantial expertise in E3 ligase biochemistry and biology has allowed us to identify and develop potent inhibitors of E3 ligases that play pivotal roles in T-cell signaling and immune cell function.

DELs allow access to a spectrum of binders across the protein surface, some of which inhibit protein function.

Drug candidate identification and selection process

We employ a series of processes and studies from target validation to preclinical development for selection of the appropriate candidate for further development.

We have invested in an integrated drug development infrastructure that enables us to perform every step of the drug discovery and early preclinical development process within our research facility.

Each of our primary areas of core expertise and technology are highlighted in the below illustration.

Our integrated drug discovery and development system and core technical expertise

Our Drug Candidates

Our pipeline consists of a protein degradation portfolio of CTM drug candidates that degrade target proteins and our ligase inhibitor portfolio of drug candidates that raise substrate protein levels.

These two portfolios demonstrate our ability to both increase and decrease protein levels in cells through the modulation of E3 ligases.

In addition to our CBL-B and BTK portfolios, our wholly owned drug discovery pipeline includes several CTM programs that are at DEL discovery, cell-based screening and lead optimization stages.

Our CTM drug discovery programs include targets for autoimmunity, hematology, oncology and antivirals.

We believe targeted protein degradation may offer an advantage over existing anti-viral agents, which largely focus on a limited set of viral targets that can be inhibited by small molecules.

The fundamentally different pharmaco-kinetic and pharmaco-dynamic action of CTMs, due to the catalytic nature of ligase-mediated degradation, may allow for the rapid removal of viral proteins and successful interruption of the viral life cycle.

In addition, we have over 30 ligase programs at various stages of DEL discovery, cell-based screening and lead optimization.

Although we believe our drug candidates have the potential to improve upon existing drugs and address targets that are thought to be undruggable with current modalities, we will need to complete additional preclinical studies and clinical trials to determine the safety and efficacy of our drug candidates.

The results of these future studies and trials may be different than the results of our earlier studies and trials.

We have not received regulatory approval for any of our drug candidates, and in order to obtain regulatory approval and commercialize our drug candidates, the FDA or foreign regulatory agencies will need to determine that our drug candidates are safe and effective.

Protein degradation portfolio:

Bruton’s Tyrosine Kinase degraders

We have developed two CTMs that are potent degraders of the BTK protein, a genetically validated signaling factor that drives B-cell activation and proliferation.

Our BTK degraders use the E3 ligase cereblon and may be engineered to include IMiD activity, a well validated mechanism to treat hematologic malignancies.

Our lead BTK CTM development candidate, NX-2127, is a dual degrader of both BTK and Aiolos, a protein target of IMiD drugs.

Our targeted protein degradation portfolio includes two clinical stage drug candidates that catalyze potent degradation of BTK, a well validated target for B-cell malignancies.

Our two BTK degrader drug candidates, NX-2127 and NX-5948, are oral drug candidates being evaluated for the treatment of relapsed or refractory B-cell malignancies including NHL and CLL.

In addition, NX-5948 has the potential to address B-cell mediated autoimmune indications, due to its specificity for BTK and its ability to cross the blood brain barrier.

In preclinical studies, we have demonstrated the ability of both NX-2127 and NX-5948 to degrade BTK in tumor cell lines harboring either wild type BTK or a variety of clinically relevant mutant forms of BTK that confer resistance to both currently marketed BTK inhibitors and next-generation BTK inhibitors in late-stage development.

In these models, BTK degradation correlated with anti-tumor activity.

In addition to degrading BTK, NX-2127 was also designed to have cereblon mediated immunomodulatory activity through the degradation of neosubstrates Ikaros and Aiolos.

Based on our preclinical data, we believe NX-2127 and NX-5948 have the potential to demonstrate improved clinical benefit over current standard-of-care in multiple oncology indications.

Our targeted protein elevation portfolio includes two clinical stage small molecule drug candidates that inhibit CBL-B, an intracellular orchestrator of the activation of T cells, B cells and NK cells.

In addition, NX-1607 has been shown in preclinical models to increase T‑cell proliferation and result in increased secretion of interleukin-2 (IL-2) a key cytokine involved in immune activation.

We believe that oral delivery of CBL-B inhibitors has the potential to drive immune cell activation and stimulation of localized IL-2 secretion, leading to enhanced anti-tumor response across a wide range of oncology indications.

We have also developed a second CBL-B ligase inhibitor drug candidate, NX‑0255, for ex vivo use.

We believe incorporating NX-0255 into adoptive cell therapy (ACT) has the potential to enhance T‑cell proliferation and improve cellular phenotype to drive greater anti-tumor activity.

NX-0255 has been incorporated into the manufacturing process for the production of therapeutic, drug-enhanced tumor infiltrating lymphocytes (DeTIL) in a safety run-in study we completed in 2022.

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Targeted protein degradation portfolio in clinical trials

We have developed two targeted protein degrader drug candidates that are potent degraders of the BTK protein, a genetically validated signaling factor that drives B-cell activation and proliferation.

Our BTK degraders harness the E3 ligase cereblon, and our lead BTK degrader NX-2127 was engineered to include cereblon-mediated immunomodulatory activity, another well validated mechanism to treat hematologic malignancies.

As such, NX-2127 is a dual degrader of both BTK and Aiolos/Ikaros.

In certain B-cell malignancy indications, we believe dual activity may provide therapeutic advantages that could result in improved outcomes.

Our second BTK CTM development candidate, NX-5948, degrades BTK without degrading Aiolos.

Our second BTK degrader development candidate, NX-5948, degrades BTK without degrading Aiolos/Ikaros.

NX-5948 is further differentiated from NX-2127 because it has demonstrated the ability to cross the blood brain barrier in animal models and degrade BTK in both brain-resident tumor cells and normal microglia in the brain.

We are currently enrolling Phase 1 trials for NX-2127 and we are anticipate enrolling our first patient in the first half of 2022 for NX-5948 in patients with relapsed or refractory B-cell malignancies.

We are currently enrolling Phase 1 trials for NX-2127 and NX-5948 in patients with relapsed or refractory B-cell malignancies.

BTK’s role in B-cell malignancy

BTK is a key component of the B-cell receptor signaling pathway and has been clinically validated as a target in the treatment of B-cell malignancies.

It is estimated that over 81 thousand people in the United States will be diagnosed with NHLs in 2021.

It is estimated that over 80 thousand people in the United States were diagnosed with NHLs in 2022.

Approximately 85% of NHLs are a result of B-cell malignancies.

The natural progression of NHL varies widely and takes multiple forms, ranging from aggressive subtypes such as diffuse large B-cell lymphoma (DLBCL), to more indolent forms such as follicular lymphoma (FL), which account for approximately 30% and 22% of all NHL cases respectively.

Background on BTK inhibitors and IMiDs for B-cell malignancies

BTK inhibitor Imbruvica (ibrutinib) is approved for the treatment of CLL and various forms of NHLs, including mantle cell lymphoma (MCL), Waldenstrom’s macroglobulinemia (WM), and marginal zone lymphoma (MZL).

Calquence, or acalabrutinib, is approved for use in CLL and MCL, and Brukinsa, or zanubrutinib, is approved for use in MCL, WM, and MZL.

Background on BTK inhibitors and immunomodulatory drugs for B-cell malignancies

The first generation BTK inhibitor Imbruvica, or ibrutinib, is approved for the treatment of CLL and various forms of NHL, including mantle cell lymphoma (MCL), Waldenstrom’s macroglobulinemia (WM), and marginal zone lymphoma (MZL).

Second generation BTK inhibitors such as Calquence, or acalabrutinib, is approved for use in CLL and MCL, and Brukinsa, or zanubrutinib, is approved for use in CLL, MCL, WM, and MZL.

In 2021, global sales of BTK inhibitors were approximately $8.4 billion.

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however, all have some off-target binding to other kinases, which leads to unwanted side effects.

In addition, acquired resistance, most commonly through mutations in C481, may limit long term efficacy of these first generation BTK inhibitors.

A number of noncovalent BTK inhibitors are currently being investigated in clinical trials as potential therapies for patients with relapsed and refractory disease.

We believe targeted protein degradation of BTK may be a superior approach to existing covalent or noncovalent BTK inhibitors that only inhibit enzyme activity, particularly in the relapsed and refractory setting, and in the setting of resistance mutations including at C481.

IMiDs are analogs of Thalomid, or thalidomide, including Revlimid, or lenalidomide, and Pomalyst, or pomalidomide, which possess several anti-tumor properties, including anti-angiogenic and anti-proliferative effects.

IMiDs also have multiple effects on the immune system, including enhancement of T-cell mediated and NK-cell mediated immunity.

Revlimid, the market leading IMiD by global sales, was first approved in 2006 for the treatment of multiple myeloma.

In May of 2019, Revlimid in combination with Rituxan received a supplemental indication approval for previously treated FL, MZL and MCL, and in August of 2020, Revlimid in combination with Monjuvi received a supplemental indication in DLBCL, thus validating the importance of the IMiD activity in these indications.

In 2020, global sales of Revlimid were approximately $12 billion.

Subsequent to their approval and successful commercialization, studies demonstrated that IMiDs exert their therapeutic effect by triggering the degradation of specific proteins including Aiolos through the E3 ligase activity of cereblon and hence were identified retrospectively as the first approved drugs to target an E3 ligase.

Published studies have recently reported early clinical data showing that combining a BTK inhibitor with an IMiD may have the potential to augment clinical activity of certain standard of care agents in some hematologic malignancies such as non-GCB DLBCL.

In addition, acquired resistance, most commonly through mutations in C481, may limit long term efficacy of these first and second generation BTK inhibitors.

A number of noncovalent BTK inhibitors are currently being investigated in clinical trials as potential therapies for patients with relapsed and refractory disease, including Jaypirca, or pirtobrutinib, which was recently approved for use in MCL.

However, the noncovalent inhibitors are also subject to acquired resistance, and treatment with these agents has led to the discovery of a broad range of new resistance mutations.

The immunomodulatory drugs including Revlimid, or lenalidomide, and Pomalyst, or pomalidomide, are analogs of Thalomid, or thalidomide.

These drugs possess several anti-tumor properties, including anti-angiogenic and anti-proliferative effects.

They also have multiple effects on the immune system, including enhancement of T-cell mediated and NK-cell mediated immunity.

Revlimid, the market leader in this class by global sales, was first approved in 2006 for the treatment of multiple myeloma.

In 2021, global sales of this drug class including Revlimid and Pomalyst were approximately $16.2 billion.

Subsequent to their approval and successful commercialization, studies demonstrated that these immunomodulatory drugs exert their therapeutic effect by triggering the degradation of specific proteins including Aiolos and Ikaros through the E3 ligase activity of cereblon and hence were identified retrospectively as the first approved drugs to target an E3 ligase.

Published studies have recently reported early clinical data showing that combining a BTK inhibitor with an immunomodulatory drug may have the potential to augment clinical activity of certain standard of care agents in some hematologic malignancies such as non-germinal center B-cell like (non-GCB) DLBCL.

Further, scientific publications have previously described synthetic lethality in a DLBCL cell line treated with both ibrutinib and lenalidomide.

By targeting both BTK and IMiD pathways simultaneously, it is believed that the survival mechanisms driven by accumulated mutations within certain cancers can be overcome, thereby preventing escape and disease relapse.

By targeting both BTK and cereblon-mediated immunomodulatory pathways simultaneously, it is believed that the survival mechanisms driven by accumulated mutations within certain cancers can be overcome, thereby preventing escape and disease relapse.

This may be especially effective if each pathway has not only different functions but also if they share certain critical components.

One possible intersection pathway is the suppression of interferon regulatory factor 4, a member of a family of transcription factors leading to a cell lethal increase in interferon production.

One possible intersection pathway is the suppression of interferon regulatory factor 4 (IRF4), a member of a family of transcription factors leading to a cell lethal increase in interferon production.

The early clinical study cited above was particularly noteworthy since few combinations have previously produced promising results in DLBCL.

This may suggest that simultaneous degradation of BTK combined with IMiD activity by a single agent could produce an additive or synergistic effect in certain B-cell malignancies.

BTK in autoimmune disease and related disorders

B-cell responses to foreign antigens are mediated through BTK interaction with B-cell receptors, initiating a signaling cascade central in the production of antibodies, proinflammatory cytokines and chemokines.

BTK is also expressed at high levels in certain myeloid cells, such as macrophages and granulocytes, in which receptor activation by immune complexes promotes BTK mediated expression of proinflammatory cytokines and cell adhesion molecules.

Collectively, these actions contribute to the selective elimination of foreign antigens by the immune system.

However, the immune system can mistakenly identify self-proteins as foreign antigens leading to autoimmunity, and the role of BTK in promoting the inflammatory process has been implicated in a number of autoimmune disorders.

Preclinical development of BTK degraders

We have conducted extensive preclinical studies of our two clinical-stage BTK CTMs.

This may suggest that simultaneous degradation of BTK combined with cereblon-mediated immunomodulatory activity by a single agent could produce an additive or synergistic effect in certain B-cell malignancies.

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Potential advantages of BTK degraders

We have conducted extensive preclinical studies of our two clinical stage BTK degraders.

We have demonstrated that both NX-2127 and NX-5948 can induce BTK degradation and inhibit tumor growth with oral administration in xenograft mouse models implanted with both wild type and ibrutinib-resistant lymphoma cell lines.

We have specifically designed NX-2127 as a dual degrader of BTK and Aiolos, a target protein of IMiDs, and we have designed NX-5948 to degrade BTK with limited or no IMiD activity for potential applications in indications where sparing IMiD activity may be beneficial.

We have also demonstrated the ability of both NX-2127 and NX-5948 to degrade BTK in circulating B-cells of non-human primates following once daily oral dosing.

We have specifically designed NX-2127 as a dual degrader of BTK and the cereblon neosubstrates Aiolos and Ikaros, and we have designed NX-5948 to degrade BTK with limited or no degradation of cereblon neosubstrates for potential applications in indications where sparing immunomodulatory activity may be beneficial.

We have also demonstrated the ability of both NX-2127 and NX-5948 to degrade BTK in circulating B-cells of non-human primates and in B-cell lymphoma patients following once daily oral dosing in ongoing Phase 1 trials.

We have optimized NX-2127 and NX-5948 to be able to degrade both wild type BTK and the C481S variant of BTK that has been identified as the most common mutation in patients who have become resistant to ibrutinib therapy over time.

Both agents have subsequently demonstrated the ability to degrade additional mutant variants of BTK associated with resistance to BTK inhibitors including L528W, T474I, M437R and V416L.

In the figure below, we show the concentration dependent degradation of both wild-type BTK (top left) and C481S mutant BTK (top right) in a lymphoma cell line (TMD8) for our clinical candidate NX-5948.

We have also demonstrated that NX-5948 induces rapid BTK degradation over time in a lymphoma cell line (Ramos) as compared to a control protein, with nearly complete loss of BTK within one hour of administration as shown in the figure below at the bottom.

Using a human lymphoma cell line (TMD8), we have demonstrated that both NX-2127 and NX-5948 have an ability to degrade BTK and inhibit growth of tumor cell lines that are resistant to ibrutinib.

As shown in the charts below, our BTK CTM NX-5948 can inhibit both wild type and ibrutinib-resistant tumor cell line growth, where approved BTK inhibitors ibrutinib and acalabrutinib lose activity against the C481S mutation.

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Using a human TMD8, we have demonstrated that both NX-2127 and NX-5948 have an ability to degrade BTK and inhibit growth of tumor cell lines that are resistant to ibrutinib.

As shown in the charts below, our BTK degrader, NX-5948, can inhibit both wild type and ibrutinib-resistant tumor cell line growth, where approved BTK inhibitors ibrutinib and acalabrutinib lose activity against the C481S mutation.

Potent tumor growth inhibition was achieved at varying doses of orally administered NX-2127 in mouse xenograft tumor models with a wild type BTK protein, as shown in the figure below on the top right.

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These target levels of inhibition suggest a potential therapeutic range correlating BTK degradation to tumor growth inhibition.

In addition to BTK degradation, we have also demonstrated the ability of NX-2127 to degrade Aiolos, a protein target of IMiD drugs in preclinical studies, as shown in the figure below on the left.

Studies in human T cells comparing NX-2127 to the IMiD drugs lenalidomide and pomalidomide have shown comparable Aiolos degradation and resultant T-cell activation, as shown in the figure below on the right.

Based on the clinical data of both ibrutinib and the IMiDs in B-cell malignancies, we believe that this strategy of targeting both BTK and Aiolos in a single oral treatment may improve anti-tumor activity.

We anticipate that the ability of NX-2127 to degrade both BTK and Aiolos will confer unique anti-tumor activity.

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In addition to BTK degradation, we have also demonstrated the ability of NX-2127 to degrade both Aiolos (as shown in the figure below on the left) and Ikaros (not shown), proteins targeted by immunomodulatory drugs Revlimid (lenalidomide) and Pomalyst (pomalidomide).

Studies in human T cells comparing NX-2127 to lenalidomide and pomalidomide have shown comparable Aiolos degradation and resultant T-cell activation, as shown in the figure below on the right.

Based on the clinical data of both ibrutinib and the immunomodulatory drug in B-cell malignancies, we believe that this strategy of targeting both BTK and Aiolos/Ikaros in a single oral treatment may improve anti-tumor activity.

We anticipate that the ability of NX-2127 to degrade both BTK and Aiolos/Ikaros will confer unique anti-tumor activity.

One example is in the preclinical mantle cell lymphoma model (REC-1).

BTK inhibitors and IMiD drugs have both demonstrated single agent clinical activity in mantle cell lymphoma.

In the REC-1 model shown in the figure below, covalent BTK inhibitors such as ibrutinib demonstrate potent but incomplete activity (left).

Both BTK inhibitors and immunomodulatory drugs have demonstrated single agent clinical activity in mantle cell lymphoma.

In the REC-1 model shown in the figure below, covalent BTK inhibitors such as ibrutinib demonstrate potent but incomplete activity (below, left).

The same is true for non-covalent inhibitors such as pirtobrutinib (below, right).

IMiDs, such as pomalidomide, demonstrate a more complete cell killing but at higher drug concentrations (below, left).

NX-2127 outperforms all of these drugs in this model, demonstrating both potent activity and complete cell killing.

NX-2127, a development candidate for the treatment of B-cell malignancies

Despite the increasing number of approved treatments for B-cell malignancies, significant unmet need remains for patients with relapsed, refractory disease.

We believe that NX-2127, a novel agent with a dual BTK and Aiolos degradation mechanism of action, could address such patient populations.

We have conducted a preclinical program to characterize NX-2127 as our lead development candidate.

NX-2127 has demonstrated promising activity in multiple in vitro and in vivo models using human cancer cell lines.

Oral administration of NX-2127 demonstrated dose proportional degradation of BTK proteins in mouse models and showed potent anti-tumor activity against C481S ibrutinib-resistant lymphoma in a xenograft mouse tumor model.

NX-2127 demonstrated favorable drug-like characteristics in our in vitro and in vivo studies performed through our preclinical development candidate selection process.

Taken together, these data suggest that NX-2127 could have a favorable efficacy profile against both wild type and ibrutinib-resistant BTK alleles in CLL as well as in other indications including DLBCL and FL where ibrutinib or IMiDs alone do not provide sufficient clinical benefit.

However, the FDA has not yet approved NX-2127 and we will need to complete clinical trials to determine whether it is safe and effective.

A Phase 1 clinical trial for NX-2127 in patients with relapsed or refractory B-cell malignancies is ongoing.

Clinical development plans for NX-2127

We plan to study the pharmacology of NX-2127 in multiple subtypes of relapsed and refractory B‑cell malignancies, including those in which ibrutinib has shown only modest effects or is ineffective, as in the case of CLL patients with the C481 mutation.

Furthermore, indications in which IMiD activity could augment responses are of high interest.

Immunomodulatory drugs, such as pomalidomide, demonstrate a more complete cell killing but at higher drug concentrations (below, left).

NX-2127 outperforms these drugs in this cell viability assay, demonstrating both potent activity and complete cell killing.

Clinical development of NX-2127

We are studying the pharmacology, safety and clinical activity of NX-2127 in multiple subtypes of relapsed and refractory B‑cell malignancies, including those in which ibrutinib has shown only modest effects or is ineffective, as in the case of CLL patients with BTK inhibitor resistance mutations.

Furthermore, indications in which immunomodulatory activity could augment responses are of high interest.

These indications include DLBCL, MCL, MZL and FL.

We anticipate testing NX-2127 in additional B-cell malignancies, such as CLL and WM, where IMiDs are not approved but may have shown modest responses, including in patients who have acquired ibrutinib-resistance or are ibrutinib intolerant.

We plan to expedite development in indications where NX-2127 shows evidence of compelling clinical activity and where there is high unmet need.

As illustrated in the diagram below, we are enrolling patients in the Phase 1a portion of a Phase 1a/1b dose-escalation and cohort expansion study of NX-2127 in patients with relapsed or refractory NHL and CLL.

The Phase 1a portion is designed as a monotherapy dose escalation trial to investigate the safety and tolerability of NX‑2127 and to identify a maximum tolerated dose for further evaluation.

The Phase 1b portion of the trial is designed as a monotherapy expansion trial in five potential cohorts of up to 20 patients each.

The five potential cohorts include CLL patients, CLL patients with the C481 mutation, patients with MCL, MZL or WM, patients with FL and patients with DLBCL.

More information on this ongoing trial can be found on clinicaltrials.gov ( NCT04830137 ).

NX-5948, a development candidate for the treatment of B-cell malignancies and certain autoimmune indications

NX-5948 is an orally bioavailable, potent degrader of BTK that is differentiated from NX-2127 in possessing limited or no IMiD activity and in its ability to cross the blood brain barrier in animal models.

NX-5948 has demonstrated potent anti-tumor activity in mouse xenograft models of B-cell malignancies including in models of CNS lymphoma.

NX-5948 has demonstrated degradation of BTK after oral dosing of NHPs as determined by flow cytometry measuring BTK protein levels in the blood and has demonstrated BTK degradation in the CNS of mice in both intracranial lymphoma cells and in microglia (figure below).

NX-5948 has potential utility for certain B-cell malignancies where IMiD activity may be less important in achieving a therapeutic benefit and also in autoimmune diseases, especially those that involve the CNS.

Clinical development plans for NX-5948

We plan to study the pharmacology of NX-5948 in multiple subtypes of relapsed and refractory B-cell malignancies, including those in which ibrutinib has shown only modest effects or is ineffective, as in the case of CLL patients with the C481 mutation.

Furthermore, we plan to study NX-5948 in autoimmune indications.

As illustrated in the diagram below, we anticipate enrolling our first patient in the first half of 2022 in the Phase 1a portion of a Phase 1a/1b dose-escalation and cohort expansion study of NX-5948 in patients with relapsed or refractory NHL and CLL.

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As illustrated in the diagram below, we are enrolling patients in the Phase 1a dose-escalation trial in patients with relapsed or refractory NHL and a Phase 1b cohort expansion study of NX-2127 in patients with relapsed or refractory CLL.

The Phase 1a portion is designed as a monotherapy dose escalation trial to investigate the safety and tolerability of NX‑2127 and to identify a maximum tolerated dose for further evaluation.

The Phase 1b portion of the trial is designed as a monotherapy expansion trial in five potential cohorts, including CLL patients, CLL patients with the C481 mutation, patients with MCL or DLBCL, patients with FL, MZL or WM, and patients with primary CNS lymphoma.

More information on this ongoing trial can be found on clinicaltrials.gov ( NCT05131022 ).

Ligase inhibitor portfolio:

CBL-B ligase inhibitors

The Phase 1b portion of the trial is designed as a monotherapy expansion trial in defined cohorts of up to 20 patients each.

We selected a 100 mg dose for a Phase 1b expansion dose in CLL patients and that study is ongoing.

The three other potential cohorts include patients with DLBCL, MCL/MZL/WM, and FL.

Initial clinical findings in patients with CLL

Two presentations at the 64 th American Society of Hematology (ASH) annual meeting in December 2022 described positive data for NX-2127 in patients with CLL and new scientific findings supporting the rationale for BTK degradation as a novel mechanism of action to address the current and emerging unmet need in patients who have failed multiple prior lines of therapy.

The first presentation described a set of clinically emergent BTK mutations that confer resistance to currently approved covalent BTK inhibitors and to unapproved noncovalent BTK inhibitors in development.

These mutations fall into two biochemically defined categories of kinase proficient, which maintain their known enzymatic activity but no longer are fully inhibited by BTK active site inhibitors such as ibrutinib, and kinase dead, which lack the enzymatic activity normally attributed to BTK but still signal tumor growth promotion through the B-cell receptor in the presence of a BTK inhibitor.

Such signaling has been hypothesized to be achieved through a structural, scaffolding function of the BTK protein.

In the figure below, we demonstrate equivalent BTK degradation in clinical samples from patients in our Phase 1 trial independent of baseline mutations.

Montoya et al., ASH 2022, Abstract #750.

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The second presentation included preliminary clinical findings from the ongoing Phase 1 trial for patients with CLL.

Despite a median of five prior lines of treatment and BTK mutations present in 48% of patients, NX-2127 treatment resulted in an objective overall response rate of 33% (5 out of 15).

Tumor shrinkage and clinical responses were observed in patients regardless of prior lines of therapy or baseline BTK mutations.

The trial is ongoing, and we continue to enroll additional CLL patients.

Mato et al., ASH 2022, Abstract #965.

Clinical development studies for NX-5948

We are studying the pharmacology, safety, and clinical activity of NX-5948 in multiple subtypes of relapsed and refractory B-cell malignancies, including those in which ibrutinib has shown only modest effects or is ineffective, as in the case of CLL patients with BTK inhibitor resistance mutations.

As illustrated in the diagram below, we are conducting a Phase 1a/1b dose-escalation and cohort expansion study of NX-5948 in patients with relapsed or refractory NHL and CLL.

The Phase 1a portion is designed as a monotherapy dose escalation trial to investigate the safety and tolerability of NX-5948 and to identify a biologically active dose for cohort expansion and potentially a maximum tolerated dose.

The Phase 1b portion of the trial is designed as a monotherapy expansion trial in up to five potential cohorts.

We are currently enrolling patients at escalating doses in the Phase 1a portion of the study.

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Initial biomarker data from the first dose levels in the ongoing Phase 1a trial shown below demonstrate rapid, robust, and sustained BTK degradation in all patients with once daily oral dosing of NX-5948.

Targeted protein elevation portfolio in clinical trials

Background on CBL-B

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Many factors can hamper the development of an efficient anti-tumor immune response, such as insufficient expression of tumor antigens, defective antigen presentation, inhibitory molecular interactions including those effected by immune checkpoints, immune suppressive factors or suppressor cells and T-cell exhaustion.

CBL-B, an E3 ligase expressed in immune cell lineages, functions as an intracellular immune checkpoint that negatively regulates T-cell activation and immune response, as illustrated above.

CBL-B, an E3 ligase expressed in immune cell lineages, functions as an intracellular orchestrator of the immune response by negatively regulating T-cell activation, as illustrated above.

CBL-B also limits function and survival of NK cells, B cells, and dendritic cells as well as promotes T-cell exhaustion, anergy, and cell death.

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CBL-B deficient animal models demonstrate enhanced signal dependent T-cell activation and robust T-cell dependent anti-tumor immunity.

We believe that our oral, small molecule CBL-B inhibitors have several potential immunotherapy applications through enhancing T-cell mediated anti-tumor activity by lowering the activation threshold of T cells in a suppressive tumor microenvironment where CBL-B plays a key role in the downregulation of T cells.

We are planning to develop our lead oral CBL-B inhibitor, NX-1607, in multiple solid tumors as monotherapy or in combination with other mechanistically complementary therapies.

Solid tumors represent approximately 90% of adult human cancers, with estimated new cases in 2021 ranging from approximately 14,500 for cervix uteri cancer to 284,200 for breast cancer.

Various immunotherapy strategies have been developed in order to increase the efficiency of anti-tumor immune response, including the use of antibody checkpoint inhibitors such as anti-PD-1, anti-PD-L1, and anti-CTLA-4, which block the “brakes” of immune response.

These immune-stimulating antibodies have a more favorable clinical outcome than traditional treatment modalities on a growing list of tumor types.

However, most patients fail to respond or experience only transient responses.

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CBL-B is highly expressed in human CD4+ and CD8+ T cells, with expression tightly regulated by CD28 and CTLA-4 and other co-stimulatory and inhibitory signals.

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Studies have found that CBL-B deficient T cells display lower thresholds for activation by antigen recognition receptors and co-stimulatory molecules such as CD28.

For example, loss of CBL-B in T cells results in T cells that can be activated upon TCR engagement without co-stimulation by CD28, although to a lesser extent than with co-stimulation.

For example, loss of CBL-B in T cells results in T cells that can be activated upon TCR engagement without co-stimulation by CD28.

Importantly, our CBL-B inhibitors do not appear to activate T cells in the absence of TCR engagement.

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The increased secretion of IL-2 is of particular importance in the optimization and development of our CBL-B inhibitors, serves as a key cellular biomarker for measuring successful T-cell activation and is a known therapeutic cytokine in oncology.

Importantly, our CBL-B inhibitors do not appear to activate T cells in the absence of TCR engagement.

We are studying our lead oral CBL-B inhibitor, NX-1607, in a Phase 1a dose escalation trial in multiple solid tumors and lymphoma.

Solid tumors represent the vast majority of human cancers.

Various immunotherapy strategies have been developed in order to increase the efficiency of anti-tumor immune response, including the use of antibody checkpoint inhibitors such as anti-PD-1, anti-PD-L1 and anti-CTLA-4, which block the “brakes” of immune response.

These immune-stimulating antibodies have a more favorable clinical outcome than traditional treatment modalities on a growing list of tumor types.

However, most patients fail to respond or experience only transient responses.

Pre-clinical development of CBL-B inhibitors

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The precursor compounds shown in the graphs below led to the optimization and selection of NX-1607 and NX-0255 as development candidates in our CBL-B portfolio.

Development strategy of CBL-B inhibitors

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Clinical development strategy of CBL-B inhibitors

We are focused on three major immunotherapy applications for our CBL-B inhibitors in oncology.

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In the first application, NX-1607, an oral small molecule immunotherapy drug candidate, is intended to be used as a single agent or in combination with other mechanistically complementary oncology therapies.

The second application is the ex vivo use of NX-0255 to create drug-enhanced ACT products.

DeTIL-0255 is a drug-enhanced investigational ACT product that uses NX-0255 ex vivo to enhance TIL propagation and phenotypic characteristics.

We have entered into agreements with contract manufacturing organizations (CMOs) for the development of DeTIL-0255.

The third application is the use of orally dosed NX-1607 in combination with potentially any ACT, such as DeTIL-0255, to promote engraftment and anti-tumor activity of the transplanted cells.

The second application is the ex vivo use of NX-0255 to create drug-enhanced cell therapy products.

DeTIL-0255 is a drug-enhanced investigational cell therapy product that uses NX-0255 ex vivo to enhance TIL propagation and phenotypic characteristics.

In 2022, we completed a safety run-in portion of a Phase 1 trial in patients.

The third application is the use of orally dosed NX-1607 in combination with potentially any cell therapy, such as DeTIL-0255, to promote engraftment and anti-tumor activity of the transplanted cells.

NX-1607, an oral CBL-B inhibitor for immuno-oncology

NX-1607 is an investigational, orally bioavailable, potent inhibitor of CBL-B.

In vitro studies demonstrated that NX-1607 treatment resulted in a dose-dependent increase in T cells activation in TCR stimulated primary human T cells in the presence and, to a lesser extent, in the absence of CD28 co-stimulation, a potential advantage in a suppressive tumor microenvironment.

In vitro , NX-1607 has been demonstrated to increase T-cell activation in primary human T cells in the absence of co-stimulation with CD3 and CD28, a potential advantage in a suppressive tumor microenvironment.

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The tumor growth inhibition with oral administration of NX-1607 recapitulates the genetic experiment in mice with a ligase-inactive version of CBL-B which also shows tumor growth inhibition as illustrated in the figure below on the right.

The in vivo effects of orally administered NX-1607 were further evaluated as a single agent in an animal mouse model of triple-negative breast cancer.

In this experiment shown in the figure below, tumors were implanted in a mouse and removed 15 days later.

Without further treatment, all mice in the vehicle group (black line) died by day 60 as a result of tumor metastases in the lung, liver, and brain.

By contrast, animals treated with NX-1607 (red line) administered as a daily oral dose starting at day 7 and continuing through day 46 demonstrated a highly significant prolongation of survival.

The in vivo effects of orally administered NX-1607 were evaluated in combination with an antibody to PD-1 as shown in the figure below.

In this model, tumor-bearing mice were treated with NX-1607 (red line), anti-PD-1 (blue line), or the combination (purple line) and compared to animals who received no treatment.

Either single agent alone showed only modest inhibition of tumor growth (figure below on the left) and prolongation of survival (figure below on the right).

However, the combination of NX-1607 with the anti-PD-1 antibody demonstrated enhanced activity for both tumor growth inhibition and overall survival.

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The in vivo effects of orally administered NX-1607 were further evaluated as a single agent in several mouse models of cancer.

In the experiments shown in the figure below on the left, oral treatment with NX-1607 at a dose of 30 mg/kg (blue circles) significantly reduced the size of tumors measured at day 25 compared to vehicle treated animals (black squares) in this colorectal cancer model.

In the figure below in the middle, oral treatment with NX-1607 significantly increased survival in this neoadjuvant model of metastatic triple-negative breast cancer in which treatment was initiated just prior to surgical primary tumor resection.

Without further treatment, all mice in the vehicle group (black line) died by day 60 as a result of disseminated tumor metastases in the lung, liver and brain.

By contrast, animals treated with NX-1607 (blue line) administered as a daily oral dose starting at day 7 and continuing through day 46 demonstrated a highly significant prolongation of survival.

In the figure below on the right, oral treatment with NX-1607 (blue squares) significantly reduced the size of tumors and the rate of tumor growth compared to the vehicle group (black circles) in a B-cell lymphoma model.

The in vivo effects of orally administered NX-1607 were evaluated in combination with an antibody to PD-1 in several mouse models of cancer as shown in the figure below.

In the left and middle panels, the combination of oral NX-1607 plus anti-PD-1 (light blue lines) demonstrated increased survival in two separate colorectal cancer models compared with animals treated with either NX-1607 alone (blue line), anti-PD-1 alone (red line), or vehicle (black line).

In the panel on the right, the activity of oral NX-1607, anti-PD-1 and the combination of NX-1607 and anti-PD-1 were tested in a model of metastatic triple-negative breast cancer.

Both single agent NX-1607 (blue triangles) and single agent anti-PD-1 (red circles) reduced the number of lung metastases at day 28 compared with the vehicle group (black squares), but the combination of NX-1607 and anti-PD-1 (light blue diamonds) was superior to either single agent.

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Clinical development of NX-1607

We plan to study the pharmacology of single-agent NX-1607 in multiple solid tumor indications and in DLBCL with Richter Transformation (DLBCL-RT).

We are studying the pharmacology, safety and clinical activity of single-agent NX-1607 in multiple solid tumor indications and lymphoma.

The solid tumors selected for this initial assessment include three different immune phenotypes:

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We believe that there is a scientific rationale for the role of CBL-B inhibition in each of these immune phenotypes.

As illustrated in the diagram below, we are currently enrolling patients in the Phase 1a portion of a Phase 1a/1b dose-escalation and cohort expansion study of NX-1607 in patients with relapsed or refractory solid tumors and DLBCL-RT .

The Phase 1a portion is designed as a monotherapy dose escalation trial to investigate the safety and tolerability of NX-1607 and to identify a maximum tolerated dose for further evaluation.

The Phase 1b portion of the trial is designed as a monotherapy expansion trial in eight potential cohorts, including melanoma, platinum resistant epithelial ovarian cancer (EOC), gastric cancer, squamous cell carcinoma of the head and neck (HNSCC), non-small cell lung cancer (NSCLC), metastatic castration resistant prostate cancer (mCRPC), mixed solid tumors, and DLBCL-RT.

More information on this ongoing trial can be found on clinicaltrials.gov ( NCT05107674 ).

CBL-B inhibitors for Adoptive Cell Therapies

As illustrated in the diagram below, we are conducting a Phase 1a/1b dose-escalation and cohort expansion study of NX-1607 in patients with relapsed or refractory solid tumors and lymphoma.

The Phase 1a portion is designed as a monotherapy dose escalation trial to investigate the safety and tolerability of NX-1607, to identify a biologically active dose for cohort expansion and to identify a maximum tolerated dose.

The Phase 1b portion of the trial is designed as a monotherapy expansion trial in eight potential cohorts spanning four immune phenotypes, including immune checkpoint-resistant tumors, highlight suppressive tumor microenvironment indications, low immunogenicity/low antigenicity tumors and hematologic malignancies with T cell dysfunction or post-CAR-T.

We are currently enrolling patients in the Phase 1a dose escalation portion of the trial.

Background on Adoptive Cell Therapies

ACTs represent another class of immunotherapy in which T cells are isolated directly from patient tumors, as with TIL, or from patient blood with subsequent genetic modification to recognize specific antigens present on cancer cells, as with CAR-T therapies.

Adoptive Cell Therapies represent another class of immunotherapy in which T cells are isolated directly from patient tumors, as with TIL, or from patient blood with subsequent genetic modification to recognize specific antigens present on cancer cells, as with CAR-T therapies.

Tumor-reactive T cells are then expanded and infused back into the patient.

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(i) failure to obtain sufficient quantity and/or quality of T cells from the tumor samples or from the blood for a successful production process, (ii) poor engraftment of T cells upon reinfusion to the patient and (iii) lack of a persistent anti-tumor response or relapse.

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CBL-B Inhibitors for Adoptive Cell Therapies

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We are advancing several lines of experimentation to refine our understanding of the clinical and commercial opportunities in this area.

We have consolidated these efforts under an initiative we call the Nurix Adoptive Cell Therapy program (NxACT) as illustrated in the figure below.

Our NxACT initiative includes a drug-enhanced TIL program known as DeTIL, and a drug-enhanced CAR-T therapy known as DeCART.

We have consolidated these efforts under an initiative we call the Nurix Adoptive Cell Therapy program (NxACT).

Our NxACT initiative includes a drug-enhanced TIL program known as DeTIL, as illustrated in the figure below, and a drug-enhanced CAR-T therapy known as DeCART.

The broader conceptual framework for NxACT is convergence of targeted protein modulation with ACT.

In addition to CBL-B, we expect to explore additional targets for protein modulation that may be useful in the NxACT program.

We expect to develop NxACT product opportunities through CMOs.

Based on our preclinical findings to date, we believe CBL-B inhibition using NX-0255 ex vivo during the isolation and expansion of TIL can address some of the issues that have limited the success of existing ACT.

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We believe DeTIL-0255 could allow a broader application of TIL therapy, potentially providing long term benefit to patients with multiple types of cancer.

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Preclinical development of DeTIL-0255

We have tested NX-0255 in a mouse model of ACT shown below to determine if culture of tumor specific T cells ex vivo in the presence of a potent CBL-B inhibitor can confer a superior anti-tumor effect as compared to standard culture conditions using IL-2 alone.

We have demonstrated that even a short, 3-day ex vivo exposure of T cells to NX-0255, either alone or in combination with IL-2, conferred a lasting anti-tumor phenotype upon transfer of the cells into a tumor-bearing animal as compared to controls.

We have demonstrated that even a short, three-day ex vivo exposure of T cells to NX-0255, either alone or in combination with IL-2, conferred a lasting anti-tumor phenotype upon transfer of the cells into a tumor-bearing animal as compared to controls.

We have also demonstrated that those cells cultured under standard conditions with IL-2 alone resulted in superior conditional survival of the mice relative to controls, but not as good as either group treated with NX-0255 as shown in the figure below.

Clinical development plans for DeTIL-0255

We are currently recruiting patients with relapsed and refractory gynecologic cancers in a Phase 1 trial of DeTIL-0255 in the United States.

We are currently working with CMOs with experience in TIL product development for the development of the DeTIL-0255 process and manufacturing.

The trial will include patients with ovarian cancer, cervical cancer, and endometrial cancer.

The primary objective of the study will be to evaluate safety and tolerability of DeTIL-0255 autologous cell therapy.

We have further preclinically explored ACT by including an oral dosing regimen of NX-1607 in combination with NX‑0255 ex vivo treated T cells.

The results shown below illustrate that the combination with NX‑1607 yields more substantial anti-tumor effect and subsequent conditional survival than with ex vivo NX‑0255 ACT alone.

These data support our plan to explore the combination of oral NX‑1607 and ex vivo NX-0255 ACT in a future clinical trial.

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Clinical development of DeTIL-0255

We recently completed the safety run-in portion of the DeTIL-0255 Phase 1 trial for patients with relapsed and refractory gynecologic cancers.

For this trial, we worked with contract manufacturing organizations (CMOs) with experience in TIL product development for the development of the DeTIL-0255 process and manufacturing.

The primary objective of the study is to evaluate the safety and tolerability of DeTIL-0255 autologous cell therapy.

Secondary objectives include an exploratory evaluation of efficacy.

Other exploratory objectives include characterization of DeTIL-0255 phenotypes utilizing a variety of T-cell markers, identification of potential mechanisms of response or resistance to DeTIL-0255 including repertoire analysis and persistence of the autologous cell therapy in the patient.

More information on this ongoing trial can be found on clinicaltrials.gov ( NCT05107739 ).

Oral CBL-B inhibitors combined with ex vivo CBL-B inhibition in a mouse model of ACT

We have further explored ACT by including an oral dosing regimen of NX-1607 in combination with NX‑0255 ex vivo treated T cells.

Preliminary results shown below illustrate that the combination with NX‑1607 yields more substantial anti-tumor effect and subsequent conditional survival than with ex vivo NX‑0255 ACT alone.

Pending trial results using each therapy alone, we also intend to evaluate the combination of oral NX‑1607 and ex vivo NX-0255 ACT in a future clinical trial.

The safety run-in portion of the trial included three patients with advanced EOC who have been dosed with DeTIL-0255 and have cleared the initial safety evaluation.

The timing of the expansion of the Phase 1 trial will be established following a determination regarding the potential inclusion of NX-1607 in future cohorts.

Our DELigase platform

Our approach leverages the specificity of E3 ligases and the natural function of the UPS to regulate the cellular proteome for therapeutic effect.

Through our focused efforts and investment over the past several years, we have developed proprietary tools, in-depth knowledge and expertise relating to E3 ligases as targets for drug discovery.

In addition, we have assembled a team that has extensive experience applying DEL discovery technologies to a wide variety of proteins including targets previously considered undruggable.

Our DELigase platform combines our proprietary DELs and E3 ligase expertise to empower efficient drug discovery.

DEL technology is well suited to finding new binders for targets thought to be undruggable, which include the vast majority of proteins encoded in the human genome including E3 ligases.

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DEL technology taps enormous chemical space to overcome “druggability” limits

Our DEL collection comprises several billion compounds whereas typical screening collections contain less than a few million.

This increased scale provides the necessary chemical diversity to identify chemical starting points for more challenging protein targets that have been considered undruggable by other approaches.

DEL technology evaluates each library compound simultaneously in a single experiment, enabling a more accurate assessment of compound function.

Lastly, a chemical linker attaches each DEL compound to a strand of DNA, which functions as a structure barcode allowing screening hits to be easily identified.

Our DELigase platform was designed for E3 ligase discovery

Key features of our DELigase platform include:

• Custom-synthesized DELs.

The three-dimensional design of the proprietary scaffolds allows our library compounds to complement the surface of the target proteins, making them ideal for binding targets classically considered undruggable, such as E3 ligases.

For 75% of the undruggable targets screened by us, the scaffold libraries have been the sole source of hits from our collection.

Our collection of over 5 billion compounds also enables us to find diverse hits for classical targets and contains a sizable subset of covalent compounds, which have been shown as another effective way to bind E3 ligases.

Covalent compounds have begun to show promise in augmenting performance of targeted protein degraders, suggesting that our covalent DELs may have additional utility for Targeted Protein Modulation.

Design of the Nurix DEL Collection

• Proprietary data analysis and hit confirmation technologies .

We have built a suite of custom analytical tools for interpretation and prioritization of our DEL binder outputs, which routinely contain thousands of productive hits.

By leveraging data collected from hundreds of DEL screens, we are able to rapidly eliminate background signal and reveal the most promising target-specific ligands.

We have also developed machine learning and high throughput methods for nanoscale hit resynthesis and affinity selection mass spectroscopy that allow a more comprehensive and industrialized process for finding the best chemical starting points for future pipeline programs.

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Leveraging the Nurix DEL Database for clear classification of enriched DEL ligands

• Many screens, one protein target .

E3 ligases can exist in multiple potential conformation states.

Our approach uses comprehensive parallel screening campaigns to interrogate numerous states and surfaces of the target protein.

An illustration of how we probe the surface of an E3 ligase by DEL screening is depicted in the graphic below.

DELs allow access to a spectrum of binders across the protein surface, some of which inhibit protein function.

• Rapid automated chemistry .

Our state-of-the-art automated chemistry robotic suite allows for rapid synthesis of both binders and fully assembled degrader molecules.

This automation enables us to sample unprecedented chemical space and allows for faster design test cycles which accelerates drug discovery projects.

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• Harnessing our data generation pipelines with Machine Learning.

Our investment in scalable science has created large data streams stemming from our DEL, automated chemistry, and high-throughput experimental platforms.

Our internal machine learning team leverages these data in developing models to enable property prediction of our targeted degraders, to support small molecule and TPD lead optimization efforts and to enhance the data analysis and lead ID workflows of our DEL platform.

Our DELigase discovery platform enables us to address multiple therapeutic applications

We have expanded the universe of E3 ligases available for therapeutic manipulation from the two predominantly used in the field, cereblon and VHL, by screening over 60 additional E3 ligases to date.

We have carefully selected these E3 ligases for use in drug discovery across our four core areas of therapeutic expertise:

oncology, immuno-oncology, adoptive cell therapy and immune disorders.

We consider the unique biological function of each ligase and the therapeutic requirements of the disease state for inhibitor programs.

E3 ligases that are required for cancer cell survival are also of high interest for cancer indications to reduce the risk of intrinsic resistance to degrader action.

We are growing our set of E3 ligases for use in our DELigase platform tailored to our core therapeutic areas.

DELigase for E3 ligase harnesses

We apply our platform to utilize the ubiquitination function of E3 ligases for targeted protein degradation.

Our DELigase platform enables us to identify binders to E3 ligases, which we refer to as harnesses, as well as binders to degradation targets.

We use these molecular starting points to design compounds using a modular approach that connects an E3 ligase harness to a target protein binder with a linker.

We refer to these bifunctional molecules as targeted protein degraders, which function by bringing the E3 ligase into proximity of the target protein to catalyzing its ubiquitination and degradation.

DELigase for E3 ligase inhibitors

By inhibiting the function of E3 ligases, it is possible to rapidly increase specific protein levels to control biological pathways.

Increasing the levels of distinct sets of proteins could be a powerful approach to blocking pathological processes and restoring normal physiology.

Our DELigase platform enables the identification of inhibitors through parallel screening of distinct E3 ligase activity states using chemical matter tailored specifically for binding to E3 ligases.

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Drug candidate identification and selection process

We employ a series of processes and studies from target validation to preclinical development for selection of the appropriate candidate for further development.

We have invested in an integrated drug development infrastructure that enables us to perform every step of the drug discovery and early preclinical development process within our research facility.

Each of our primary areas of core expertise and technology are highlighted in the below illustration.

Our integrated drug discovery and development system and core technical expertise

Collaborations and License Agreements

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In December 2019, we entered into a strategic collaboration with Genzyme Corporation, a subsidiary of Sanofi, which became effective in January 2020 (as subsequently expanded and amended, the Sanofi Agreement), to discover, develop and commercialize a pipeline of targeted protein degradation drugs for patients with challenging diseases in multiple therapeutic areas using our DELigase platform to identify small molecules designed to induce degradation of three specified initial drug targets.

In January 2021, as part of the existing collaboration, Sanofi paid us an additional $22.0 million to exercise its option to expand the number of targets in the collaboration agreement from three to a total of five targets.

In January 2021, as part of the existing Sanofi Agreement, Sanofi paid us $22.0 million to exercise its option to expand the number of targets in the Sanofi Agreement from three to a total of five targets.

Over time and subject to certain limitations, Sanofi may elect to replace the drug targets with other reserved targets.

We also entered into the First Sanofi Amendment to the collaboration agreement with Sanofi in January 2021 to modify the research term on all targets.

Under the Sanofi Agreement, Sanofi has exclusive rights and is responsible for the clinical development, commercialization and manufacture of drug candidates resulting from the collaboration, while we retain the option to co-develop, co-promote and co-commercialize all drug candidates in the United States directed to up to two targets under certain conditions.

In January 2021, we entered into the First Amendment to the Sanofi Agreement to modify the research term on all targets.

In December 2021, we entered into the Second Amendment to the Sanofi Agreement to extend the substitution deadline on certain targets.

In July 2022, we entered into the Third Amendment to the Sanofi Agreement to further extend the substitution deadline on certain targets.

The extensions of the substitution deadline had no impact on revenue recognition.

Also in July 2022, Sanofi elected to replace certain drug targets, and the substitution extended the research term of those targets by one year to 5.25 years and increased overall forecasted costs, which had an immaterial impact on revenue recognition.

In August 2022, we entered into the Fourth Amendment to the Sanofi Agreement to modify the research plan for a certain target, which had no impact on revenue recognition.

The collaboration excludes our current internal protein degradation programs for which we retain all rights, and also excludes our future internal programs, provided that we have distinguished future programs as excluded from the scope of the collaboration.

For drug targets that are subject to the collaboration, we have primary responsibility for conducting preclinical research activities (including target validation, drug discovery, identification or synthesis) in accordance with the applicable research plan agreed to by the parties and established on a target-by-target basis.

We are obligated to use commercially reasonable efforts to identify relevant target binders and chimeric targeting molecules (CTMs) in order to identify development candidates.

We are obligated to use commercially reasonable efforts to identify relevant target binders and targeted protein degraders in order to identify development candidates.

Subject to certain exceptions, each party will bear its own costs in the conduct of such research.

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net sales and reduced milestone payments on such optioned products.

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Upon signing the Sanofi Agreement, Sanofi paid us an upfront payment of $55.0 million.

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We are eligible to receive additional payments if Sanofi exercises an option to extend the license term with respect to a particular target.

From the signing of the Sanofi Agreement to November 30, 2021 , we received a payment of $1.0 million for research milestones.

In addition, from the signing of the Sanofi Agreement to November 30, 2022, we received payments of $ 3.0 million for research milestones.

As of November 30, 2022, we are eligible to receive up to approximately $ 2.5 billion in total payments, including payments of up to $ 496.0 million upon the achievement of specified development milestones, up to $ 625.0 million upon the achievement of specified regulatory milestones and up to $ 1.3 billion upon the achievement of certain sales milestones, as well as up to $ 126.5 million in certain additional fees related to target licensing and reservation.

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Gilead Collaboration, Option and License Agreement

In June 2019, we entered into a global strategic collaboration agreement with Gilead, which was amended in August 2019 (the Gilead Agreement), to discover, develop and commercialize a pipeline of targeted protein degradation drugs for patients with cancer and other challenging diseases using our DELigase platform to identify novel agents that utilize E3 ligases to induce degradation of five specified drug targets.

In June 2019, we entered into a global strategic collaboration agreement with Gilead (as subsequently amended, the Gilead Agreement) to discover, develop and commercialize a pipeline of targeted protein degradation drugs for patients with cancer and other challenging diseases using our DELigase platform to identify novel agents that utilize E3 ligases to induce degradation of five specified drug targets.

In August 2019 and September 2022, we entered into the First and Second Amendment, respectively, to the Gilead Agreement to clarify certain language of the Gilead Agreement.

Under the Gilead Agreement, Gilead has the option to license drug candidates directed to up to five targets resulting from the collaboration and is responsible for the clinical development and commercialization of drug candidates resulting from the collaboration.

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For drug targets that are subject to the collaboration, we are obligated to use commercially reasonable efforts to undertake a research program in accordance with a research plan agreed to by the parties and established on a target-by-target basis.

We have primary responsibility under the agreement for performing preclinical research activities (including target validation, drug discovery, identification or synthesis) pursuant to a research plan.

We have primary responsibility under the Gilead Agreement for performing preclinical research activities (including target validation, drug discovery, identification or synthesis) pursuant to a research plan.

Each party will bear its own costs in the conduct of research activities.

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Upon signing the Gilead Agreement, Gilead paid us an upfront payment of $45.0 million, plus $3.0 million in additional fees.

From the signing of the Gilead Agreement to November 30, 2021, we received payments of $18.5 million for research milestones and additional payments, including $5.0 million, which was received in the fourth quarter of 2021.

Additionally, in November 2021, we recognized a research milestone and received a payment of $6.0 million in the first quarter of 2022.

In addition, from the signing of the Gilead Agreement to November 30, 2022, we have received payments of $ 34.5 million for research milestones and additional payments.

As of November 30, 2022, we are eligible to receive up to approximately $ 2.3 billion in total additional payments, including up to $ 667.5 million upon the achievement of specified development milestones, up to $ 1.5 billion upon the achievement of specified sales milestones, subject to reduction for any product for which we exercise our option to co-develop and co-promote, and up to $ 136.8 million in certain additional fees related to target licensing, reservation and selection and research term extensions.

In addition, we are eligible to receive tiered royalties from mid-single digit to low tens percentages on annual net sales from any commercial products directed to the optioned collaboration targets, subject to certain reductions and excluding sales in the United States of any products for which we exercise our option to co-develop and co-promote, for which we share profits and losses evenly.

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Subject to earlier expiration in certain circumstances, the Gilead Agreement expires on a licensed product-by-licensed product and country-by-country basis upon on the later of (i) the expiration of the last-to-expire patent with a valid claim covering the applicable licensed product in the applicable country, (ii) the expiration of any regulatory exclusivity for the applicable licensed product in the applicable country or (iii) ten years after the first commercial sale of the applicable licensed product in the applicable country covered by the Gilead Agreement, provided that the term for any profit-shared licensed product in the United States will expire upon the expiration or termination of the applicable profit-share term as set forth in an applicable profit-share agreement to be negotiated upon our exercise of our option to co-develop and co-promote such licensed product.

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We do not own or operate, and currently have no plans to establish, any facilities for product manufacturing, packaging, storage and distribution, or testing.

We rely on and expect to continue to rely on CMOs for both drug substance and finished drug product, and ACT product.

We rely on and expect to continue to rely on contract manufacturing organizations (CMOs) for both drug substance and finished drug product, and ACT product.

We have personnel or engaged consultants with extensive technical, manufacturing, analytical and quality experience and good project management to oversee contract manufacturing and testing activities.

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Our platform and product focus is the discovery and development of protein modulation therapies using our chimeric small molecules and ligase inhibitors.

Other companies researching chimeric small molecules for protein degradation include Arvinas, Inc., BioTheryX, Inc., C4 Therapeutics, Inc., Cullgen Inc.

, Foghorn Therapeutics Inc., Kymera Therapeutics, Inc.

Other companies researching chimeric small molecules for protein degradation include Arvinas, Inc., BeiGene, Ltd., BioTheryX, Inc., C4 Therapeutics, Inc., Cullgen Inc., Foghorn Therapeutics Inc., Kymera Therapeutics, Inc.

and Monte Rosa Therapeutics.

Further, several large pharmaceutical companies have disclosed preclinical investments in this field, including Amgen Inc., AstraZeneca plc, Bayer AG, Bristol-Myers Squibb Company, Genentech, Inc., GlaxoSmithKline plc and Novartis International AG.

Furthermore, we are aware of several biotech companies focused on developing tumor infiltrating lymphocyte (TIL) therapies for the treatment of cancer, including Instil Bio, Inc.

Furthermore, we are aware of several biotech companies focused on developing TIL therapies for the treatment of cancer, including Instil Bio, Inc.

and Iovance Biotherapeutics, Inc.

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In addition to competition from other protein modulation therapies, any products that we develop may also face competition from other types of therapies, such as small molecule, antibody, vaccine or gene therapies.

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Our lead drug candidates target hematologic cancers and immune-mediated diseases including immuno-oncology and cell-based therapeutics for cancer.

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However, the portfolio covering our drug candidates is at an early stage and is currently comprised of only applications and we do not currently own or license any issued patents.

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We also rely on trade secret protection of our confidential information and know-how relating to our proprietary technology, platforms and drug candidates and continuing innovation to develop, strengthen and maintain our position in our DELigase platform and drug candidates.

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We believe that we have a strong global intellectual property position and substantial know how and trade secrets relating to our DELigase platform and drug candidates.

As of December 31, 2021, we have 20 U.S.

patent applications and 51 foreign applications that we own, and four pending U.S.

patent applications and three foreign patent applications that we co-own with Gilead.

Should patents issue covering our clinical candidates, the expected expirations are 2039-2041 for patents covering NX-2127 and NX-5948;

2040-2042 for patents covering NX-1607;

and 2040 for patents covering DeTIL-0255.

As of December 31, 2022, we have four U.S.

patents, 19 U.S.

patent applications and 80 foreign applications that we own, and three pending U.S.

patent applications and 23 foreign patent applications that we co-own with Gilead.

The expected expirations for issued patents and patents that may issue from pending applications covering our clinical candidates are 2039-2042 for NX-2127 and NX-5948;

2040-2042 for NX-1607;

and 2040 for DeTIL-0255.

The term of individual patents depends upon the laws of the countries in which they are obtained.

In most countries in which we file, including the United States, the patent term is 20 years from the earliest date of filing of a non-provisional patent application in the applicable country.

However, the patent term of United States patents may, in certain cases, be adjusted for administrative delays by the United States Patent and Trademark Office (USPTO) in examining and granting a patent or may be shortened if a patent is terminally disclaimed over an earlier filed patent.

However, the patent term of U.S.

patents may, in certain cases, be adjusted for administrative delays by the United States Patent and Trademark Office (USPTO) in examining and granting a patent or may be shortened if a patent is terminally disclaimed over an earlier filed patent.

In addition, the term of a patent may be extended as compensation for the patent term lost during the FDA regulatory review process.

For example, for drugs that are regulated by the FDA under the Hatch-Waxman Act, it is permitted to extend the term of a patent that covers such drug for up to five years beyond the normal expiration date of the patent.

For more information on patent term extensions, see “Business—Government Regulation:

The Hatch-Waxman Act—Patent term extension.” In the future, if and when our pharmaceutical drug candidates receive FDA approval, we expect to apply for patent term extensions on patents, if issued, covering those drug candidates.

For more information on patent term extensions, see “Business—Government Regulation—The Hatch-Waxman Act—Patent term extension.” In the future, if and when our pharmaceutical drug candidates receive FDA approval, we expect to apply for patent term extensions on patents, if issued, covering those drug candidates.

We intend to seek patent term extensions to any of our patents, if issued, in any jurisdiction where these are available;

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To the extent that our employees, contractors, consultants, collaborators and advisors use intellectual property owned by others in their work for us, disputes may arise as to the rights in relation to the resulting know-how or inventions.

For more information, please see the sections titled “Risk Factors—Risks Related to Our Intellectual Property” and “Risk Factors—Risks Related to Regulatory Approval and Marketing of Our Drug candidate s.”

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Government Regulation

FDA approval process

In the United States, pharmaceutical products are subject to extensive regulation by the FDA.

In the United States, biological and pharmaceutical products are subject to extensive regulation by the FDA.

The processes for obtaining approval in the United States, along with subsequent compliance with applicable statutes and regulations and other regulatory authorities, require the expenditure of substantial time and financial resources.

The Federal Food, Drug, and Cosmetic Act (FDCA) and other federal and state statutes and regulations govern, among other things, the research, development, testing, manufacture, quality control, packaging, storage, recordkeeping, approval, labeling, promotion, advertising and marketing, distribution, post-approval monitoring and reporting, sampling, tracking and tracing and import and export of pharmaceutical products.

The Federal Food, Drug, and Cosmetic Act (FDCA), Public Health Service Act (PHSA), and other federal and state statutes and regulations govern, among other things, the research, development, testing, manufacture, quality control, packaging, storage, recordkeeping, approval, labeling, promotion, advertising and marketing, distribution, post-approval monitoring and reporting, sampling, tracking and tracing and import and export of biological and pharmaceutical products.

Failure to comply with applicable U.S.

requirements may subject a company to a variety of administrative or judicial sanctions, such as FDA refusal to approve pending new drug applications (NDAs), withdrawal of an approval, imposition of a clinical hold, warning or untitled letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, refusals of government contracts, restitution, disgorgement of profits, or civil or criminal investigations and penalties brought by the FDA and the Department of Justice (DOJ) or other governmental entities.

Pharmaceutical product development for a new product or certain changes to an approved product in the United States typically involves preclinical laboratory and animal tests, the submission to the FDA of an IND which must become effective before clinical testing may commence, and adequate and well-controlled clinical trials to establish the safety and effectiveness of the drug for each indication for which FDA approval is sought.

Satisfaction of FDA pre-market approval requirements typically takes many years and the actual time required may vary substantially based upon the type, complexity and novelty of the product or disease.

requirements may subject a company to a variety of administrative or judicial sanctions, such as FDA refusal to approve pending new drug applications (NDAs) or biologics licensure applications (BLAs), withdrawal of an approval, imposition of a clinical hold, warning or untitled letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, refusals of government contracts, restitution, disgorgement of profits or civil or criminal investigations and penalties brought by the FDA and the Department of Justice (DOJ) or other governmental entities.

Biological or pharmaceutical product development for a new product or certain changes to an approved or licensed product in the United States typically involves preclinical laboratory and animal tests, the submission to the FDA of an investigational new drug application (IND) which must become effective before clinical testing may commence, and adequate and well-controlled clinical trials to establish the safety and effectiveness of a drug, or the safety, purity, or potency of a biological product, for each indication for which FDA approval is sought.

Satisfaction of FDA pre-market approval and licensure requirements typically takes many years and the actual time required may vary substantially based upon the type, complexity and novelty of the product or disease.

Preclinical tests include laboratory evaluation of product chemistry, formulation and toxicity, as well as in vitro and animal trials to assess the characteristics and potential safety and efficacy of the product for initial testing in humans and to establish a rationale for therapeutic use.

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

The conduct of the preclinical tests must comply with federal regulations and requirements, including Good Laboratory Practices (GLPs).

The results of preclinical testing are submitted to the FDA as part of an IND along with other information, including information about product chemistry, manufacturing and controls, and a proposed clinical trial protocol.

Long-term preclinical tests, such as animal tests of reproductive toxicity and carcinogenicity, may continue after the IND is submitted.

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

Such authorization must be secured prior to interstate shipment and administration of any new drug that is not the subject of an approved NDA.

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

Such authorization must be secured prior to interstate shipment and administration of any new drug or biological product that is not the subject of an approved NDA or BLA.

In support of a request for an IND, a sponsor must submit a protocol for each clinical trial and any subsequent protocol amendments must be submitted to the FDA as part of the IND.

The sponsor may be a company seeking to develop the drug or, as in the case of an investigator-initiated trial, the sponsor may be an investigator who is conducting the trial.

The sponsor may be a company seeking to develop the drug or biological product or, as in the case of an investigator-initiated trial, the sponsor may be an investigator who is conducting the trial.

In addition, the results of the preclinical tests, together with manufacturing information, analytical data, any available clinical data or literature and plans for clinical trials, among other things, are submitted to the FDA as part of an IND.

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If the FDA has neither commented on nor questioned the IND within this 30-day period, the clinical trial proposed in the IND may begin.

Clinical trials involve the administration of the investigational new drug to healthy volunteers or patients under the supervision of a qualified investigator.

Clinical trials involve the administration of the investigational new drug or biological product to healthy volunteers or patients under the supervision of a qualified investigator.

Clinical trials must be conducted:

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patients and subsequent protocol amendments must be submitted to the FDA as part of the IND.

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The FDA may order the temporary or permanent discontinuation of a clinical trial at any time, as a clinical hold or partial clinical hold, or impose other sanctions, if it believes that the clinical trial either is not being conducted in accordance with FDA requirements or presents an unacceptable risk to the clinical trial patients.

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When a foreign clinical study is conducted under an IND, all IND requirements must be met unless waived.

When the foreign clinical study is not conducted under an IND, the sponsor must ensure that the study complies with certain FDA regulatory requirements in order to use the study as support for an IND or application for marketing approval.

Specifically, the FDA has promulgated regulations governing the acceptance of data from foreign clinical trials not conducted under an IND, establishing that such data from studies will be accepted as support for an IND or application for marketing approval if the study was conducted in accordance with GCP, including review and approval by an independent ethics committee and use of proper procedures for obtaining informed consent from subjects, and the FDA is able to validate the data from the study through an onsite inspection if the FDA deems such inspection necessary.

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Disclosure of the results of these trials can be delayed in certain circumstances for up to two years after the date of completion of the trial.

Clinical trials to support NDAs for marketing approval are typically conducted in three sequential phases, but the phases may overlap.

In Phase 1, the drug is introduced into healthy human subjects or in certain indications such as cancer, into patients with the target disease or condition.

Clinical trials to support NDAs or BLAs for marketing approval or licensure are typically conducted in three sequential phases, but the phases may overlap.

In Phase 1, the drug or biological product is introduced into healthy human subjects or in certain indications such as cancer, into patients with the target disease or condition.

The drug is tested in Phase 1 to assess metabolism, pharmacokinetics, pharmacological actions, side effects associated with increasing doses, and, if possible, early evidence of effectiveness.

Phase 2 usually involves trials in a limited patient population to determine the effectiveness of the drug for a particular indication, dosage tolerance and optimum dosage, and to identify common adverse effects and safety risks.

If a compound demonstrates evidence of effectiveness and an acceptable safety profile in Phase 2 evaluations, Phase 3 trials are conducted.

In a Phase 3 trial, the drug is administered to an expanded patient population, generally at geographically dispersed clinical trial sites, in well-controlled clinical trials to generate enough data to statistically evaluate the efficacy and safety of the product for approval, to establish the overall risk benefit profile of the product, and to provide adequate information for the labeling of the product.

In most cases the FDA requires at least two adequate and well-controlled Phase 3 clinical trials to demonstrate the efficacy of the drug.

Phase 2 usually involves trials in a limited patient population to determine the effectiveness or potency of the drug or biological product for a particular indication, dosage tolerance and optimum dosage, and to identify common adverse effects and safety risks.

If a product candidate demonstrates evidence of effectiveness and an acceptable safety profile in Phase 2 evaluations, Phase 3 trials are conducted.

In a Phase 3 trial, the drug or biological product is administered to an expanded patient population, generally at geographically dispersed clinical trial sites, in well-controlled clinical trials to generate enough data to statistically evaluate the efficacy or potency and purity, and safety, of the product for approval or licensure, to establish the overall risk benefit profile of the product, and to provide adequate information for the labeling of the product.

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In most cases the FDA requires at least two adequate and well-controlled Phase 3 clinical trials to demonstrate the efficacy or potency of the drug.

A single Phase 3 trial with other confirmatory evidence may be sufficient in rare instances, such as where the study is a large multicenter trial demonstrating internal consistency and a statistically very persuasive finding of a clinically meaningful effect on mortality, irreversible morbidity or prevention of a disease with a potentially serious outcome and confirmation of the result in a second trial would be practically or ethically impossible.

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serious and unexpected suspected adverse reactions;

findings from other studies or animal or in vitro testing that suggest a significant risk in humans exposed to the drug;

findings from other studies or animal or in vitro testing that suggest a significant risk in humans exposed to the drug or biological product;

and any clinically important increase in the case of a serious suspected adverse reaction over that listed in the protocol or investigator brochure.

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

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

The FDA will typically inspect one or more clinical sites to assure compliance with GCP and the integrity of the clinical data submitted.

Concurrent with clinical trials, companies often complete additional animal studies and must also develop additional information about the chemistry and physical characteristics of the drug as well as finalize a process for manufacturing the product in commercial quantities in accordance with current good manufacturing practices (cGMP) requirements.

The manufacturing process must be capable of consistently producing quality batches of the drug candidate and, among other things, must develop methods for testing the identity, strength, quality and purity of the final drug.

Additionally, appropriate packaging must be selected and tested, and stability studies must be conducted to demonstrate that the drug candidate does not undergo unacceptable deterioration over its shelf life.

After completion of the required clinical testing, an NDA is prepared and submitted to the FDA.

FDA approval of the NDA is required before marketing of the product may begin in the United States.

The NDA must include the results of all preclinical, clinical and other testing and a compilation of data relating to the product’s pharmacology, chemistry, manufacture and controls.

The cost of preparing and submitting an NDA is substantial.

The submission of most NDAs is additionally subject to a substantial application user fee, currently set for fiscal year 2022 at $3,117,218 for applications requiring clinical data, and $1,558,609 for applications not requiring clinical data , and the manufacturer and sponsor under an approved NDA are also subject to annual program fees, currently set for fiscal year 2022 at $369,413 for each prescription product.

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

The FDA will typically inspect one or more clinical sites to assure compliance with GCP and the integrity of the clinical data submitted in an NDA or BLA.

Concurrent with clinical trials, companies often complete additional animal studies and must also develop additional information about the chemistry and physical characteristics of the drug or biological product as well as finalize a process for manufacturing the product in commercial quantities in accordance with current good manufacturing practices (cGMP) requirements.

The manufacturing process must be capable of consistently producing quality batches of the drug or biological product candidate and, among other things, must develop methods for testing the identity, strength, quality and purity of the final drug.

Additionally, appropriate packaging must be selected and tested, and stability studies must be conducted to demonstrate that the drug or biological product candidate does not undergo unacceptable deterioration over its shelf life.

After completion of the required clinical testing, an NDA or BLA is prepared and submitted to the FDA.

FDA approval of the NDA or BLA is required before marketing of the product may begin in the United States.

The application must include the results of all preclinical, clinical and other testing and a compilation of data relating to the product’s pharmacology, chemistry, manufacture and controls.

The cost of preparing and submitting an application is substantial.

The submission of most NDAs or BLAs is additionally subject to a substantial application user fee, currently set for fiscal year 2023 at $3,242,026 for applications requiring clinical data, and $1,621,013 for applications not requiring clinical data, and the manufacturer and sponsor under an approved NDA or BLA are also subject to annual program fees, currently set for fiscal year 2023 at $393,933 for each prescription product.

These fees are typically increased annually.

Sponsors of applications for drugs granted Orphan Drug Designation are exempt from these user fees.

The FDA has 60 days from its receipt of an NDA to determine whether the application will be accepted for filing based on the agency’s threshold determination that it is sufficiently complete to permit substantive review.

The FDA may request additional information rather than accept an NDA for filing.

The FDA has 60 days from its receipt of an NDA or BLA to determine whether the application will be accepted for filing based on the agency’s threshold determination that it is sufficiently complete to permit substantive review.

The FDA may request additional information rather than accept an NDA or BLA for filing.

In this event, the application must be resubmitted with the additional information.

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Once the submission is accepted for filing, the FDA begins an in-depth review.

The FDA has agreed to certain performance goals in the review of NDAs to encourage timeliness.

The FDA intends to review applications for standard review drug products within ten months of the 60-day filing date;

and applications for priority review drugs within six months.

Priority review can be applied to drugs that the FDA determines treat a serious condition, and if approved, would offer a significant improvement in safety or effectiveness.

The FDA has agreed to certain performance goals in the review of NDAs and BLAs to encourage timeliness.

The FDA intends to review applications for standard review product candidates within ten months of the 60-day filing date;

and applications for priority review product candidates within six months.

Priority review can be applied to drugs or biological products that the FDA determines treat a serious condition, and if approved, would offer a significant improvement in safety or effectiveness.

The FDA determines, on a case-by-case basis, whether the proposed product represents a significant improvement when compared with other available therapies.

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The review process for both standard and priority review may be extended by the FDA for three additional months to consider certain late-submitted information, or information intended to clarify information already provided in the submission.

The FDA is required to refer an application for a novel drug to an advisory committee or explain why such referral was not made.

An advisory committee is typically a panel that includes clinicians and other experts—for review, evaluation and a recommendation as to whether the application should be approved.

The FDA is required to refer an application for a novel drug or biological product to an advisory committee for review, evaluation and a recommendation as to whether the application should be approved, or otherwise explain why such referral was not made.

An advisory committee is typically a panel that includes clinicians and other experts.

The FDA is not bound by the recommendation of an advisory committee, but it generally follows such recommendations.

Before approving an NDA, the FDA will typically inspect one or more clinical sites to assure compliance with GCP.

Additionally, the FDA will inspect the facility or the facilities at which the drug is manufactured.

The FDA will not approve the product unless compliance with cGMPs is satisfactory and the NDA contains data that provide substantial evidence that the drug is safe and effective in the indication studied.

After the FDA evaluates the NDA and accompanying information and the manufacturing facilities, it issues either an approval letter or a complete response letter.

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Before approving an NDA or BLA, the FDA will typically inspect one or more clinical sites to assure compliance with GCP.

Additionally, the FDA will inspect the facility or the facilities at which the drug or biological product is manufactured.

The FDA will not approve the application unless compliance with cGMPs is satisfactory and the application contains data that provide substantial evidence that the drug is safe and effective, or the biological product is safe, pure and potent, in the indication studied.

After the FDA evaluates the NDA or BLA and accompanying information and the manufacturing facilities, it issues either an approval letter or a complete response letter.

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

A complete response letter generally outlines the deficiencies in the submission and may require substantial additional testing, or information, in order for the FDA to reconsider the application.

If, or when, those deficiencies have been addressed to the FDA’s satisfaction in a resubmission of the NDA, the FDA will issue an approval letter.

If, or when, those deficiencies have been addressed to the FDA’s satisfaction in a resubmission of the NDA or BLA, the FDA will issue an approval letter.

The FDA intends to review such resubmissions in two or six months depending on the type of information included.

Even with submission of this additional information, the FDA ultimately may decide that the application does not satisfy the regulatory criteria for approval.

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

As a condition of NDA approval, the FDA may require a risk evaluation and mitigation strategy (REMS) to help ensure that the benefits of the drug outweigh the potential risks.

Even with submission of this additional information, the FDA ultimately may decide that the application does not satisfy the regulatory criteria for approval or licensure.

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

As a condition of approval or licensure, the FDA may require a risk evaluation and mitigation strategy (REMS) to help ensure that the benefits of the drug or biological product outweigh the potential risks.

REMS can include medication guides, communication plans for healthcare professionals and elements to assure safe use (ETASU).

ETASU can include, but are not limited to, special training or certification for prescribing or dispensing, dispensing only under certain circumstances, special monitoring and the use of patient registries.

The requirement for a REMS can materially affect the potential market and profitability of the drug.

The requirement for a REMS can materially affect the potential market and profitability of the drug or biological product.

Moreover, product approval may require substantial post-approval testing and surveillance to monitor the drug’s safety or efficacy.

Once granted, product approvals may be withdrawn if compliance with regulatory standards is not maintained or problems are identified following initial marketing.

If the FDA approves a product, it may limit the approved indications for use of the product;

If the FDA approves or licenses a drug or biological product, it may limit the approved indications for use of the product;

require that contraindications, warnings or precautions be included in the product labeling;

require that post-approval studies, including Phase 4 clinical trials, be conducted to further assess the drug’s safety after approval;

require that post-approval studies, including Phase 4 clinical trials, be conducted to further assess the drug’s safety after approval or licensure;

require testing and surveillance programs to monitor the product after commercialization;

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The FDA may prevent or limit further marketing of a product based on the results of post-market studies or surveillance programs.

Changes to some of the conditions established in an approved application, including changes in indications, labeling, or manufacturing processes or facilities, require submission and FDA approval of a new NDA or NDA supplement before the change can be implemented.

An NDA supplement for a new indication typically requires clinical data similar to that in the original application, and the FDA uses the same procedures and actions in reviewing NDA supplements as it does in reviewing NDAs.

Approval of medicines in the EU

In the EU, companies can apply for marketing authorizations under the centralized procedure to the European Medicines Agency (EMA) or they can submit their application to the competent authorities in the EEA Member States via the decentralized procedure, the national procedure, or the mutual recognition procedure.

Changes to some of the conditions established in an approved application, including changes in indications, labeling, or manufacturing processes or facilities, require submission and FDA approval of a new NDA or BLA, or an NDA or BLA supplement before the change can be implemented.

An NDA or BLA supplement for a new indication typically requires clinical data similar to that in the original application, and the FDA uses the same procedures and actions in reviewing NDA and BLA supplements as it does in reviewing NDAs and BLAs.

Approval of medicines in the European Union (EU)

In the EU, companies can apply for marketing authorizations under the centralized procedure to the European Medicines Agency (EMA) or they can submit their application to the competent authorities in the European Economic Area (EEA) Member States via the decentralized procedure, the national procedure, or the mutual recognition procedure.

The centralized procedure is mandatory for certain medicines, such as those produced by biotechnology, orphan medicinal products, advanced therapy medicinal products and those containing a new active substance indicated for the treatment of HIV, AIDS, cancer, neurodegenerative disorders, autoimmune and other immune dysfunctions, viral diseases, or diabetes.

The centralized procedure remains optional for medicines containing a new active substance, or which are a significant therapeutic, scientific, or technical innovation or whose authorization would be in the interest of public health.

Therefore the centralized procedure remains mandatory for the majority of biological medicinal products.

The marketing authorization granted under the centralized procedure by the EMA will be valid in all EEA Member States.

The maximum timeframe for the evaluation of a marketing authorization application, by the EMA is 210 days but can go be extended should additional information be required by the Committee for Medicinal Products for Human Use (CHMP).

The European Commission makes the final decision to grant a marketing authorization, which is issued within 67 days of receipt of the EMA’s recommendation.

An accelerated assessment procedure of 150 days may be implemented for dugs considered to be of major public health interest.

The maximum timeframe for the evaluation of a marketing authorization application by the EMA is 210 days but can be extended should additional information be required by the EMA’s Committee for Medicinal Products for Human Use (CHMP).

The European Commission makes the final decision to grant a marketing authorization, which is issued within 67 days of receipt of the EMA’s positive opinion.

An accelerated assessment procedure of 150 days may be implemented for drugs considered to be of major public health interest.

Under the mutual recognition procedure, the national marketing authorization holder may submit an application to other EEA Member States.

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If a Member State does not recognize the marketing authorization, the disputed points are eventually referred to the European Commission, whose decision is binding.

Since the UK has left the EU, Great Britain is no longer covered by centralized marketing authorizations.

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Since the United Kingdom (UK) has left the EU, Great Britain is no longer covered by centralized marketing authorizations.

This is not the case for Northern Ireland as under the Northern Ireland Protocol, centralized marketing authorizations continue to be recognized in Northern Ireland.

Medicines with centralized marketing authorizations were automatically converted to Great Britain marketing authorizations on January 1, 2021.

Medicines with existing centralized marketing authorizations were automatically converted to Great Britain marketing authorizations on January 1, 2021.

For a period of two years from January 1, 2021, the Medicines and Healthcare Products Regulatory Agency (MHRA), the UK medicines regulator, can rely on a decision taken by the European Commission on the approval of a new marketing authorization in the centralized procedure, in order to more quickly grant a new Great Britain marketing authorization.

A separate application is, however, still required.

The MHRA has launched the Innovative Licensing and Access Pathway (ILAP), a new accelerated assessment procedure for marketing authorization applications that enables companies to enter the UK market faster.

Clinical trials regulation in the EU

In the EU, a Clinical Trial Application (CTA) must be submitted for each clinical trial to each Member State’s national competent authority (NCA) and an independent Ethics Committee.

The MHRA has ceased to participate in the assessment of any centralized procedures since January 1, 2021.

Since then, the MHRA has launched the Innovative Licensing and Access Pathway (ILAP), a new accelerated assessment procedure for marketing authorization applications that enables companies to enter the UK market faster.

Clinical trials regulation and data sharing in the EU

In the EU, a Clinical Trial Application (CTA) must be submitted for each clinical trial to each Member State’s national competent authority (NCA) and ethics approval must be sought from an independent Ethics Committee.

Once the CTA is approved in accordance with a particular Member State’s requirements, the clinical trial may proceed.

Under the EU Clinical Trials Directive 2001/20/EC, suspected unexpected serious adverse reactions to the drug being trialed occurring during the clinical trial must be reported to the NCA and the Ethics Committee of the Member State where they occurred.

The EU has adopted a new Clinical Trials Regulation (EU) No 536/2014 that will amend the current system of approvals for clinical trials in the EU by simplifying and streamlining the application procedure via a single-entry point with the implementation of strictly defined deadlines for assessment.

The new Regulation will come into effect in each Member State on January 31, 2022.

In the EU, Transparency Regulation No 1049/ 2001, EMA Policy 0043, EMA Policy 0070, as well as the Clinical Trials Regulation No 536/2014 set out the obligation for sponsors to make publicly available certain information stemming from clinical studies.

Under the EU Clinical Trials Regulation 536/2014, which has been in effect since January 31, 2022 replacing the EU Clinical Trials Directive 2001/20/EC, suspected unexpected serious adverse reactions to the drug being trialed occurring during the clinical trial must be reported to the NCA and the Ethics Committee of the Member State where they occurred.

Interested parties based in the EU may submit a request to the EMA to access information included in the marketing authorization application for authorized medicinal products.

Commercially confidential information and protected personal data may however not be accessed.

Regulatory Framework in the United Kingdom following Brexit

Commercially confidential information and protected personal data, however, may not be accessed.

On May 3, 2022, the European Commission published a proposal for a regulation on the European Health Data Space (EHDS), which aims to further enable exchange of electronic health data both for primary use (among national EU healthcare systems for patient care) and secondary use (among private companies and regulators to enable scientific research).

Whilst the regulation is currently under discussions among the EU legislators, the text is expected to be finalized by the end of 2023 and for the EHDS to become reality in 2025.

This will impose new obligations, but also create opportunities, for entities engaged in health-related research to share and access health data on a scale much larger than what is foreseen under current applicable transparency provisions.

Regulatory framework in the UK following Brexit

The UK officially left the EU on January 31, 2020.

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In addition, Accelerated Approval offers the potential for approval based on a surrogate or intermediate clinical endpoint.

In May 2014, the FDA published a final Guidance for Industry titled “Expedited Programs for Serious Conditions Drugs and Biologics,” which provides guidance on the FDA programs that are intended to facilitate and expedite development and review of new drug candidates as well as threshold criteria generally applicable to concluding that a drug candidate is a candidate for these expedited development and review programs.

In May 2014, the FDA published a final Guidance for Industry titled “Expedited Programs for Serious Conditions Drugs and Biologics,” which provides guidance on the FDA programs that are intended to facilitate and expedite development and review of new drug or biological product candidates as well as threshold criteria generally applicable to concluding that a product candidate is a candidate for these expedited development and review programs.

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The FDA may designate a product for Fast Track review if it is intended, whether alone or in combination with one or more other products, for the treatment of a serious or life threatening disease or condition, and nonclinical or clinical data demonstrate the potential to address unmet medical needs for such a disease or condition.

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Accelerated Approval Pathway

The FDA may grant accelerated approval to a drug for a serious or life threatening condition that provides meaningful therapeutic advantage to patients over available treatments based upon a determination that the drug has an effect on a surrogate endpoint that is reasonably likely to predict clinical benefit.

The FDA may also grant accelerated approval for such drug for such a condition when the product has an effect on an intermediate clinical endpoint that can be measured earlier than an effect on irreversible morbidity or mortality (IMM) and that is reasonably likely to predict an effect on IMM or other clinical benefit, taking into account the severity, rarity or prevalence of the condition and the availability or lack of alternative treatments.

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

The FDA may grant Accelerated Approval to a drug or biological product for a serious or life threatening condition that provides meaningful therapeutic advantage to patients over available treatments based upon a determination that the drug or biological product has an effect on a surrogate endpoint that is reasonably likely to predict clinical benefit.

The FDA may also grant Accelerated Approval for such drug or biological product for such a condition when the product has an effect on an intermediate clinical endpoint that can be measured earlier than an effect on irreversible morbidity or mortality (IMM) and that is reasonably likely to predict an effect on IMM or other clinical benefit, taking into account the severity, rarity or prevalence of the condition and the availability or lack of alternative treatments.

Drugs and biological products granted Accelerated Approval must meet the same statutory standards for safety and effectiveness as those granted traditional approval.

For the purposes of Accelerated Approval, a surrogate endpoint is a marker, such as a laboratory measurement, radiographic image, physical sign or other measure that is thought to predict clinical benefit but is not itself a measure of clinical benefit.

Surrogate endpoints can often be measured more easily or more rapidly than clinical endpoints.

An intermediate clinical endpoint is a measurement of a therapeutic effect that is considered reasonably likely to predict the clinical benefit of a drug, such as an effect on IMM.

The FDA has limited experience with accelerated approvals based on intermediate clinical endpoints, but has indicated that such endpoints generally may support accelerated approval where the therapeutic effect measured by the endpoint is not itself a clinical benefit and basis for traditional approval, if there is a basis for concluding that the therapeutic effect is reasonably likely to predict the ultimate clinical benefit of a drug.

The accelerated approval pathway is most often used in settings in which the course of a disease is long and an extended period of time is required to measure the intended clinical benefit of a drug, even if the effect on the surrogate or intermediate clinical endpoint occurs rapidly.

Thus, accelerated approval has been used extensively in the development and approval of drugs for treatment of a variety of cancers in which the goal of therapy is generally to improve survival or decrease morbidity and the duration of the typical disease course requires lengthy and sometimes large trials to demonstrate a clinical or survival benefit.

The accelerated approval pathway is contingent on a sponsor’s agreement to conduct, in a diligent manner, additional post-approval confirmatory studies to verify and describe the drug’s clinical benefit.

As a result, a drug candidate approved on this basis is subject to rigorous post-marketing compliance requirements, including the completion of Phase 4 or post-approval clinical trials to confirm the effect on the clinical endpoint.

Failure to conduct required post-approval studies, or confirm a clinical benefit during post-marketing studies, would allow the FDA to withdraw the drug from the market on an expedited basis.

In addition, all promotional materials for drugs approved under accelerated regulations are subject to prior review by the FDA.

The EU and UK operate accelerated evaluation schemes, which may be granted in exceptional cases, often when there is unmet medical need for a life-threatening or serious debilitating condition and existing data show a positive benefit/risk balance that means the medicinal product is of a major public health interest.

An intermediate clinical endpoint is a measurement of a therapeutic effect that is considered reasonably likely to predict the clinical benefit of a drug or biological product, such as an effect on IMM.

The FDA has limited experience with Accelerated Approvals based on intermediate clinical endpoints, but has indicated that such endpoints generally may support Accelerated Approval where the therapeutic effect measured by the endpoint is not itself a clinical benefit and basis for traditional approval, if there is a basis for concluding that the therapeutic effect is reasonably likely to predict the ultimate clinical benefit of a drug or biological product.

The Accelerated Approval Pathway is most often used in settings in which the course of a disease is long and an extended period of time is required to measure the intended clinical benefit of a drug or biological product, even if the effect on the surrogate or intermediate clinical endpoint occurs rapidly.

Thus, Accelerated Approval has been used extensively in the development and approval of drugs and biological products for treatment of a variety of cancers in which the goal of therapy is generally to improve survival or decrease morbidity and the duration of the typical disease course requires lengthy and sometimes large trials to demonstrate a clinical or survival benefit.

The Accelerated Approval Pathway is contingent on a sponsor’s agreement to conduct, in a diligent manner, additional post-approval confirmatory studies to verify and describe the product’s clinical benefit.

As a result, a drug or biological product candidate approved on this basis is subject to rigorous post-marketing compliance requirements, including the completion of Phase 4 or post-approval clinical trials to confirm the effect on the clinical endpoint.

Failure to conduct required post-approval studies, or confirm a clinical benefit during post-marketing studies, would allow the FDA to withdraw the drug or biological product from the market on an expedited basis.

In addition, all promotional materials for drugs and biological products approved under accelerated regulations are subject to prior review by the FDA.

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The EU and UK operate accelerated evaluation and assessment schemes, which include, at EU level, PRIME (PRIority MEdicines) scheme and, at UK level, the Early Access to Medicines Scheme (EAMS), which may be granted in exceptional cases, often when there is unmet medical need for a life-threatening or serious debilitating condition and existing data show a positive benefit/risk balance that means the medicinal product is of a major public health interest.

The CHMP of the EMA or the MHRA (or other national competent authority) will make this determination on a case-by-case basis and subject to meeting eligibility criteria.

Accelerated assessment takes place within 150 days.

Under the Orphan Drug Act, the FDA may grant Orphan Drug Designation to drugs intended to treat a rare disease or condition—generally a disease or condition that affects fewer than 200,000 individuals in the United States.

Other regulatory facilitations for these pathways include additional scientific advice at key development milestones and frequent guidance and discussions throughout the approval process.

In the UK, the MHRA has launched the Innovative Licensing and Access Pathway (ILAP), a new accelerated assessment procedure for marketing authorization applications that enables companies to enter the UK market faster, available since January 1, 2021.

Under the Orphan Drug Act, the FDA may grant Orphan Drug Designation to drugs or biological products intended to treat a rare disease or condition—generally a disease or condition that affects fewer than 200,000 individuals in the United States.

Orphan Drug Designation must be requested before submitting an NDA.

After the FDA grants Orphan Drug Designation, the name of the drug and its potential orphan-designated use are disclosed publicly by the FDA.

After the FDA grants Orphan Drug Designation, the name of the drug or biological product and its potential orphan-designated use are disclosed publicly by the FDA.

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

The first NDA applicant to receive FDA approval for a particular drug to treat a particular disease with FDA Orphan Drug Designation is entitled to a seven-year exclusive marketing period in the United States for that product, for that indication.

During the seven-year exclusivity period, the FDA may not approve any other applications to market the same drug for the same disease, except in limited circumstances, such as a showing of clinical superiority to the product with orphan drug exclusivity.

Orphan drug exclusivity does not prevent the FDA from approving a different drug for the same disease or condition, or the same drug for a different disease or condition.

Among the other benefits of Orphan Drug Designation are tax credits for certain research and an exemption from the NDA application user fee.

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

The first NDA or BLA applicant to receive FDA approval for a particular drug or biological product to treat a particular disease with FDA Orphan Drug Designation is entitled to a seven-year exclusive marketing period in the United States for that product, for that indication.

During the seven-year exclusivity period, the FDA may not approve any other applications to market the same drug or biological product for the same disease, except in limited circumstances, such as a showing of clinical superiority to the product with orphan drug exclusivity.

Orphan drug exclusivity does not prevent the FDA from approving a different drug or biological product for the same disease or condition, or the same drug or biological product for a different disease or condition.

Among the other benefits of Orphan Drug Designation are tax credits for certain research and an exemption from the NDA or BLA application user fee.

A designated orphan drug or biological product may not receive orphan drug exclusivity if it is licensed for a use that is broader than the indication for which it received orphan designation.

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

In the EU and UK, under Regulation (EC)141/2000 and the UK Human Medicines Regulation 2012 (as amended), respectively, medicinal products may be granted an orphan drug designation if they are used to treat or prevent life-threatening or chronically debilitating conditions that affect no more than five in 10,000 people in the EU/ UK and for which there is no satisfactory method of diagnosis, prevention or treatment when the application is made, or when the medicinal product is of significant benefit to those affected by the condition.

In the EU and UK, under Regulation (EC) 141/2000 and the UK Human Medicines Regulations 2012 SI 2012 No.

1916 (as amended), respectively, medicinal products may be granted an orphan drug designation if they are used to treat or prevent life-threatening or chronically debilitating conditions that affect no more than five in 10,000 people in the EU/UK and for which there is no satisfactory method of diagnosis, prevention or treatment when the application is made, or when the medicinal product is of significant benefit to those affected by the condition.

In addition, orphan drug designation can be granted to drugs used to treat or prevent life-threatening or chronically debilitating conditions which, for economic reasons, would be unlikely to be developed without incentives.

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The ten-year market exclusivity may be reduced to six years if, at the end of the fifth year, it is established that the product no longer meets the criteria for orphan designation, for example, if the product is sufficiently profitable not to justify the maintenance of market exclusivity.

Conversely, the 10-year exclusivity period can be further extended by 2 years, when pediatric studies are conducted in accordance with an agreed pediatric investigation plan (PIP) and in completion of all the legal requirements.

Pediatric studies and exclusivity

Under the Pediatric Research Equity Act of 2003, an NDA or supplement thereto must contain data that are adequate to assess the safety and effectiveness of the drug product for the claimed indications in all relevant pediatric subpopulations, and to support dosing and administration for each pediatric subpopulation for which the product is safe and effective.

With enactment of the Food and Drug Administration Safety and Innovation Act of 2012 (FDASIA), sponsors must also submit pediatric study plans prior to the assessment data.

Those plans must contain an outline of the proposed pediatric study or studies the applicant plans to conduct, including study objectives and design, any deferral or waiver requests, and other information required by regulation.

The applicant, the FDA and the FDA’s internal review committee must then review the information submitted, consult with each other and agree upon a final plan.

The FDA or the applicant may request an amendment to the plan at any time.

The FDA may, on its own initiative or at the request of the applicant, grant deferrals for submission of some or all pediatric data until after approval of the product for use in adults, or full or partial waivers from the pediatric data requirements.

Additional requirements and procedures relating to deferral requests and requests for extension of deferrals are contained in FDASIA.

Unless otherwise required by regulation, the pediatric data requirements do not apply to products with orphan designation.

Pediatric exclusivity is another type of non-patent marketing exclusivity in the United States and, if granted, provides for the attachment of an additional six months of marketing protection to the term of any existing regulatory exclusivity, including the non-patent and orphan exclusivity.

This six-month exclusivity may be granted if an NDA sponsor submits pediatric data that fairly respond to a written request from the FDA for such data.

The data do not need to show the product to be effective in the pediatric population studied;

rather, if the clinical trial is deemed to fairly respond to the FDA’s request, the additional protection is granted.

If reports of requested pediatric studies are submitted to and accepted by the FDA within the statutory time limits, whatever statutory or regulatory periods of exclusivity or patent protection cover the product are extended by six months.

This is not a patent term extension, but it effectively extends the regulatory period during which the FDA cannot approve another application.

Under the European Pediatric Regulation (Regulation (EC) No 1901/2006), which has also been reflected in and retained by UK law, applicants must submit to the national competent authority or the EMA data from pediatric studies in compliance with an agreed PIP for the validation or acceptance of a marketing authorization application, unless the medicine is exempt because of a deferral or waiver.

Conversely, the 10-year exclusivity period can be further extended by two years, when pediatric studies are conducted in accordance with an agreed pediatric investigation plan (PIP) and in completion of all the legal requirements.

It is noted that the general pharmaceutical legislative framework, as well as the framework applicable to orphan and pediatric medicinal products in the EU, is under review.

The European Commission expects to publish its position on this in the second quarter of 2023.

Although the final proposals are not yet known, it is expected that there will be a reduction in applicable regulatory exclusivities which will significantly affect all medicinal products that will be authorized after the legislative changes have taken effect.

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Post-approval requirements

Drugs manufactured or distributed pursuant to FDA approvals are subject to pervasive and continuing regulation by the FDA, including, among other things, requirements relating to recordkeeping, periodic reporting, product sampling and distribution, advertising and promotion and reporting of adverse experiences with the product.

Drugs and biological products manufactured or distributed pursuant to FDA approvals are subject to pervasive and continuing regulation by the FDA, including, among other things, requirements relating to recordkeeping, periodic reporting, product sampling and distribution, advertising and promotion and reporting of adverse experiences with the product.

After approval, most changes to the approved product, such as adding new indications or other labeling claims, are subject to prior FDA review, through the applicant’s submission of a supplemental application, and approval.

There also are continuing, annual user fee requirements for any marketed products and the establishments at which such products are manufactured, as well as new application fees for supplemental applications with clinical data.

In addition, drug manufacturers and other entities involved in the manufacture and distribution of approved drugs are required to register their establishments with the FDA and state agencies, and are subject to periodic unannounced inspections by the FDA and these state agencies for compliance with cGMP requirements.

In addition, drug and biological product manufacturers and other entities involved in the manufacture and distribution of approved products are required to register their establishments with the FDA and state agencies, and are subject to periodic unannounced inspections by the FDA and these state agencies for compliance with cGMP requirements.

Changes to the manufacturing process are strictly regulated and often require prior FDA approval before being implemented.

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• Fines, untitled or warning letters or holds on post-approval clinical trials;

Refusal of the FDA to approve pending NDAs or supplements to approved NDAs, or suspension or revocation of product license approvals;

• Refusal of the FDA to approve pending NDAs, BLAs or supplements to approved NDAs or BLAs, or suspension or revocation of product license approvals;

• Product seizure or detention, or refusal to permit the import or export of products;

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The FDA strictly regulates marketing, labeling, advertising and promotion of products that are placed on the market.

Drugs may be promoted only for the approved indications and consistently with the provisions of the approved labeling.

Drugs and biological products may be promoted only for the approved indications and consistently with the provisions of the approved labeling.

The FDA and other agencies actively enforce the laws and regulations prohibiting the promotion of off label uses, and a company that is found to have improperly promoted off label uses may be subject to significant liability.

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Both the PDMA and state laws limit the distribution of prescription drug product samples and impose requirements to ensure accountability in distribution.

Many jurisdictions, including the EU and the UK, require each marketing authorization holder, national competent authority and the EMA to operate a pharmacovigilance system to ensure that the safety of all medicines is monitored throughout their use.

The overall EU pharmacovigilance system operates through cooperation between the EU Member States, EMA and the European Commission.

Applicable obligations extend to all activities consisting of procuring, holding, supplying or exporting medicinal products to the public and may therefore be incumbent upon importers, distributors and other economic operators in the supply chain.

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Abbreviated new drug applications for generic drugs

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In addition, by operation of certain state laws and numerous health insurance programs, the FDA’s designation of therapeutic equivalence often results in substitution of the generic drug without the knowledge or consent of either the prescribing physician or patient.

Abridged marketing authorization applications for generic and biosimilar drugs in the EU and the UK

Generic and hybrid medicinal products of reference medicinal products authorized via the centralized procedure have automatic access to the centralized procedure.

Generic and hybrid products can refer to the complete dossier (i.e.

the quality, pre-clinical and clinical data) of the reference medicinal product in their marketing authorization application, by demonstration of bioequivalence, usually through the submission of the appropriate bioavailability studies after the period of regulatory data protection (also called “data exclusivity”) has expired, namely eight years after the grant of the marketing authorization of the reference medicinal product.

Applicants will be able to cross-refer to the dossier of the reference medicinal product, as long as the data protection period has expired.

This abridged application procedure avoids the requirement to repeat trials and allows generic applicants a faster entry to the market.

If a biosimilar of a reference biological product does not meet the conditions in the definition of generic medicinal products, owing to, in particular, differences relating to raw materials or differences in manufacturing processes of the biological medicinal product and the reference biological medicinal product, the results of appropriate pre-clinical studies or clinical trials relating to these conditions must be provided.

The type and quantity of supplementary data to be provided must comply with the relevant criteria stated in Annex I of Directive 2001/83 as amended and the related detailed guidelines.

The results of other tests and trials from the reference medicinal product’s dossier do not need to be provided.

505(b)(2) New Drug Applications

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Upon approval of a drug, each of the patents listed in the application for the drug is then published in the FDA’s Orange Book.

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When an ANDA applicant files its application with the FDA, the applicant is required to certify to the FDA concerning any patents listed for the reference product in the Orange Book, except for patents covering methods of use for which the ANDA applicant is not seeking approval.

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The filing of a patent infringement lawsuit within 45 days of the receipt of a Paragraph IV certification automatically prevents the FDA from approving the ANDA until the earlier of 30 months, expiration of the patent, settlement of the lawsuit or a decision in the infringement case that is favorable to the ANDA applicant.

Patent term extension

After NDA approval, owners of relevant drug patents may apply for up to a five-year patent extension, which permits patent term restoration as compensation for the patent term lost during the FDA regulatory process.

The allowable patent term extension is typically calculated as one-half the time between the effective date of an IND application and the submission date of a NDA, plus the time between NDA submission date and the NDA approval date up to a maximum of five years.

The time can be shortened if the FDA determines that the applicant did not pursue approval with due diligence.

The total patent term after the extension may not exceed 14 years from the date of product approval.

Only one patent applicable to an approved drug is eligible for extension and only those claims covering the approved drug, a method for using it, or a method for manufacturing it may be extended and the application for the extension must be submitted prior to the expiration of the patent in question.

However, we may not be granted an extension because of, for example, failing to exercise due diligence during the testing phase or regulatory review process, failing to apply within applicable deadlines, failing to apply prior to expiration of relevant patents or otherwise failing to satisfy applicable requirements.

Exclusivity under the Hatch-Waxman Amendments

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The FDA typically makes decisions about awards of data exclusivity shortly before a product is approved.

Biosimilars and reference product exclusivity

The Biologics Price Competition and Innovation Act of 2009 (BPCIA) created an abbreviated approval pathway for biological product candidates shown to be highly similar, or “biosimilar,” to or interchangeable with an FDA licensed reference biological product.

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

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

A product shown to be biosimilar or interchangeable with an FDA-approved reference biological product may rely in part on the FDA’s previous determination of safety and effectiveness for the reference product for approval, which can potentially reduce the cost and time required to obtain approval to market the product.

Complexities associated with the larger, and often more complex, structures of biological products, as well as the processes by which such products are manufactured, pose significant hurdles and have slowed implementation of the BPCIA by the FDA.

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Under the BPCIA, an application for a biosimilar product may not be submitted to the FDA until four years following the date that the reference product was first licensed by the FDA.

In addition, the approval of a biosimilar product may not be made effective by the FDA until 12 years from the date on which the reference product was first licensed.

During this 12-year period of reference product exclusivity, another company may obtain FDA licensure and market a competing version of the reference product if the FDA approves a full BLA for the competing product containing that applicant’s own preclinical data and data from adequate and well-controlled clinical trials to demonstrate the safety, purity and potency of its product.

The BPCIA also created certain exclusivity periods for biosimilars approved as interchangeable products.

At this juncture, it is unclear whether products deemed “interchangeable” by the FDA will, in fact, be readily substituted by pharmacies, which are governed by state pharmacy law.

The BPCIA is complex and continues to be interpreted and implemented by the FDA.

In addition, there has been discussion of whether Congress should reduce the 12-year reference product exclusivity period.

Other aspects of the BPCIA, some of which may impact the BPCIA exclusivity provisions, have also been the subject of recent litigation.

As a result, the ultimate implementation of the BPCIA is subject to significant uncertainty.

In the EU and the UK, an abridged procedure is available for the regulatory approval of biosimilars, on the basis of comparability studies to the reference biological medicine to substantiate the safety and efficacy profile of the biosimilar product.

This comparability with the reference biological medicinal product is only available after the period of regulatory data protection has expired namely eight years after the grant of the marketing authorization of the reference biological medicinal product has expired.

Recently, the MHRA and the EMA have stated that comparative data may not be required across all therapeutic indications and may be extrapolated to other indications already approved for the reference medicinal product.

The interchangeability of biosimilars remains subject to national determination, on a case-by-case basis;

however a recent scientific recommendation by the EMA may lead to a default assumption of interchangeability across all biosimilars in the EU and in the UK.

Pediatric studies and exclusivity

Under the Pediatric Research Equity Act of 2003, an NDA, BLA or supplement thereto must contain data that are adequate to assess the safety and effectiveness of the drug or biological product for the claimed indications in all relevant pediatric subpopulations, and to support dosing and administration for each pediatric subpopulation for which the product is safe and effective.

With enactment of the Food and Drug Administration Safety and Innovation Act of 2012 (FDASIA), sponsors must also submit pediatric study plans prior to the assessment data.

The applicant, the FDA and the FDA’s internal review committee must then review the information submitted, consult with each other and agree upon a final plan.

The FDA or the applicant may request an amendment to the plan at any time.

Additional requirements and procedures relating to deferral requests and requests for extension of deferrals are contained in the FDASIA.

Unless otherwise required by regulation, the pediatric data requirements do not apply to products with Orphan Drug Designation.

This six-month exclusivity may be granted if an NDA sponsor submits pediatric data that fairly respond to a written request from the FDA for such data.

The data do not need to show the product to be effective in the pediatric population studied;

rather, if the clinical trial is deemed to fairly respond to the FDA’s request, the additional protection is granted.

This is not a patent term extension, but it effectively extends the regulatory period during which the FDA cannot approve another application.

The conduct of the paediatric studies in accordance with the agreed PIP will result in the grant of a reward (period of protection) which will depend on the type of product (i.e., orphan medicinal product will benefit from an extension of the orphan exclusivity by two years, bringing it to 12 years of marketing exclusivity;

or an extension of the supplementary protection certificate by six months).

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Patent term extension

After NDA approval, owners of relevant drug or biological product patents may apply for up to a five-year patent extension, which permits patent term restoration as compensation for the patent term lost during the FDA regulatory process.

The allowable patent term extension is typically calculated as one-half the time between the effective date of an IND application and the submission date of a NDA or BLA, plus the time between submission date and the approval date of the NDA or BLA, up to a maximum of five years.

The time can be shortened if the FDA determines that the applicant did not pursue approval with due diligence.

The total patent term after the extension may not exceed 14 years from the date of product approval.

Only one patent applicable to an approved drug or biological product is eligible for extension and only those claims covering the approved drug or biological product, a method for using it or a method for manufacturing it may be extended and the application for the extension must be submitted prior to the expiration of the patent in question.

In the EU and the UK, a patent may be extended by up to a maximum of five years and the protection conferred by the certificate shall extend only to the product covered by the authorization to place the corresponding medicinal product on the market (in the EU and UK) and for any use of the product as a medicinal product that has been authorized before the expiry of the certificate.

The aim is to compensate for the erosion of patent term between the filing of a patent and the grant of an MA for a medicinal product incorporating the relevant invention.

The term of a supplementary protection certification may be extended by a further six months if the pediatric studies have been conducted in accordance with an agreed PIP within the applicable timeframe.

Foreign regulation

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In addition, the EU GDPR prohibits the transfer of personal data from the EEA to the United States and other jurisdictions that the European Commission does not recognize as having “adequate” data protection laws unless a data transfer mechanism has been put in place.

In July 2020, the Court of Justice of the European Union limited how organizations could lawfully transfer personal data from the EEA to the United States by invalidating the EU-US Privacy Shield for purposes of international transfers and imposed further restrictions on use of standard contractual clauses (SCCs) (i.e., EU-style data transfer agreements) including, a requirement for companies to carry out a transfer privacy impact assessment, which among other things, assesses laws governing access to personal data in the recipient country and considers whether supplementary measures that provide privacy protections additional to those provided under SCCs will need to be implemented to ensure an essentially equivalent level of data protection to that afforded in the EEA.

In July 2020, the Court of Justice of the European Union limited how organizations could lawfully transfer personal data from the EEA to the United States by invalidating the EU-U.S.

Privacy Shield for purposes of international transfers and imposed further restrictions on use of standard contractual clauses (SCCs) (i.e., EU-style data transfer agreements) including, a requirement for companies to carry out a transfer privacy impact assessment, which among other things, assesses laws governing access to personal data in the recipient country and considers whether supplementary measures that provide privacy protections additional to those provided under SCCs will need to be implemented to ensure an essentially equivalent level of data protection to that afforded in the EEA.

Moreover, new versions of the SCCs (new EU SCCs) have recently been published requiring additional compliance and implementation efforts.

Relatedly, following the United Kingdom’s withdrawal from the EU (Brexit), the EU GDPR has been implemented in the United Kingdom (as the UK GDPR).

The UK GDPR site alongside the UK Data Protection Act 2018 which implements certain derogations in the EU GDPR into UK law.

However, in October 2022, President Biden signed an Executive Order to facilitate a new Trans-Atlantic Data Privacy Framework which will act as a successor to the invalidated EU-U.S.

Privacy Shield.

Following this, in December 2022, the European Commission released a draft adequacy decision for the United States, reflecting its belief that the Executive Order and Framework address the transfer issues raised when the EU-U.S.

Privacy Shield was invalidated.

If finalized, the agreement will facilitate the transatlantic flow of personal data and provide additional safeguards (in addition to the new SCCs) for companies transferring personal data from the EU to the United States.

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Relatedly, following the UK’s withdrawal from the EU (Brexit), the EU GDPR has been implemented in the UK (UK GDPR).

The UK GDPR sits alongside the UK Data Protection Act 2018, which implements certain derogations in the EU GDPR into UK law.

The requirements of the UK GDPR are (at this time) largely aligned with those under the EU GDPR and as such, may lead to similar compliance and operational costs with potential fines for non-compliance of up to £17.5 million or 4% of annual worldwide turnover.

As a result, we are potentially exposed to two parallel data protection regimes, each of which authorizes fines and the potential for divergent enforcement actions.

It should also be noted that the new EU SCCs do not automatically apply in the UK since Brexit, and the UK Government has not yet formally acknowledged the new EU SCCs, i.e.

, as a valid data transfer mechanism under the UK GDPR.

Indeed, on 11 August 2021, the UK Information Commissioner’s Office (ICO) launched a public consultation on its draft international data transfer agreement and guidance.

This included the publication of a draft UK addendum that can be used with the new EU SCCs – however, this is not (at this time) finalized and as such, for the time being transfers from the UK to a third country should continue to be made in reliance on the ‘old’ SCCs.

In terms of international data transfers, the UK also imposes obligations on entities transferring personal data outside of the UK, in a similar manner to the EU.

The UK’s data protection authority (ICO), has released its own version of the SCCs, the International Data Transfer Agreement (IDTA).

We note that companies have the choice to use either the IDTA or the new EU SCCs along with a “UK Addendum” for any restricted international data transfers.

In addition, the UK has published its own transfer privacy impact assessment called the Transfer Risk Assessment (TRA) tool, although again parties may conduct the EU style transfer impact assessment instead of adopting the TRA tool.

Reimbursement of medicines in Europe

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Some Member States and the UK may require that health technology assessments (HTA) be completed to obtain reimbursement or pricing approval.

The outcome of HTA assessments is decided on a national basis and some Member States may decide not to reimburse the use of medicines or may reduce the rate of reimbursement.

The outcome of HTAs is decided on a national basis and some Member States may decide not to reimburse the use of medicines or may reduce the rate of reimbursement.

In December 2021, the EU adopted a new Regulation on Health Technology Assessment which allows Member States to carry out joint clinical assessments and operate joint clinical consultations.

It is expected that the new Regulation will come into effect in 2025.

In the UK, NICE is the body which conducts HTAs and issues guidance on whether a product is considered to be “cost-effective.”

In the UK, NICE is the body in England and Wales, which conducts HTAs and issues guidance on whether a product is considered to be “cost-effective” and therefore recommended for use and reimbursement under the national health service.

This means that if a positive recommendation has been obtained, then the medicinal product will be widely available to patients in England and Wales.

For avoidance of doubt, Scotland and Northern Ireland have their own HTA bodies which will conduct their own assessment.

Other healthcare laws

Although we do not currently have any products on the market, in addition to FDA restrictions on marketing of pharmaceutical products, we are also subject to healthcare statutory and regulatory requirements and enforcement by the U.S.

Although we do not currently have any products on the market, in addition to FDA restrictions on marketing of pharmaceutical and biological products, we are also subject to healthcare statutory and regulatory requirements and enforcement by the U.S.

federal and state governments.

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These laws include anti-kickback statutes, false claims statutes and other healthcare laws and regulations.

The federal Anti-Kickback Statute prohibits, among other things, knowingly and willfully offering, paying, soliciting or receiving any remuneration, directly or indirectly, in cash or in kind, to induce, or in return for, purchasing, leasing, ordering, or arranging for, referring, or recommending the purchase, lease or order of any healthcare item or service reimbursable, in whole or in part, under Medicare, Medicaid, or other federal health care program.

The federal Anti-Kickback Statute prohibits, among other things, knowingly and willfully offering, paying, soliciting or receiving any remuneration, directly or indirectly, in cash or in kind, to induce, or in return for, purchasing, leasing, ordering or arranging for, referring, or recommending the purchase, lease or order of any healthcare item or service that may be reimbursable, in whole or in part, under Medicare, Medicaid, or other federal health care program.

The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act (collectively, the ACA) amended the intent element of the federal Anti-Kickback Statute to clarify that a person or entity need not have actual knowledge of the statute or specific intent to violate it in order to commit a violation.

Among others, this statute applies to arrangements between pharmaceutical manufacturers on the one hand and prescribers, purchasers and formulary managers on the other, including, for example, consulting/speaking arrangements, discount and rebate offers, grants, charitable contributions and patient support offerings.

Among others, this statute applies to arrangements between pharmaceutical and biological product manufacturers on the one hand and prescribers, purchasers and formulary managers on the other, including, for example, consulting/speaking arrangements, discount and rebate offers, grants, charitable contributions and patient support offerings.

A conviction for violation of the federal Anti-Kickback Statute can result in criminal fines and/or imprisonment and requires mandatory exclusion from participation in federal health care programs.

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Although there are a number of statutory exceptions and regulatory safe harbors protecting certain common activities from prosecution or other regulatory sanctions under the law, the exceptions and safe harbors are drawn narrowly and practices that involve remuneration intended to induce prescribing, purchases or recommendations may be subject to scrutiny if they do not qualify for an exception or safe harbor.

The federal Anti-Kickback Statute safe harbors are the subject of possible regulatory reforms.

Any changes to the safe harbors may impact our future contractual and other arrangements with pharmacy benefit managers, group purchasing organizations, third party payors, wholesalers and distributors, healthcare providers and prescribers, and other entities, as well as our future pricing strategies.

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The federal civil False Claims Act prohibits, among other things, any person or entity from knowingly presenting, or causing to be presented, a false claim for payment to the federal government, or knowingly making, or causing to be made, a false record or statement material to a false claim.

The False Claims Act, which covers claims made to programs where the federal government reimburses (directly or indirectly) individuals and entities, such as under the Medicare and Medicaid programs, as well as programs where the federal government is a direct purchaser, such as when it purchases off the Federal Supply Schedule.

The False Claims Act covers claims made to programs where the federal government reimburses (directly or indirectly) individuals and entities, such as under the Medicare and Medicaid programs, as well as programs where the federal government is a direct purchaser, such as when it purchases off of the Federal Supply Schedule.

The law also prohibits avoiding, decreasing or concealing an obligation to pay money to the federal government.

The government can bring claims directly or through a civil whistleblower or qui tam action, and potential liability includes mandatory treble damages and significant per claim penalties, currently set at $11,665 up to $23,331 per false claim or statement for penalties assessed after June 19, 2020, with respect to violations occurring after November 2, 2015.

Several pharmaceutical and other healthcare companies have been prosecuted under these laws for allegedly inflating drug prices they report to pricing services, which in turn were used by the government to set Medicare and Medicaid reimbursement rates, and for allegedly providing free product to customers with the expectation that the customers would bill federal programs for the product.

The government can bring claims directly or through a civil whistleblower or qui tam action, and potential liability includes mandatory treble damages and significant per claim penalties currently set at $12,537 up to $25,076 per false claim or statement for penalties assessed after May 9, 2022.

Numerous pharmaceutical and other healthcare companies have been prosecuted under these laws for allegedly inflating drug or biological product prices they report to pricing services, which in turn were used by the government to set Medicare and Medicaid reimbursement rates, and for allegedly providing free product to customers with the expectation that the customers would bill federal programs for the product.

In addition, certain marketing practices, including off-label promotion, may also violate false claims laws.

Additionally, the ACA amended the federal Anti-Kickback Statute such that a violation of that statute can serve as a basis for liability under the federal False Claims Act.

Most states also have statutes or regulations similar to the federal Anti-Kickback Statute and False Claims Act, which apply to items and services reimbursed under Medicaid and other state programs, or, in several states, apply to commercially reimbursed items or services or regardless of whether reimbursement from a federal or state healthcare program is available for the item or service.

There is also the Federal Criminal False Claims Act, which is similar to the Federal Civil False Claims Act and imposes criminal liability on those that make or present a false, fictitious or fraudulent claim to the federal government.

Other federal statutes pertaining to healthcare fraud and abuse include the civil monetary penalties statute, which prohibits, among other things, the offer or payment of remuneration to a Medicaid or Medicare beneficiary that the offeror or payor knows or should know is likely to influence the beneficiary to order or receive a reimbursable item or service from a particular provider, practitioner, or supplier (although pharmaceutical manufacturers are not considered suppliers for purposes of this law), and contracting with an individual or entity that the person knows or should know is excluded from participation in a federal health care program.

Other federal statutes pertaining to healthcare fraud and abuse include the civil monetary penalties statute, which prohibits, among other things, the offer or payment of remuneration to a Medicaid or Medicare beneficiary that the offeror or payor knows or should know is likely to influence the beneficiary to order or receive a reimbursable item or service from a particular provider, practitioner or supplier (although pharmaceutical and biological product manufacturers are not considered providers, practitioners or suppliers for purposes of this law), and contracting with an individual or entity that the person knows or should know is excluded from participation in a federal health care program.

In addition, federal criminal statutes created by the Health Insurance Portability and Accountability Act of 1996 (HIPAA) prohibit, among other things, knowingly and willfully executing or attempting to execute a scheme to defraud any healthcare benefit program or obtain by means of false or fraudulent pretenses, representations or promises any money or property owned by or under the control of any healthcare benefit program in connection with the delivery of or payment for healthcare benefits, items or services.

In addition, HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act (HITECH) and their respective implementing regulations, including the Final Omnibus Rule published on January 25, 2013, impose obligations on certain healthcare providers, health plans and healthcare clearinghouses, known as covered entities, as well as their business associates that perform certain services involving the storage, use or disclosure of individually identifiable health information, including mandatory contractual terms, requirements to facilitate certain patient rights, requirements to safeguard the privacy, security, and transmission of individually identifiable health information, and requirements to provide notice to affected individuals and regulatory authorities of certain breaches of security of individually identifiable health information.

HITECH increased the civil and criminal penalties that may be imposed against covered entities, business associates and possibly other persons, and gave state attorneys general new authority to file civil actions for damages or injunctions in federal courts to enforce the federal HIPAA laws and seek attorney’s fees and costs associated with pursuing federal civil actions.

On December 10, 2020, the Office of Civil Rights within the Department of Health and Human Services issued proposed revisions to the HIPAA Privacy Rule aimed at reducing regulatory burdens that may exist in discouraging coordination of care and patient access to their health information, among other changes.

In addition, HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act (HITECH) and their respective implementing regulations, including the Final Omnibus Rule published on January 25, 2013, imposes obligations on certain healthcare providers, health plans and healthcare clearinghouses, known as covered entities, as well as their business associates that perform certain services involving the storage, use or disclosure of individually identifiable health information, including mandatory contractual terms, requirements to facilitate certain patient rights, requirements to safeguard the privacy, security, and transmission of individually identifiable health information, and requirements to provide notice to affected individuals and regulatory authorities of certain breaches of security of individually identifiable health information.

HITECH increased the civil and criminal penalties that may be imposed against covered entities, business associates and possibly other persons, and gave state attorneys general new authority to file civil actions for damages or injunctions in federal courts to enforce the federal HIPAA laws and seek attorneys’ fees and costs associated with pursuing federal civil actions.

On December 10, 2020, the Office of Civil Rights within the Department of Health and Human Services (HHS) issued proposed revisions to the HIPAA Privacy Rule aimed at reducing regulatory burdens that may exist in discouraging coordination of care and patient access to their health information, among other changes.

While a final rule has not yet been issued, if adopted, these proposed changes may require us to update our policies and procedures to comply with the new requirements.

In addition, many state laws govern the privacy and security of health information and other personal information in certain circumstances (such as the California Consumer Privacy Act of 2018 (CCPA) and the California Privacy Rights Act of 2020 (CPRA), and similar new state privacy laws) , and these state laws may differ from each other in significant ways and may not have the same effect.

In addition, many state laws govern the privacy and security of health information and other personal information in certain circumstances (such as the California Consumer Privacy Act of 2018 and the Virginia Consumer Data Protection Act, and similar forthcoming state privacy laws in Colorado, Connecticut and Utah), and these state laws may differ from each other in significant ways and may not have the same effect.

These laws are rapidly evolving and may impose additional regulatory compliance burden and legal risks on our operations.

Further, pursuant to the ACA, the Centers for Medicare & Medicaid Services (CMS) has promulgated regulations to implement what is commonly known as the federal Physician Payment Sunshine Act, which, among other things, requires manufacturers of prescription drugs, among others, to collect and report information on certain payments or transfers of value they make to U.S.-licensed physicians and teaching hospitals, as well as investment interests held by physicians and their immediate family members.

Further, pursuant to the ACA, the Centers for Medicare & Medicaid Services (CMS) has promulgated regulations to implement what is commonly known as the federal Physician Payment Sunshine Act, which, among other things, requires manufacturers of prescription drugs and biological products, among others, to collect and report information on certain payments or transfers of value they make to U.S.-licensed physicians, teaching hospitals, physician assistants, nurse practitioners or clinical nurse specialists, certified registered nurse anesthetists, anesthesiologist assistants and certified nurse-midwives, as well as investment interests in the manufacturer held by physicians and their immediate family members.

The reports must be submitted on an annual basis, and the reported data is made available in searchable form on a public website.

Failure to submit required information may result in civil monetary penalties.

Effective January 1, 2022, reporting on transfers of value to physician assistants, nurse practitioners or clinical nurse specialists, certified registered nurse anesthetists, anesthesiologist assistants, and certified nurse-midwives is also required .

In addition, several states require prescription drug companies to report certain expenses relating to the marketing and promotion of drug products and to report gifts and payments to individual healthcare practitioners in these states.

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In addition, several states require prescription drug and biological product companies to report certain expenses relating to the marketing and promotion of drug and biological products and to report gifts and payments to individual healthcare practitioners in these states.

Other states prohibit various marketing-related activities, such as the provision of certain kinds of gifts or meals.

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Efforts to ensure that business arrangements with third parties comply with applicable healthcare laws and regulations involve substantial costs.

If a drug company’s operations are found to be in violation of any such requirements, it may be subject to significant penalties, including civil, criminal and administrative penalties, damages, fines, disgorgement, imprisonment, the curtailment or restructuring of its operations, loss of eligibility to obtain approvals from the FDA, exclusion from participation in government contracting, healthcare reimbursement or other federal or state government healthcare programs, including Medicare and Medicaid, integrity oversight and reporting obligations, imprisonment and reputational harm.

If a company’s operations are found to be in violation of any such requirements, it may be subject to significant penalties, including civil, criminal and administrative penalties, damages, fines, disgorgement, imprisonment, the curtailment or restructuring of its operations, loss of eligibility to obtain approvals from the FDA, exclusion from participation in government contracting, healthcare reimbursement or other federal or state government healthcare programs, including Medicare and Medicaid, integrity oversight and reporting obligations, imprisonment, and reputational harm.

Although effective compliance programs can mitigate the risk of investigation and prosecution for violations of these laws, these risks cannot be entirely eliminated.

Any action for an alleged or suspected violation can cause a drug company to incur significant legal expenses and divert management’s attention from the operation of the business, even if such action is successfully defended.

In the EU and the UK companies must comply with national general anti-bribery legislation as well as medicines legislation which prohibits the supply, offer or promise of certain gifts, and benefits in connection with the promotion of medicinal products to any person qualified to prescribe or supply them.

Any action for an alleged or suspected violation can cause a company to incur significant legal expenses and divert management’s attention from the operation of the business, even if such action is successfully defended.

In the EU and the UK companies must comply with national general anti-bribery legislation, including the UK Bribery Act 2010, as well as medicines legislation which prohibits the supply, offer or promise of certain gifts and benefits in connection with the promotion of medicinal products to any person qualified to prescribe, recommend, use, procure or supply them.

Companies that breach these laws may incur substantial fines and imprisonment.

In the EU, payments made to healthcare professionals must be publicly disclosed and agreements with healthcare professionals must be the subject of prior notification and approval by the healthcare professional’s employer.

In the EU, payments made to healthcare professionals must be publicly disclosed under applicable transparency provisions and agreements with healthcare professionals must be the subject of prior notification and approval by the healthcare professional’s employer.

Such requirements are set out in national laws, industry codes or professional codes of conduct, applicable in the EU Member States and in the UK.

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The ACA, among other things, (i) proscribed a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs and therapeutic biologics that are inhaled, infused, instilled, implanted or injected, (ii) increased the minimum Medicaid rebates owed by manufacturers under the Medicaid Drug Rebate Program and extended the rebate program to individuals enrolled in Medicaid managed care organizations, (iii) established annual nondeductible fees and taxes on manufacturers of certain branded prescription drugs and therapeutic biologics, apportioned among these entities according to their market share in certain government healthcare programs, (iv) established a new Medicare Part D coverage gap discount program, in which manufacturers must agree to offer what are now 70% point of-sale discounts off negotiated prices of applicable brand drugs and therapeutic biologics to eligible beneficiaries during their coverage gap period, as a condition for the manufacturer’s outpatient drugs and therapeutic biologics to be covered under Medicare Part D, (v) expanded eligibility criteria for Medicaid programs by, among other things, allowing states to offer Medicaid coverage to additional individuals and by adding new mandatory eligibility categories for individuals with income at or below 138% of the federal poverty level, thereby potentially increasing manufacturers’ Medicaid rebate liability, (vi) expanded the entities eligible for discounts under the 340B Public Health program, (vii) required annual reporting of certain information regarding drug samples that manufacturers and distributors provide to licensed practitioners, (viii) created a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in and conduct comparative clinical effectiveness research, along with funding for such research, and (ix) established a Center for Medicare Innovation at CMS to test innovative payment and service delivery models to lower Medicare and Medicaid spending, potentially including prescription drug spending.

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The ACA and certain of its provisions have been subject to judicial challenges as well as legislative and regulatory efforts to repeal or replace them or to alter their interpretation or implementation.

From January 2017 through January 2021, the Trump administration issued three executive orders and other directives designed to delay the implementation of certain provisions of the ACA or otherwise circumvent some of the requirements for health insurance mandated by the ACA.

For example, on January 22, 2018, the Trump administration signed a continuing resolution on appropriations for fiscal year 2018 that delayed the implementation of certain ACA-mandated fees, including the so-called “Cadillac” tax on certain high-cost employer-sponsored insurance plans, the annual fee imposed on certain health insurance providers based on market share, and the medical device excise tax on non-exempt medical devices.

Concurrently, Congress considered legislation that would repeal or repeal and replace all or part of the ACA.

While Congress has not passed comprehensive repeal legislation, two bills affecting the implementation of certain taxes under the ACA have been signed into law.

The Tax Cuts and Jobs Act (TCJA) among other things, included a provision repealing, effective January 1, 2019, the tax-based shared responsibility payment, or penalty, imposed by the ACA on certain individuals who fail to maintain qualifying health coverage for all or part of a year that is commonly referred to as the “individual mandate.” In December 2018, a federal district court in Texas ruled that the ACA’s individual mandate, without the penalty that was repealed effective January 1, 2019, was unconstitutional and could not be severed from the ACA.

For example, the Tax Cuts and Jobs Act (TCJA), among other things, included a provision repealing, effective January 1, 2019, the tax-based shared responsibility payment, or penalty, imposed by the ACA on certain individuals who fail to maintain qualifying health coverage for all or part of a year that is commonly referred to as the “individual mandate.” Further, the Bipartisan Budget Act of 2018, among other things, amended the ACA, effective January 1, 2019, to increase from 50% to 70% the point-of-sale discount that is owed by pharmaceutical manufacturers who participate in Medicare Part D and to close the coverage gap in most Medicare drug plans, commonly referred to as the “donut hole.” Additionally, the Further Consolidated Appropriations Act of 2020, signed into law December 20, 2019, fully repealed the ACA’s “Cadillac Tax” on certain high-cost employer-sponsored insurance plans (for tax years beginning after December 31, 2019), the annual fee imposed on certain health insurance providers based on market share (for calendar year 2021) and the medical device excise tax on non-exempt medical devices.

In December 2018, a federal district court in Texas ruled that the ACA’s individual mandate, without the penalty that was repealed effective January 1, 2019, was unconstitutional and could not be severed from the ACA.

As a result, the court ruled the remaining provisions of the ACA were also invalid.

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On June 17, 2021, the Supreme Court dismissed the lawsuit without ruling on the merits of the constitutionality arguments.

Further, the Bipartisan Budget Act of 2018, among other things, amended the ACA, effective January 1, 2019, to increase from 50% to 70% the point-of-sale discount that is owed by pharmaceutical manufacturers who participate in Medicare Part D and to close the coverage gap in most Medicare drug plans, commonly referred to as the “donut hole.” More recently, on January 28, 2021, President Biden issued an Executive Order to initiate a special enrollment period from February 15, 2021 through August 15, 2021 for purposes of obtaining health insurance coverage through the ACA marketplace.

The Executive Order also instructed certain governmental agencies to review and reconsider their existing policies and rules that limit access to healthcare, including among others, policies that create barriers to obtaining access to health insurance coverage through the ACA marketplaces.

On March 11, 2021, Congress enacted the American Rescue Plan Act of 2021, which included among its provisions a sunset of the ACA’s cap on pharmaceutical manufacturers’ rebate liability under the Medicaid Drug Rebate Program.

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The American Rescue Plan Act also temporarily increased premium tax credit assistance for individuals eligible for subsidies under the ACA for 2021 and 2022 and removed the 400% federal poverty level limit that otherwise applies for purposes of eligibility to receive premium tax credits.

Most recently, the Inflation Reduction Act of 2022 extended this increased tax credit assistance and removal of the 400% federal poverty limit through 2025.

In the future, there may be additional challenges and/or amendments to the ACA.

It remains to be seen precisely what any new legislation will provide, when or if it will be enacted, and what impact it will have on the availability and cost of healthcare items and services, including drug products .

Other legislative changes have been proposed and adopted in the United States since the ACA was enacted to reduce healthcare expenditures.

These changes include the Budget Control Act of 2011, which, among other things, led to aggregate reductions of Medicare payments to providers of up to 2% per fiscal year that started in 2013 and, due to subsequent statutory amendments, will remain in effect into 2031 unless additional Congressional action is taken, with the exception of a temporary suspension from May 1, 2020 through March 31, 2022 due to the COVID-19 pandemic.

In 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) temporarily suspended the 2% cut in Medicare payments from May 1, 2020 through December 31, 2020, and it extended the cut through fiscal year 2030 to offset the cost of such temporary suspension.

Following the end of the temporary suspension, the law provided for 1% Medicare sequestration in the second quarter of 2022, with the full 2% sequestration going into effect thereafter until 2031.

To offset the temporary suspension during the COVID-19 pandemic, in 2030, the sequestration will be 2.25% for the first half of the year, and 3% in the second half of the year.

The American Taxpayer Relief Act of 2012 made other changes, including the reduction of Medicare payments to several types of providers and an increase in the statute of limitations period for the government to recover overpayments to providers from three to five years.

More recently, in August 2022, President Biden signed into law the Inflation Reduction Act of 2022, which implements substantial changes to the Medicare program, including drug pricing reforms and changes to the Medicare Part D benefit design.

Among other reforms, the Inflation Reduction Act of 2022 imposes inflation rebates on drug and biological product manufacturers for products reimbursed under Medicare Parts B and D if the prices of those products increase faster than inflation beginning in 2023;

implements changes to the Medicare Part D benefit that, beginning in 2025, will cap benefit annual out-of-pocket spending at $2,000, with new discount obligations for pharmaceutical manufacturers;

and, beginning in 2026, establishes a “maximum fair price” for a fixed number of pharmaceutical and biological products covered under Medicare Parts B and D following a price negotiation process with the CMS.

If federal spending is further reduced, anticipated budgetary shortfalls may also impact the ability of relevant agencies, such as the FDA or the NIH to continue to function at current levels.

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These reductions may also impact the ability of relevant agencies to timely review and approve research and development, manufacturing, and marketing activities which may delay our ability to develop, market and sell any products we may develop.

More recently the cost of prescription pharmaceuticals has been the subject of considerable discussion in the United States.

Specifically, there have been several recent U.S.

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

While several proposed reform measures will require Congress to pass legislation to become effective, Congress and the Biden administration have each indicated that it will continue to seek new legislative and/or administrative measures to address prescription drug costs, as discussed in greater detail in the section titled “Risk Factors.”

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

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Additionally, the cost of prescription pharmaceuticals and biological products has recently been the subject of considerable discussion in the United States.

For example, in response to an Executive Order dated July 9, 2021, on September 9, 2021, the HHS issued a Comprehensive Plan for Addressing High Drug Prices that identified potential legislative policies and administrative tools that Congress and the agency can pursue in order to make drug prices more affordable and equitable, improve and promote competition throughout the prescription drug industry, and foster scientific innovation.

In addition, on February 2, 2022, the Biden administration signaled its continued commitment to the Cancer Moonshot initiative, which was initially launched in 2016.

In its announcement, the administration noted that its new goals under the initiative include addressing inequities in order to ensure broader access to cutting-edge cancer therapeutics and investing in a robust pipeline for new treatments.

On September 12, 2022, President Biden issued an Executive Order to promote biotechnology and biomanufacturing innovation.

The Order noted several methods through which the Biden administration would support the advancement of biotechnology and biomanufacturing in healthcare, and instructed the HHS to submit, within 180 days of the Order, a report assessing how to use biotechnology and biomanufacturing to achieve medical breakthroughs, reduce the overall burden of disease, and improve health outcomes.

Additionally, on October 14, 2022 President Biden issued an Executive Order on Lowering Prescription Drug Costs for Americans, which instructed the Secretary of the HHS to consider whether to select for testing by the CMS Innovation Center new health care payment and delivery models that would lower drug costs and promote access to innovative drug therapies for beneficiaries enrolled in the Medicare and Medicaid programs.

The Executive Order further directed the Secretary of the HHS to submit, within 90 days after the date of the Executive Order, a report regarding any models that may lead to lower cost-sharing for commonly used drugs and support value-based payment that promotes high-quality care.

Moreover, there have been several recent U.S.

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

While several proposed reform measures will require Congress to pass legislation to become effective, Congress and the Biden administration have each indicated that it will continue to seek new legislative and/or administrative measures to address prescription drug and biological product costs, as discussed in greater detail in the section titled “Risk Factors.”

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

The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability, or commercialize any product that is ultimately approved, if approved.

In addition, several recently passed state laws require disclosures related to state agencies and/or commercial purchasers with respect to certain price increases that exceed a certain level as identified in the relevant statutes.

Some of these laws and regulations contain ambiguous requirements that government officials have not yet clarified.

Given the lack of clarity in the laws and their implementation, our future reporting actions could be subject to the penalty provisions of the pertinent federal and state laws and regulations.

Additionally, on May 30, 2018, the Trickett Wendler, Frank Mongiello, Jordan McLinn, and Matthew Bellina Right to Try Act of 2017 was signed into law.

The law, among other things, provides a federal framework for certain patients to access certain investigational new drug products that have completed a Phase 1 clinical trial and that are undergoing investigation for FDA approval.

The law, among other things, provides a federal framework for certain patients to access certain investigational new drug or biological products that have completed a Phase 1 clinical trial and that are undergoing investigation for FDA approval.

Under certain circumstances, eligible patients can seek treatment without enrolling in clinical trials and without obtaining FDA authorization under an FDA expanded access program;

however, manufacturers are not obligated to provide investigational new drug products under the current federal right to try law.

however, manufacturers are not obligated to provide investigational new drug or biological products under the current federal right to try law.

Human Capital

As of November 30, 2021, we had 242 full-time employees, of which 212 are engaged in research and development.

From time to time, we also retain independent contractors to support our organization.

As of November 30, 2022, we had 297 full-time employees, of which approximately 34% have earned an M.D.

As of November 30, 2022, 260 of our full-time employees are engaged in research and development.

From time to time, we retain independent contractors to support our organization.

None of our employees are represented by a labor union or covered by collective bargaining agreements, and we believe our relationship with our employees is good.

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new employees were hired to support our clinical and preclinical pipeline, with additions in our research, clinical development, operations and general and administrative functions.

We expect to continue to add additional employees in 2022 with a focus on increasing expertise in clinical and preclinical research and development.

We continually evaluate our business needs and opportunities and strive to balance in house expertise and capacity with outsourced expertise and capacity.

We continually evaluate our business needs and opportunities and strive to balance inhouse expertise and capacity with outsourced expertise and capacity.

Currently, we outsource substantially all clinical trial work to clinical research organizations and drug substance and finished drug product manufacturing to contract manufacturers.

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Competitive pay and benefits

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We monitor our compensation programs closely and provide what we consider to be a very competitive mix of compensation, insurance and wellness benefits for all our employees, as well as participation in our equity and enhanced maternity and paternity programs.

To attract qualified applicants, we offer a total rewards package consisting of base salary and cash target bonus, a comprehensive benefits package and equity compensation for all full-time employees.

To attract qualified applicants, we offer a total rewards package consisting of a base salary and cash target bonus, a comprehensive benefits package and equity compensation for all full-time employees.

Bonus opportunity and equity compensation increase as a percentage of total compensation based on level of responsibility.

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All of our employees must adhere to a code of conduct that sets standards for appropriate behavior and are required to attend biennial training to help prevent, identify, report and stop any type of discrimination and harassment.

Our recruitment, hiring, development, training, compensation and advancement at our company is based on qualifications, performance, skills and experience without regard to gender, race and ethnicity.

Recruitment, hiring, development, training, compensation and advancement at our company is based on qualifications, performance, skills and experience without regard to gender, race and ethnicity.

As of November 30, 2022, approximately 52% of our full-time employees were self-reported as female.

Of our vice president-level and above employees, approximately 45% were self-reported as female.

In addition, as of November 30, 2022, approximately 55% of our full-time employees were self-reported as ethnic or racial minorities in the United States, with 40% Asian, 2% Black or African American, 7% Hispanic or Latino and 6% of other minority groups or two or more races.

Of our vice president-level and above employees, 24% were self-reported as ethnic or racial minorities in the United States, with 17% Asian, 3% Black or African American and 3% Hispanic or Latino.

Employee development and training

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The safety and health of our employees is a top priority.

In response to the COVID-19 pandemic, we have implemented safety protocols including clear policies to address actual and suspected COVID-19 cases and potential exposure, weekly COVID-19 testing, shift work scheduling to reduce the number of people in our facilities at a given time, requirements for the wearing of masks and for social distancing, and increased cleaning procedures.

These protocols are designed to comply with health and safety standards as required by federal, state and local government agencies, taking into consideration guidelines of the Centers for Disease Control and Prevention and other public health authorities.

In addition, we have provided work-at-home arrangements for employees who are able to do so.

For example, in response to the COVID-19 pandemic, we implemented safety protocols including clear policies to address actual and suspected COVID-19 cases and potential exposure, weekly COVID-19 testing, shift work scheduling to reduce the number of people in our facilities at a given time, requirements for the wearing of masks and for social distancing, and increased cleaning procedures.

These protocols were designed to comply with health and safety standards as required by federal, state and local government agencies, taking into consideration the guidelines of the Centers for Disease Control and Prevention and other public health authorities.

We continue to monitor developments regarding health pandemics or other health concerns, including COVID-19, and will implement any additional safety protocols that may become necessary in the future.

Board of Directors oversight

Our Board of Directors recognizes the critical importance of our team and the necessity to ensure a diverse, inclusive, and innovative work environment that is centered around a values-based culture.

Our Board of Directors (Board) recognizes the critical importance of our team and the necessity to ensure a diverse, inclusive, and innovative work environment that is centered around a values-based culture.

Our Board meets regularly with management to discuss issues impacting our employees, and to focus on ways to support our workforce.

Our focus on culture comes from our board of directors and flows throughout our company.

Our focus on culture comes from our Board and flows throughout our company.

In evaluating our Chief Executive Officer and management team, significant emphasis is place on their contributions to our overall culture.

Our Board’s Compensation Committee is responsible for reviewing with management our human resources activities, which include, among other things, matters relating to employee development, management and engagement, pay equity, and our demographics, diversity and inclusion.

Our Board’s Nominating and Corporate Governance Committee is responsible for developing and recommending to the Board any company program relating to corporate responsibility and sustainability, including environmental, social and governance matters.

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Corporate Information

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The mark “Nurix” is our registered trademark in Canada, France, Germany, Italy, Japan, Mexico, Spain, the United Kingdom and the United States.

The marks “DELigase” and “NXACT” are our registered trademarks in the United States.

The marks “DeCART” and “DeTIL” are our trademarks for which we have a pending trademark application in the United States.

The marks “DELigase,” “DeTIL” and “NxACT” are our registered trademarks in the United States.

The Nurix logo is our common law trademark.

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Nurix’s Internet website address is http://www.nurixtx.com.

On our website, the company makes available, free of charge, its annual, quarterly and current reports, including amendments to such reports, as soon as reasonably practicable after the company electronically files such material with, or furnishes such material to, the Securities and Exchange Commission (SEC).

On our website, we make available, free of charge, our annual, quarterly and current reports, including amendments to such reports, as soon as reasonably practicable after we electronically file such material with, or furnish such material to, the Securities and Exchange Commission (SEC).

The SEC maintains a website at www.sec.gov that contains reports as well as other information regarding us and other companies that file materials with the SEC electronically.

Also available on our website is information relating to corporate governance at Nurix and our Board of Directors, including our Corporate Governance Guidelines;

our Code of Business Conduct and Ethics (for our directors, officers and employees);

and our Board Committee Charters.

Also available on our website is information relating to corporate governance at Nurix and our Board, including our Corporate Governance Guidelines;

our Code of Business Conduct and Ethics (for our directors, officers and employees), and our Board Committee Charters.

We will provide any of the foregoing information without charge upon written request to our Corporate Secretary, Nurix Therapeutics, Inc., 1700 Owens Street, Suite 205, San Francisco, CA 94158.

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Our references to the URLs for websites are intended to be inactive textual references only.

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What changed 10-K

Item 1. Business