What changed in this filing

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Item 7. Management’s Discussion and Analysis

2022-03-14 compared with 2021-03-18 · 51 added, 54 removed, 176 unchanged (37% of the section changed)

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We believe that when implemented correctly precision medicine can enhance therapeutic response, improve patient outcomes, and reduce healthcare costs.

Our lead product candidates are rNAPc2 (AB201) as a potential treatment for diseases caused by ribonucleic acid, or RNA, viruses, initially focusing on COVID-19, the disease syndrome caused by the SARS-CoV-2 virus, and Gencaro™ (bucindolol hydrochloride)

for the treatment of atrial fibrillation, or AF, in patients with chronic heart failure, or HF .

Our lead product candidates are rNAPc2 (AB201) as a potential treatment for COVID-19, the disease syndrome caused by the SARS-CoV-2 virus, and potentially other viral diseases and Gencaro™ (bucindolol hydrochloride) for the treatment of atrial fibrillation, or

AF, in patients with chronic heart failure, or HF .

rNAPc2 targets COVID-19 patients with biomarker evidence of coagulopathy, while Gencaro is being developed for patients who have a genotype that identifies a drug target associated with heightened efficacy .

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Based on its unique mechanism of action, development history and the clinical evidence from the SARS-CoV-2 pandemic, we believe rNAPc2 has potential to be a beneficial therapy for patients with this serious viral disease.

We initiated a Phase 2 clinical trial of rNAPc2 as a potential treatment for patients hospitalized with COVID-19 in the fourth quarter of 2020 and are currently enrolling patients.

We initiated a Phase 2 clinical trial of rNAPc2 as a potential treatment for patients hospitalized with COVID-19 in the fourth quarter of 2020 and completed patient enrollment in the fourth quarter 2021.

Certain patients with severe COVID-19 disease exhibit thrombotic complications and other inflammatory responses suggesting potential dysregulation of the coagulation and immune systems.

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DIC is a serious condition that causes abnormal blood clotting throughout the body's blood vessels.

SARS-CoV-2 is a new coronavirus identified in late 2019 that belongs to a family of enveloped RNA viruses that include Middle East Respiratory Syndrome (MERS) and Severe Acute Respiratory Syndrome (SARS-CoV-1), both of which caused serious human infections of the respiratory system.

SARS-CoV-2 is a new coronavirus identified in late 2019 that belongs to a family of enveloped RNA viruses that include Middle East Respiratory Syndrome, or MERS, and Severe Acute Respiratory Syndrome (SARS-CoV-1), both of which caused serious human infections of the respiratory system.

The disease caused by the SARS-CoV-2 virus has been designated COVID-19.

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The underlying pathology of CAC is believed to result from thrombo-inflammatory processes triggered by the viral infection.

A commonly used biomarker for assessing the presence of abnormal coagulation is a D-dimer test, which is elevated (greater than 0.5) in nearly 70% of hospitalized COVID-19 patients and is associated with adverse clinical outcomes.

A commonly used biomarker for assessing the presence of abnormal coagulation is a D-dimer test, which is elevated (greater than 0.5) in approximately 40% to 75% of hospitalized COVID-19 patients and is associated with adverse clinical outcomes.

Some researchers believe that this and other evidence points to dysregulation of TF pathways in COVID-19 patients that result in the development of thrombotic complications.

As a result of the observed role of coagulation disorders in COVID-19, patients who are hospitalized with the disease are commonly giving anti-coagulant therapy, in particular heparin.

We believe that there is a medical need for a COVID-19 therapy that provides anticoagulation therapy and directly inhibits the TF pathway and the inflammatory and viral dissemination processes that may be initiated by TF.

rNAPc2 has shown potential in addressing the coagulation disorder caused by severe viral infections.

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Therefore, we believe that rNAPc2 has therapeutic potential for future viral outbreaks beyond the current pandemic.

rNAPc2 is a single-chain, 85 amino acid, recombinant protein administered subcutaneously, that has previously been evaluated under three FDA Investigational New Drug, or IND, applications in six Phase 1 and three Phase 2 clinical studies in the United States and Europe.

These clinical trials primarily examined the safety, dosing and anticoagulation effects of rNAPc2 in patients with acute coronary syndromes, in patients undergoing knee replacement surgery and in patients undergoing percutaneous coronary interventions.

In these trials, involving more than 800 human patients with over 700 exposed to drug, rNAPc2 was generally well-tolerated with a

safety profile comparable to commercially available anticoagulants .

Th e s e clinical trials primarily examined the safety, dosing and anticoagulation effects of rNAPc2 in patients with acute coronary syndromes, in patients undergoing knee replacement surgery and in patients undergoing percutaneous coronary interventions.

In these trials, involving more than 8 00 human patient s with over 7 00 exposed to drug, rNAPc2 was generally well-tolerated with a safety profile comparable to commercially available anticoagulants .

rNAPc2 is manufactured in an engineered yeast strain by an established methodology following current Good Manufacturing Practices, or cGMP, and we believe this process can be readily scaled to commercial quantities.

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We initiated the Phase 2b clinical trial of rNAPc2 (AB201), ASPEN-COVID-19, in patients hospitalized with COVID-19 in the fourth quarter of 2020.

We anticipate announcing topline data from this approximately 100 patient Phase 2b clinical trial in the third quarter of 2021.

In July 2021, we increased the ASPEN-COVID-19 clinical trial target enrollment from 100 to 160 patients in an effort to increase the sample size for determining if there are differences in the two rNAPc2 dose regimens being investigated, to decrease variance in the standard of care heparin control arm, in recognition of the study being conducted in different geographic regions and to potentially account for evolving changes in the clinical course of COVID-19.

In October 2021, the Data and Safety Monitoring Committee, or DSMC, completed a pre-specified interim analysis and, based on the DSMC’s review of approximately 75% of the projected final efficacy and safety data, recommended completion of the clinical trial with no modifications to the clinical trial design.

We anticipate announcing topline data from this approximately 160 patient international Phase 2b clinical trial in the last week of March 2022.

We are evaluating rNAPc2 as a treatment for patients hospitalized with COVID-19 who are at high risk for thrombotic complications, as indicated by elevated D-dimer levels.

The Phase 2b clinical trial is designed to be a randomized comparison of two-dose regimens of rNAPc2 versus heparin prescribed per local standard of care.

The primary endpoint of the clinical trial is the change in D-dimer level from baseline to Day 8.

If Phase 2b results indicate a favorable effect on D-dimer levels and safety is confirmed, following FDA review of the data and identification of the proposed Phase 3 rNAPc2 dose, we anticipate that clinical investigative sites will begin enrolling patients in a planned Phase 3 clinical trial.

The primary endpoint of Phase 3 is planned to be clinical recovery as measured by the Adaptive COVID-19 Treatment Trial ordinal scale, with secondary endpoints that include D-dimer levels and the number of thrombotic events.

We believe the Phase 3 clinical trial will be event driven, with an estimated requirement of 450 patients.

We believe that favorable results from this Phase 2b/3 clinical trial program could support use of rNAPc2 in COVID-19 patients, given its potential efficacy both as an anticoagulant and an anti-viral agent that we believe counters the dysregulatory immune response and improves clinical recovery.

The primary endpoint of the clinical trial is the change in D-dimer level from baseline to Day 8 relative to standard of care heparin.

Secondary endpoints include time to recovery for eligibility of hospital discharge, and the clinical composite of all-cause mortality, thrombosis, need for organ support or re-hospitalization within 30 days from randomization.

We plan to meet with the FDA to review the Phase 2b clinical study data.

The clinical trial is being managed in collaboration with the Colorado Prevention Center, or CPC, the University of Colorado's Academic Research Organization with extensive experience in managing vascular and anticoagulation clinical trials.

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Our rNAPc2 development plans, including the timeline, depend on our ability to enroll patients during the COVID-19 pandemic, the results of our Phase 2b clinical trial, FDA guidance, and availability of drug product, all of which are currently uncertain.

We own the clinical development program of rNAPc2, including Phase 2 clinical trials.

If rNAPc2 is successfully developed, we believe it will have intellectual property protection, including 12 years of market exclusivity as an innovative biologic product under FDA law in the United States, 10 years data protection exclusivity in the European Union, or EU, and potentially patent protection in addition to this.

We own the clinical development program of rNAPc2, including the Phase 2b clinical development.

If rNAPc2 is successfully developed, we believe it will have intellectual property protection, including 12 years of market exclusivity as an innovative biologic product under FDA regulation in the United States, 10 years data protection exclusivity in the European Union, or EU, and potentially patent protection in addition to this.

We have filed an international patent application for the use of rNAPc2 in COVID-19 and plan to prosecute this patent in the United States and other markets.

If this patent issues in the United States, we believe it could provide intellectual property protection into approximately 2040.

We plan to pursue strategic co-development and partnering opportunities for rNAPc2 development and commercialization.

In July 2021, we entered into a patent assignment agreement, or the Agreement, with the University Medical Center of Johannes Gutenberg University Mainz , Germany.

Under the terms of the Agreement, we received exclusive world-wide patent rights relating to the use of rNAPc2 as a potential treatment for COVID-19, and other indications, based on the research and discoveries from Univ.-Prof.

Wolfram Ruf, the Scientific Director and Alexander von Humboldt Professor at the Center for Thrombosis and Hemostasis (CTH) of the University Medical Center Mainz, and his collaborators.

We have upfront and potential milestone obligations to the University Medical Center Mainz that could total approximately €1.6 million and royalty obligations in the low single digit range, if rNAPc2 receives regulatory approval and is commercialized.

The term of the Agreement extends to the date of expiration of the last to expire of any of the assigned patent .

Gencaro™ (bucindolol hydrochloride) for Atrial Fibrillation

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Our development plan for Gencaro focuses on the treatment of AF in patients with higher ejection fraction HF, those who have an ejection fraction, or EF, of 40% and higher who also have the genotype we believe is optimal for Gencaro efficacy.

This population of HF encompasses more than half of all HF patients in the United States and Europe.

This population of

HF encompasses more than half of all HF patients in the United States and Europe.

There are currently few approved or effective drug therapies to treat AF or HF in this patient population .

Our development plan for Gencaro is based on our recent analysis of the Phase 2b clinical trial of Gencaro for the prevention of AF in HF patients, known as GENETIC-AF.

Our development plan for Gencaro is based on our recently published analysis of the Phase 2b clinical trial of Gencaro for the prevention of AF in HF patients, known as GENETIC-AF.

This analysis showed novel results for Gencaro in patients in the clinical trial with EF’s of 40% and higher.

We are planning a new design for a Phase 3 pivotal clinical trial of Gencaro based on this analysis that addresses what we believe are important clinical assessments, including the total amount of time that a patient experiences AF, known as AF burden, maintenance of normal sinus rhythm, rhythm control interventions such as electrical cardioversion, catheter ablation and use of anti-arrhythmic drugs and drug-related complications such as bradycardia.

The Phase 3 pivotal clinical trial of Gencaro conducted under an SPA will include secondary endpoints that are intended to capture some of this new information, such as a reduction in the need to deploy rhythm control interventions including electrical cardioversion, catheter ablation and use of anti-arrhythmic drugs and avoidance of drug-related complications such as bradycardia.

Based on these analyses, we were issued a United States patent in February 2021 for the use of Gencaro in this patient population.

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We are seeking similar patent protection in other countries.

We currently have an agreement with the FDA, known as a Special Protocol Assessment, or SPA, for the requirements of a Gencaro Phase 3 clinical trial that would support approval of Gencaro if successful.

Based on our recent analyses of the GENETIC-AF data, we may alter the design of PRECISION-AF to focus on endpoints that are not covered in the SPA agreement.

We currently have an agreement with the FDA, known as a Special Protocol Assessment, or SPA, for the requirements of a Gencaro Phase 3 clinical trial, PRECISION-AF, that would support approval of Gencaro if successful.

We believe that patients with HF and AF represent a major unmet medical need, and this need is most pronounced in patients with EF values of 40% and above.

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Interventional procedures for AF, such as catheter ablation and electrical cardioversion, are invasive, expensive, and often temporary;

these interventions also typically requir e the continued use of beta blockers and other anti-arrhythmic drugs post-intervention.

these interventions also typically require the continued use of beta blockers and other anti-arrhythmic drugs post-intervention.

We believe that Gencaro, if approved, may be a safe and more effective therapy for the treatment of higher ejection fraction HF patients with AF.

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Maintenance of rhythm control after a successful AF catheter ablation;

Effective rate control with lower risk of treatment-limiting bradycardia;

Effective rate control with lower risk of treatment-limiting, adverse event producing bradycardia;

Reduction in symptoms and improvement in quality of life;

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If we are unable to obtain sufficient financing or are unable to complete a strategic transaction, we may discontinue our development activities on rNAPc2 or Gencaro or discontinue our operations .

We believe our cash and cash equivalents as of December 31, 2020 , together with the $23.3 million of net proceeds raised through February 2021 from sales of our common stock, will be sufficient to fund our operations through the end of fiscal year 2022, including the projected costs for the rNAPc2 ( AB201) Phase 2b clinical trial.

We believe our cash and cash equivalents as of December 31 , 202 1 will be sufficient to fund our operations through the middle of fiscal year 2023 .

Conducting a Phase 3 rNAPc2 clinical trial or the Phase 3 PRECISION-AF trial would likely require additional financing .

However, changing circumstances may cause us to consume capital significantly faster or slower than currently anticipated.

However, changing circumstances may cause us to consume capital significantly faster or slower than currently anticipate d .

We have based these estimates on assumptions that may prove to be wrong, and we could exhaust our available financial resources sooner than we currently anticipate ;

therefore, we may have to raise additional capital for other clinical trials of rNAPc2 .

Initiating any Phase 3 clinical trial of Gencaro is dependent on sustained improvement in the COVID-19 pandemic and will require additional financing .

In 2017, we entered into a sales agreement with a placement agent to sell, from time to time, our common stock having an aggregate offering price of up to $10.2 million, in an “at the market offering.” In 2020, we further amended the sales agreement to increase the maximum aggregate value of shares which we may issue and sell from time to time under this sales agreement to $32.4 million.

This sales agreement terminated in July 2020.

Under this sales agreement, we had sold an aggregate of 3,302,159 shares of our common stock pursuant to the terms of such sales agreement, as amended, for aggregate gross proceeds of approximately $32.3 million.

Net proceeds received in this offering were approximately $30.8 million, after deducting expenses for executing the “at the market offering” and commissions paid to the placement agent.

” As of February 2021 , we ha d sold an aggregate of 9,928,272 shares of our common stock pursuant to the terms of such sales agreement for aggregate gross proceeds of approximately $ 54.0 million.

I nitiating any Phase 3 clinical trial of Gencaro is dependent on sustained improvement in the COVID-19 pandemic and will require additional financing .

In July 2020, we entered into a sales agreement with a placement agent to sell, from time to time, our common stock having an aggregate offering price of up to $54.0 million, in an “at the market offering.” As of February 2021, we had sold an aggregate of 9,928,272 shares of our common stock pursuant to the terms of such sales agreement for aggregate gross proceeds of approximately $54.0 million.

Net proceeds received in this offering were approximately $52.2 million, after deducting expenses for executing the “at the market offering” and commissions paid to the placement agent.

We have sold all shares available under the current prospectus .

In April 2021, we amended the new sales agreement and the amount available for the offering under our prospectus to our registration statement on Form S-3 (No.

As of March 14, 2022, the amount available for the offering under the prospectus supplement is subject to the limitation of not selling a total value amount of shares exceeding more than one-third of our public float in any 12-month period, which as of March 11, 2022 would have been approximately $10.5 million .

In March 2020, the World Health Organization declared the outbreak of COVID-19, a novel strain of Coronavirus, a global pandemic.

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Research and development, or R&D, expense is comprised primarily of personnel costs, clinical development, manufacturing process development, and regulatory activities and costs.

Our R&D expense continues to be almost entirely generated by our activities relating to the development of Gencaro.

Our R&D expense continues to be almost entirely generated by our activities relating to the development of rNAPc2 (AB201).

Our research and development expenses were $13.8 million for the year ended December 31, 2021 as compared to $5.0 million for 2020.

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The remaining increase was primarily a result of higher outside services and consulting costs related to initiation of our rNAPc2 (AB201) clinical trial.

R&D expense in 2021 is expected to be higher than 2020, as we continue our rNAPc2 (AB201) Phase 2b clinical trial.

R&D expense in 2022 is expected to be consistent with 2021 .

General and Administrative Expenses

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G&A expenses were $5.5 million for the year ended December 31, 2021, compared to $4.8 million for 2020, an increase of approximately $0.7 million.

The increase in expenses during 2020 comprised primarily of increased legal and professional costs, insurance costs and higher personnel costs in 2020, as compared to 2019.

The increase in expenses during 2021 comprised primarily of increased personnel and insurance costs, offset by lower legal costs in 2021, as compared to 2020.

G&A expenses in 2022 are expected to be consistent with those in 2021 as we maintain administrative activities to support our ongoing operations.

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Interest Expense

Interest expense was $9,000 for the year ended December 31, 2020 as compared to $7,000 for 2019.

There was no interest expense in 2021.

Interest expense was $9,000 for the year ended December 31, 2020.

The amounts were nominal to our overall operations.

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Income Tax Benefit

Income tax benefit for the years ended December 31, 2020 and 2019 was $9,000 and $167,000, respectively.

The income tax benefit in 2019 was primarily related to the reduction in the recorded valuation allowance as a result of the realization of research and experimentation credit carryforwards under the Protecting Americans from Tax Hikes Act of 2015, or PATH Act.

Income tax benefit for the year ended December 31, 2020 was $9,000.

The income tax benefit in 2020 was primarily related to the reduction in the recorded valuation allowance as a result of the realization of certain credit carryforwards under the Protecting Americans from Tax Hikes Act of 2015, or PATH Act.

In 2020, the benefit was fully monetized and we do not expect additional significant income tax benefit in 2022.

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As of December 31, 2021, we had total cash and cash equivalents of approximately $53.4 million, as compared to $49.1 million as of December 31, 2020.

The net increase of $40.7 million during the year primarily reflects net proceeds of approximately $48.9 million from the issuance of common stock, offset by $7.7 million of cash used to fund operating activities and $0.4 million of payments on a vendor financing arrangement.

The net increase of $4.3 million during the year primarily reflects net proceeds of approximately $23.1 million from the issuance of common stock, offset by $18.8 million of cash used to fund operating activities.

Cash Flows from Operating, Investing and Financing Activities

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Net cash used in investing activities for the years ended December 31, 2021 and 2020 was $43,000 and $19,000, respectively, for the purchase of property and equipment.

Net cash provided by financing activities was $23.1 million for the year ended December 31, 2021 related to net proceeds from sales of our common stock in our “at the market” equity offering.

Net cash provided by financing activities was $48.5 million for year ended December 31, 2020 representing $48.9 million in net proceeds from sales of our common stock in our registered direct equity offering and our “at the market” equity offering in the period, less $0.4 million of payments on a vendor finance arrangement.

Net cash provided by financing activities was $6.6 million for the year ended December 31, 2019 representing $6.9 million of net proceeds from sales of our common stock pursuant to our sales agreement, less $0.3 million in payments on a vendor financing arrangement.

Sources and Uses of Capital

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The primary uses of our capital resources to date have been to fund operating activities, including research, clinical development and drug manufacturing expenses, license payments, and spending on capital items.

” In 2020, we further amended the sales agreement to increase the maximum aggregate value of shares which we may issue and sell from time to time under this sales agreement to $32.4 million.

This sales agreement terminated in July 2020.

Under this sales agreement , we sold an aggregate of 3,302,159 shares of our common stock pursuant to the terms of such sales agreement , as amended, for aggregate gross proceeds of approximately $ 32.3 million.

Net proceeds received in this offering were approximately $30.

8 million, after deducting expenses for executing the “at the market offering” and commissions paid to the placement agent .

In July 2020, we entered into a new sales agreement with a placement agent to sell, from time to time, our common stock having an aggregate offering price of up to $54.0 million, in an “at the market offering.” As of February 2021, we had sold an aggregate of 9,928,272 shares of our common stock pursuant to the terms of such sales agreement for aggregate gross proceeds of approximately $54.0 million.

Net proceeds received in this offering were approximately $52.2 million, after deducting expenses for executing the “at the market offering” and commissions paid to the placement agent.

We have sold all shares available under the current prospectus .

In March 2020, the World Health Organization declared the outbreak of COVID-19, a novel strain of Coronavirus, a global pandemic.

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the terms and conditions of our existing collaborative and licensing agreements.

We believe our cash and cash equivalents as of December 31, 2020, together with the $23.3 million of net proceeds raised through February 2021 from sales of our common stock, will be sufficient to fund our operations, at our current cost structure, after giving effect to potential cost reductions, through the end of fiscal year 2022.

We believe our cash and cash equivalents as of December 31, 2021 will be sufficient to fund our operations through the middle of fiscal year 2023.

Conducting a Phase 3 rNAPc2 clinical trial or the Phase 3 PRECISION-AF trial would likely require additional financing .

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We develop estimates of liabilities using our judgment based upon the facts and circumstances known at the time.

Off-Balance Sheet Arrangements

We have not participated in any transactions with unconsolidated entities, such as special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements.

Indemnifications

In the ordinary course of business, we enter into contractual arrangements under which we may agree to indemnify certain parties from any losses incurred relating to the services they perform on our behalf or for losses arising from certain events as defined within the particular contract.

the particular contract.

Such indemnification obligations may not be subject to maximum loss clauses.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis