Item 1. Business
Item 1. Business
Overview
We are a late-stage biopharmaceutical company focused on discovering and developing novel therapies for the treatment of fibrosis and related diseases. Our initial focus is on treating fibrosis by inhibiting integrin-mediated activation of TGF-β. We have applied our deep understanding of fibrosis biology, along with our medicinal chemistry and translational medicine expertise to develop a set of proprietary tools designed to discover and de-risk product candidates quickly and efficiently. Our wholly owned lead product candidate, bexotegrast, is an oral, small molecule, dual selective inhibitor of αvβ6 and αvβ1 integrins. We have recently discontinued BEACON-IPF trial, a global Phase 2b trial in patients with idiopathic pulmonary fibrosis (IPF). While an imbalance in unadjudicated IPF-related adverse events between the treatment and placebo groups led to the discontinuation of the trial, early evidence of efficacy on the forced vital capacity (FVC) endpoint was also observed. The Company plans to analyze the complete data from the BEACON-IPF trial and evaluate next steps for bexotegrast’s development.
Our second clinical program, PLN-101095, is a small molecule, dual selective inhibitor of integrins αvβ8 and αvβ1 for the treatment of solid tumors that are resistant to immune checkpoint inhibitors. We are currently enrolling the fourth of five dose cohorts in a Phase 1 open-label dose-escalation trial of PLN-101095 as monotherapy and in combination with pembrolizumab in patients with solid tumors that are resistant to immune checkpoint inhibitors. Preliminary data from cohorts one through three is expected in the first quarter of 2025.
Our Phase 1-ready program PLN-101325, is in development for treatment of muscular dystrophies, including Duchenne muscular dystrophy. PLN-101325 is a monoclonal antibody designed to act as an allosteric agonist of integrin α7β1. PLN-101325 has received a clinical trial approval (CTA) in Australia.
Our Pipeline
Our Lead Candidate - Bexotegrast
Our lead wholly owned product candidate, bexotegrast, is an oral, small molecule, dual-selective inhibitor of αvß6 and αvß1. While expressed at very low levels in normal tissues, αvß6 and αvß1 are upregulated in the pulmonary tissues of IPF patients. They both serve as activators of TGF-β, leading to increased collagen production and fibrosis in these tissues. By blocking TGF-β activation by both αvß6 and αvß1, we believe bexotegrast may slow and potentially halt the progression of fibrosis in these patient populations. Bexotegrast has been granted orphan drug designation by the FDA, and the European Medicines Agency, or EMA, and Fast Track designation by the FDA for IPF.
Bexotegrast for Treatment of IPF
IPF is the most common and severe form of progressive pulmonary fibrosis, affecting approximately 150,000 patients in the United States and over 3 million patients around the world. While the underlying cause of IPF is unknown, the course of the disease is well documented, with progressive scarring that destroys the structure and function of the lungs over time. The average life expectancy for patients with confirmed IPF is between three and five years. There are currently two FDA-approved therapies for IPF. Both have shown modest slowing of disease progression. However, both therapies have safety and tolerability challenges that lead to treatment interruption, dose adjustment, and permanent discontinuation.
4
Bexotegrast is an oral small molecule that selectively inhibits both αvß6 and αvß1 integrins that we are developing as a potential therapy for IPF and PSC. It has been shown that expression of both αvß6 on epithelial cells and αvß1 on fibroblasts can lead to excessive activation of TGF-β in fibrosis. Epithelial tissue includes any tissue that lines the surfaces of the body such as alveoli, bile ducts, urinary tract, skin, and gastrointestinal tract. Each of these tissues contains multiple cell types including epithelial cells and fibroblasts. An important secondary effect of the TGF-β cascade is that it promotes upregulation of αvß6 on epithelial cells and αvß1 on fibroblasts. The increased expression of these integrins on the cell surface contributes in turn to further TGF-β activation in a TGF-β-driven positive feed-forward loop.
In May 2023, we announced final data from INTEGRIS-IPF, a multinational, randomized, double-blind, placebo-controlled Phase 2a clinical trial of bexotegrast in patients with IPF. The trial compared bexotegrast doses of 40 mg, 80 mg, 160 mg and 320 mg versus placebo over 12 weeks of treatment, with the 320 mg dose group allowed to treat for at least 24 weeks. The trial met its primary and secondary endpoints demonstrating that bexotegrast was well tolerated over a 12-week treatment period and displayed a favorable pharmacokinetic profile. The trial’s exploratory efficacy endpoints assessing changes in forced vital capacity, or FVC, Quantitative Lung Fibrosis, or QLF, imaging, serum biomarkers and clinical symptoms. Bexotegrast demonstrated a dose-dependent treatment effect on FVC, FVC percent predicted, or FVCpp, and QLF, as well as serum biomarkers and cough compared to placebo over 12 weeks in treated patients. Bexotegrast was well tolerated over 12 weeks of treatment with no drug related serious adverse events, or SAEs.
Bexotegrast at 320 mg demonstrated a statistically significant mean increase in FVC from baseline at all timepoints up to 12 weeks, surpassing all lower dose groups, and showed a strong treatment effect on FVC, FVCpp, QLF, profibrotic biomarkers and cough versus placebo at 12 weeks. The bexotegrast 320 mg group also met its primary and secondary endpoints at 24 weeks, demonstrating that bexotegrast was well tolerated over the 24-week treatment period and displayed a favorable pharmacokinetic profile. At Week 24, bexotegrast at 320 mg, in combination with standard of care, reduced FVC decline by 80% relative to standard of care alone. Eighty-nine percent of bexotegrast-treated patients who experienced an increase in FVC from baseline at Week 12 maintained an increase at Week 24. Bexotegrast at 320 mg showed a strong treatment effect with stabilization of fibrosis as measured by QLF imaging at Week 24. Bexotegrast was well tolerated up to 40 weeks of treatment at 320 mg with no drug-related serious adverse events.
In August 2023, we initiated BEACON-IPF, a 52-week, multinational, randomized, dose-ranging, double-blind, placebo-controlled Phase 2b trial evaluating bexotegrast at doses of 160 mg or 320 mg at sites in the United States. In March 2024, we initiated the Phase 2b/3 adaptive portion of the BEACON-IPF trial at global sites outside of the U.S. The BEACON-IPF Phase 2b portion of this multinational trial is enrolling approximately 360 patients with IPF. The primary endpoint is an assessment of the change from baseline in absolute mL of forced vital capacity (FVC) at Week 52. Key secondary endpoints include the measurement of time to disease progression (defined as either a ≥10% decline from baseline in FVC precent predicted (FVCpp), respiratory-related hospitalization, or all-cause mortality), change from baseline of absolute FVC (mL) with or without background therapies, change from baseline in patient reported measurements of symptoms, well-being at Week 52 and safety and tolerability.
On March 3, 2025, we announced that, following a prespecified data review and recommendation by the trial’s independent DSMB, as well as a secondary review and recommendation by an outside expert panel, Pliant has discontinued the BEACON-IPF Phase 2b trial. While an imbalance in unadjudicated IPF-related adverse events between the treatment and placebo groups led to the discontinuation of the trial, early evidence of efficacy on the forced vital capacity (FVC) endpoint was also observed.
The mean exposure duration in BEACON-IPF was approximately 17 weeks. Overall, the percentage of IPF-related adverse events in both dose groups was comparable (approximately 10%). The imbalance between active and placebo appears to have been driven by a low number (below 3%) of IPF-related adverse events in the placebo group. In comparison, the IPF-related adverse event rate in pooled placebo group of the INTEGRIS-IPF study was 10% with a comparable treatment duration to that of BEACON-IPF (mean exposure duration approximately 16 weeks).
The Company plans to analyze the complete data from the BEACON-IPF trial and evaluate next steps for bexotegrast’s development. Once the full analysis is completed, which should provide a better understanding of the benefit risk profile and therapeutic window of bexotegrast, the Company will consider additional dose-ranging Phase 2b studies with lower doses in pulmonary fibrosis and potentially other, non-respiratory indications, including liver diseases.
Bexotegrast for Treatment of Primary Sclerosing Cholangitis
Primary Sclerosing Cholangitis, or PSC is a progressive liver disorder affecting approximately 30,000 to 45,000 patients in the United States. The disease is characterized by fibrosis originating in the bile ducts that ultimately results in bile flow obstruction or cholestasis, causing liver inflammation and progressive fibrosis of the liver. Patients have a median
5
survival of 10 to 12 years without intervention and carry high lifetime risk of developing gastrointestinal malignancies. There are currently no FDA-approved therapies for PSC.
We conducted and have announced results from INTEGRIS-PSC, a Phase 2a trial of bexotegrast in PSC. The trial compared bexotegrast doses of 40 mg, 80 mg, 160 mg and 320 mg versus placebo over 12-weeks of treatment, with the 320 mg dose cohort allowed to treat for at least 24 weeks. Results from the INTEGRIS-PSC trial were positive with data disclosed in company press releases in 2023 and 2024.
Following discussions with regulatory authorities, it is clear that a cost effective and efficient development path for Pliant in PSC is not available at this time; however, we continue to evaluate the best path forward for this program.
PLN-101095 for Treatment of Solid Tumors That are Resistant to Immune Checkpoint Inhibitors
Our third clinical program to date, PLN-101095, is an oral, dual inhibitor of αvß8 and αvß1 integrins for the treatment of solid tumors with a suboptimal response to immune checkpoint inhibitors, or ICIs. As TGF-β biology has been elucidated, it has become increasingly understood in the scientific literature that TGF-β plays an important anti-inflammatory role in the tumor micro-environment, preventing T-cell infiltration and inhibiting release of various cytokines. This mechanism is becoming increasingly recognized as a potential cause of the resistance to checkpoint inhibitors such as anti-PD-1 therapies seen in many tumors. We are targeting the TGF-β activating integrins αvβ8 and αvβ1, which are upregulated in certain tumors, with the goal of sensitizing tumors to checkpoint inhibitors. We are currently dosing the fourth of five planned dose cohorts in a Phase 1 open label dose-escalation trial of PLN-101095 as monotherapy for 14 days, followed by combination therapy with pembrolizumab in patients with solid tumors that are resistant to immune checkpoint inhibitors. Preliminary data from first three cohorts of the Phase 1 trial are expected in the first quarter of 2025.
PLN-101325 for Treatment of Muscular Dystrophies
We are developing PLN-101325, a monoclonal antibody targeting α7β1 for treatment of muscular dystrophies, including Duchenne Muscular Dystrophy, or DMD. The α7β1 integrin is upregulated on muscle cells in several muscular dystrophy indications. It partially compensates for the lack of dystrophin by helping to anchor muscle cells to the extracellular matrix. PLN-101325 binds and allosterically activates α7β1 in order to augment this naturally occurring compensatory mechanism. Because the antibody is not mutation specific, it could potentially be effective as a single therapy or in combination with other treatment modalities across multiple muscular dystrophy indications. A clinical trial approval (CTA) was granted in Australia and is active in authorizing the initiation of a Phase 1 clinical trial of PLN-101325 in healthy volunteers .
Our Team
We have assembled an executive team with highly relevant experience in fibrosis, small molecule drug discovery and clinical development. Bernard Coulie, M.D., Ph.D., our President and Chief Executive Officer, has over 20 years of experience in drug development, previously serving as Chief Executive Officer and Chief Medical Officer of ActoGeniX, as well as holding senior roles at Johnson & Johnson. Éric Lefebvre, M.D., our Chief Medical Officer, brings deep experience in clinical development in liver disease. He previously served as head of clinical research and development for the MASH program at Allergan. Prior to Allergan, Dr. Lefebvre led HIV and HCV development at Janssen and later served as Chief Medical Officer at Tobira. Our science builds on the research of world-renowned researchers Dean Sheppard, M.D., Rik Derynck, Ph.D., Bill DeGrado, Ph.D. and Hal Chapman, M.D., all from the University of California, San Francisco, who bring broad experience in fibrosis biology and small molecule chemistry among other related disciplines.
Our Strategy
Our goal is to become a world-leading fibrosis company, developing and commercializing disease- modifying therapies across a spectrum of fibrotic diseases. To achieve this, we are focused on the following key strategies:
• Rapidly advance bexotegrast through clinical development and commercialization in IPF. We are developing our lead oral, small molecule inhibitor of αvß6 and αvß1 as a novel therapy for IPF, an area of high unmet medical need. IPF is an orphan indication that we believe we can commercialize on our own in key geographies using a targeted sales force.
• Selectively evaluate additional partnerships in indications and geographies where we believe partners can add significant commercial and/or development capabilities. Fibrotic diseases represent a broad set of disease indications to pursue. Our focus is to commercialize our assets in orphan fibrosis indications and to selectively work with partners in larger indications and in geographies outside of North America. Furthermore, we will evaluate and potentially choose to partner our unpartnered product candidates in indications outside of fibrosis.
6
• Explore opportunities for our pipeline assets in additional fibrotic indications. We are evaluating the potential benefit of our product candidates outside of their lead indications. Our product candidates have shown anti-fibrotic activity in multiple animal models as well as human tissue in indications outside of IPF, PSC and MASH. We will continue to evaluate additional indications to maximize the potential of our pipeline.
• Leverage our industry leading tools and capabilities to advance our mission of becoming a leading fibrosis company. Since our founding, we have endeavored to advance the understanding of fibrosis biology, uncover new targets and advance novel product candidates. Currently, our proprietary capabilities include a target expression atlas, an expansive library of over 10,000 integrin binding molecules, an integrin screening assay platform, a live fibrotic human tissue program, a PET-ligand imaging program and biomarker assays. We continue to expand our integrin inhibitor library and develop tools such as additional PET-ligands as well as novel disease biomarkers. In addition, we have a library of over 70,000 compounds for non-integrin targets. We intend to leverage these tools and capabilities in a target- and modality-agnostic manner to expand our pipeline with a mission to become a world-leading fibrosis company.
Competition
The biotechnology and biopharmaceutical industries are characterized by rapidly advancing technologies, strong competition and an emphasis on proprietary products. While we believe that our technology, knowledge, experience and scientific personnel provide us with competitive advantages, we face substantial competition from many different sources, including larger pharmaceutical companies with greater resources. Smaller specialty biotechnology and biopharmaceutical companies, academic research institutions, governmental agencies, as well as public and private institutions are also potential sources of competitive products and technologies, including through collaborative arrangements with large and established biopharmaceutical companies. We also face competition in recruiting and retaining qualified scientific and management personnel, establishing clinical trial sites and enrolling patients for clinical trials, and acquiring technologies complementary to, or necessary for, our programs. We believe that the key competitive factors affecting the success of any of our product candidates will include efficacy, safety profile, convenience, method of administration, cost, level of promotional activity and intellectual property protection.
There are a number of biopharmaceutical and biotechnology companies that are currently pursuing the development of products for the treatment of fibrosis. Companies that we are aware of that are targeting the treatment of various fibrosis indications through inhibiting various parts of the TGF-β pathway include companies with significant financial resources such as AbbVie Inc., AstraZeneca plc, Bristol Myers Squibb Co., Corbus Pharmaceutical, Merck & Co., Inc., Novartis AG, Scholar Rock, Inc. and Takeda Pharmaceutical Company.
Boehringer Ingelheim's PDE4B inhibitor (BI 1015550), Bristol Myers Squibb Co.’s LPAR1 inhibitor (BMS-986278) and United Therapeutics Corporation prostacyclin vasodilator (treprostinil) are the most advanced development candidates for the treatment of IPF.
Although our novel approach is unique from most other existing or investigational therapies across the disease areas where we are focusing our development, we will need to compete with currently approved therapies, and potentially those currently in development if they are approved. We are aware of several marketed and investigational products in our leading disease areas, including but not limited to:
• IPF : There are currently two approved products for the treatment of IPF; pirfenidone – brand name Esbriet ® , marketed by Roche Holding AG, with generics marketed by Sandoz Group AG, Teva Pharmaceutical Industries Ltd., and others, and nintedanib – brand name Ofev ® , marketed by Boehringer Ingelheim GmbH. Companies currently developing product candidates in IPF include Boehringer Ingelheim Pharmaceuticals, Inc., Bristol Myers Squibb Co., United Therapeutics Corporation, Amgen, Roche Holding AG, Vicore Pharma Holding, CSL Behring, PureTech Health PLC, GlaxoSmithKline, InSilico Medicines, Tvardi Therapeutics, BridgeBio Therapeutics Inc., Syndax Pharmaceuticals Inc., Endeavor BioMedicines, Inc., Contineum Therapeutics, Inc.and Avalyn Pharma Inc.
• PSC : There are currently no approved therapies for the treatment of PSC. Companies currently developing product candidates in PSC include Dr. Falk Pharma GmbH, Mirum Pharmaceuticals, Inc., Chemomab Therapeutics Ltd., Ipsen Biopharmaceuticals Inc., Curome Biosciences and NGM Biopharmaceuticals, Inc.
The availability of reimbursement from government and other third-party payors will also significantly affect the pricing and competitiveness of our product candidates, if approved for marketing. Our competitors also may obtain FDA or
7
other regulatory approval for their products more rapidly than we do, which could result in our competitors establishing a strong market position before we are able to enter the market.
Intellectual Property
Overview
We strive to protect and enhance the proprietary technology, inventions, and improvements that are commercially important to the development of our business, including seeking, maintaining, and defending patent rights, whether developed internally or licensed from third parties. We also rely on trade secrets relating to our proprietary technology platform and on know-how, continuing technological innovation and in-licensing opportunities to develop, strengthen, and maintain our proprietary position in the field of fibrosis that may be important for the development of our business. We additionally may rely on regulatory protection afforded through data exclusivity, market exclusivity, and patent term extensions, where available.
Our commercial success may depend in part on our ability to: obtain and maintain patent and other proprietary protection for commercially important technology, inventions and know-how related to our business; defend and enforce our patents; preserve the confidentiality of our trade secrets; and operate without infringing the valid enforceable patents and proprietary rights of third parties. Our ability to stop third parties from making, using, selling, offering to sell, or importing our products may depend on the extent to which we have rights under valid and enforceable licenses, patents, or trade secrets that cover these activities. In some cases, enforcement of these rights may depend on third party licensors. With respect to both licensed and company-owned intellectual property, we cannot be sure that patents will be granted with respect to any of our pending patent applications or with respect to any patent applications filed by us in the future, nor can we be sure that any of our existing patents or any patents that may be granted to us in the future will be commercially useful in protecting our commercial products and methods of manufacturing the same.
As of February 26, 2025, we own or co-own over 300 pending patent applications worldwide in over 30 patent families, including United States and corresponding foreign patent applications. As of February 26, 2025, thirteen U.S. patents and thirty-nine foreign patents have been issued, granted or allowed. Our patents and any patents that may issue from our pending patent applications are generally expected to expire between the years 2037 to 2046, subject to possible patent term adjustment and/or extension. Our policy is to file patent applications to protect technology, inventions and improvements to inventions that are commercially important to the development of our business. We seek United States and foreign patent protection for a variety of technologies, including, research compounds and methods, candidate compounds and antibodies for modulating the activity of integrins, methods for treating diseases of interest, and methods for manufacturing our products. We also intend to seek patent protection or rely upon trade secret rights to protect other technologies that may be used to discover and validate targets and that may be used to identify and develop novel products. We seek protection, in part, through confidentiality and proprietary information agreements. We are a party to various other license agreements that give us rights to use specific technologies in our research and development.
Company Owned IP
We own multiple families of patent applications that are directed to small molecule compositions capable of modulating integrins and methods for treating or preventing diseases associated with integrins. Certain applications in these families relate to our bexotegrast and PLN-1474 small molecule product candidates, backup compounds and structural analogs, various unit dosages, dosing regimens, and routes of administration. We are also pursuing innovative ways to modulate integrin function using antibodies, and as of February 26, 2025 we have 35 pending patent applications to that technology in the United States and foreign jurisdictions. As of February 26, 2025, we have one U.S. patent and two foreign patents that have been issued, granted, or allowed. These antibody patents and patents that may issue from company owned antibody applications are generally expected to expire between the years 2040 to 2045, subject to possible patent term adjustment and/or extension.
Trademark Protection
We have two registered U.S. trademarks for use in connection with our products. We may pursue additional registrations for future products in markets of interest.
Trade Secret Protection
We may rely, in some circumstances, on trade secrets to protect our technology. We seek to protect our proprietary technology and processes, in part, by entering into confidentiality agreements with our employees, consultants, scientific advisors, and contractors. We also seek to preserve the integrity and confidentiality of our data and trade secrets by maintaining physical security of our premises and physical and electronic security of our information technology systems.
8
In addition to the above, we have established expertise and development capabilities focused in the areas of preclinical research and development, manufacturing and manufacturing process development, quality control, quality assurance, regulatory affairs, and clinical trial design and implementation. We believe that our focus and expertise will help us develop products based on our proprietary intellectual property.
Manufacturing
Our lead product candidate, bexotegrast, is a small molecule inhibitor amenable to standard formulation technologies. We have confirmed the utility of the synthetic process and manufactured multi-kilogram quantities sufficient to provide drug product for our clinical trials. The manufacturing process of the drug substance for such product candidate is robust and accessed from readily available starting materials. The synthetic route is amenable to large-scale production and does not require unusual equipment or handling during the manufacturing process.
We do not own or operate facilities for clinical drug manufacturing, storage, distribution, or quality testing. All of our clinical manufacturing is outsourced to third-party manufacturers. Our agreements with third-party manufacturers include confidentiality and intellectual property provisions as well as routine quality audits. We also rely on internal personnel with extensive cGMP manufacturing experience in order to ensure effective technology transfer and to manage the manufacturing and development processes conducted by third-party manufacturers.
We have established an adequate supply of the drug substance for bexotegrast from our Asian contract manufacturing organizations, or CMOs, to satisfy both our clinical and preclinical requirements.
As our development programs expand and we build new process efficiencies, we expect to continually evaluate this strategy with the objective of satisfying demand for our clinical trials and, if approved, the manufacture, sale, and distribution of commercial products.
Government Regulation
The FDA, Centers for Medicare and Medicaid Services, or CMS,U.S. Department of Health and Human Services Office of the Inspector General, or HHS-OIG and comparable regulatory authorities in state and local jurisdictions and in other countries impose substantial and burdensome requirements upon companies involved in the clinical development, manufacture, marketing, sale and distribution of drugs, such as those we are developing. These agencies and other federal, state, and local entities regulate, among other things, the research and development, testing, manufacture, quality control, safety, effectiveness, labeling, storage, record keeping, approval, advertising and promotion, distribution, post-approval monitoring and reporting, sampling, coverage, reimbursement, pricing, and export and import of our product candidates.
U.S. government regulation of drug products
In the United States, the FDA regulates drugs under the Federal Food, Drug, and Cosmetic Act, or FDCA, and its implementing regulations. The FDA also regulates biological products under the FDCA and the Public Health Service Act, or PHSA. If we advance clinical development of a biological product candidate in the future, these development activities will be subject to additional regulatory requirements specific to biological products. The process of obtaining regulatory approvals and the subsequent compliance with applicable federal, state, local and foreign statutes and regulations requires the expenditure of substantial time and financial resources. Failure to comply with the applicable U.S. requirements at any time during the product development process, approval process or after approval, may subject an applicant to a variety of administrative or judicial sanctions, such as the FDA’s refusal to approve pending New Drug Applications, or NDAs, withdrawal of an approval, imposition of a clinical hold, issuance of warning letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, refusals of government contracts, restitution, disgorgement or civil or criminal penalties.
The process required by the FDA before a drug may be marketed in the United States generally involves the following:
• Completion of preclinical laboratory tests, animal studies and formulation studies in compliance with the FDA’s good laboratory practice, or GLP, regulations;
• Submission to the FDA of an investigational new drug application, or IND, which must become effective before human clinical trials may begin;
• Approval by an independent institutional review board, or IRB, at each clinical site before each trial may be initiated;
9
• Performance of adequate and well-controlled human clinical trials in accordance with good clinical practice, or GCP, requirements to establish the safety and efficacy of the proposed drug product for each indication;
• Submission to the FDA of an NDA;
• Satisfactory completion of an FDA advisory committee review, if applicable;
• Satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the product is produced to assess compliance with current good manufacturing practice, or cGMP, requirements and to assure that the facilities, methods and controls are adequate to preserve the drug’s identity, strength, quality and purity;
• Satisfactory completion of FDA audits of clinical trial sites to assure compliance with GCPs and the integrity of the clinical data;
• Payment of user fees and securing FDA approval of the NDA; and
• Compliance with any post-approval requirements, including the potential requirement to implement a Risk Evaluation and Mitigation Strategy, or REMS, and the potential requirement to conduct post-approval studies.
Preclinical studies
Preclinical studies include laboratory evaluation of product chemistry, toxicity and formulation, as well as animal studies to assess potential safety and efficacy. An IND sponsor must submit the results of the preclinical tests, together with manufacturing information, analytical data and any available clinical data or literature, among other things, to the FDA as part of an IND. Some preclinical testing may continue even after the IND is submitted. An IND automatically becomes effective 30 days after receipt by the FDA, unless before that time the FDA raises concerns or questions related to one or more proposed clinical trials and places the clinical trial on a clinical hold. In such a case, the IND sponsor and the FDA must resolve any outstanding concerns before the clinical trial can begin. As a result, submission of an IND may not result in the FDA allowing clinical trials to initiate.
Clinical trials
Clinical trials involve the administration of the investigational new drug to human subjects under the supervision of qualified investigators in accordance with GCP requirements, which include the requirement that all research subjects provide their informed consent in writing for their participation in any clinical trial. Clinical trials are conducted under protocols detailing, among other things, the objectives of the trial, the parameters to be used in monitoring safety, and the effectiveness criteria to be evaluated. A protocol for each clinical trial and any subsequent protocol amendments must be submitted to the FDA as part of the IND. In addition, an IRB at each institution participating in the clinical trial must review and approve the plan for any clinical trial before it initiates at that institution. Information about certain clinical trials must be submitted within specific timeframes to the National Institutes of Health, or NIH, for public dissemination on their www.clinicaltrials.gov website.
Human clinical trials are typically conducted in three sequential phases, which may overlap or be combined:
• Phase 1: The drug is initially introduced into healthy human subjects or patients with the target disease or condition and tested for safety, dosage tolerance, absorption, metabolism, distribution, excretion and, if possible, to gain an early indication of its effectiveness.
• Phase 2: The drug is administered to a limited patient population to identify possible adverse effects and safety risks, to preliminarily evaluate the efficacy of the product for specific targeted diseases and to determine dosage tolerance and optimal dosage.
• Phase 3: 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.
Progress reports detailing the results of the clinical trials must be submitted at least annually to the FDA and more frequently if serious adverse events occur. Phase 1, Phase 2 and Phase 3 trials may not be completed successfully within any specified period, or at all. 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,
10
an IRB can suspend or terminate approval of a clinical trial at its institution 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.
Marketing approval
Assuming successful completion of the required clinical testing, the results of the preclinical and clinical studies, together with detailed information relating to the product’s chemistry, manufacture, controls, and proposed labeling, among other things, are submitted to the FDA as part of an NDA requesting approval to market the product for one or more indications. In most cases, the submission of an NDA is subject to a substantial application user fee. Under the Prescription Drug User Fee Act, or PDUFA, guidelines that are currently in effect, the FDA has a goal of ten months from the date of “filing” of a standard NDA, for a new molecular entity to review and act on the submission. This review typically takes twelve months from the date the NDA is submitted to FDA because the FDA has approximately two months to make a “filing” decision.
In addition, under the Pediatric Research Equity Act of 2003, or PREA, as amended and reauthorized, certain NDAs or supplements to an NDA must contain data that are adequate to assess the safety and effectiveness of the drug 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. 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. An Agreed Initial Pediatric Study Plan requesting a waiver from the requirement to conduct clinical studies has been submitted to the FDA.
The FDA also may require submission of a risk evaluation and mitigation strategy, or REMS, plan to ensure that the benefits of the drug outweigh its risks. The REMS plan could include medication guides, physician communication plans, assessment plans, and/or elements to assure safe use, such as restricted distribution methods, patient registries, or other risk minimization tools.
The FDA conducts a preliminary review of all NDAs within the first 60 days after submission, before accepting them for filing, to determine whether they are sufficiently complete to permit substantive review. The FDA may request additional information rather than accept an NDA for filing. In this event, the application must be resubmitted with the additional information. The resubmitted application is also subject to review before the FDA accepts it for filing. Once the submission is accepted for filing, the FDA begins an in-depth substantive review. The FDA reviews an NDA to determine, among other things, whether the drug is safe and effective and whether the facility in which it is manufactured, processed, packaged or held meets standards designed to assure the product’s continued safety, quality and purity.
The FDA may refer an application for a novel drug to an advisory committee. An advisory committee is a panel of independent experts, including clinicians and other scientific experts, which reviews, evaluates and provides a recommendation as to whether the application should be approved and under what conditions. The FDA is not bound by the recommendations of an advisory committee, but it considers such recommendations carefully when making decisions.
Before approving an NDA, the FDA typically will inspect the facility or facilities where the product is manufactured. The FDA will not approve an application unless it determines that the manufacturing processes and facilities are in compliance with cGMP requirements and adequate to assure consistent production of the product within required specifications. Additionally, before approving an NDA, the FDA may inspect one or more clinical trial sites to assure compliance with GCP requirements.
After evaluating the NDA and all related information, including the advisory committee recommendation, if any, and inspection reports regarding the manufacturing facilities and clinical trial sites, the FDA may issue an approval letter, or, in some cases, a complete response letter. A complete response letter generally contains a statement of specific conditions that must be met in order to secure final approval of the NDA and may require additional clinical or preclinical testing in order for FDA to reconsider the application. Even with submission of this additional information, the FDA ultimately may decide that the application does not satisfy the regulatory criteria for approval. If and when those conditions have been met to the FDA’s satisfaction, the FDA will typically issue an approval letter. An approval letter authorizes commercial marketing of the drug with specific prescribing information for specific indications.
Even if the FDA approves a 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 a drug’s safety after approval, require testing and surveillance programs to monitor the product after commercialization, or impose other conditions, including distribution and use restrictions or other risk management mechanisms under a REMS, which can materially affect the potential market and profitability of the product. The FDA may prevent or limit further marketing of a product based on the results of post-marketing studies or surveillance programs. After approval, some types of changes to the approved product, such as adding
11
new indications, manufacturing changes, and additional labeling claims, are subject to further testing requirements and FDA review and approval.
Fast Track designation
The FDA is authorized to designate certain products for expedited review if they are intended to address an unmet medical need in the treatment of a serious or life-threatening disease or condition. Among these programs is Fast Track designation. 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.
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. For Fast Track products, sponsors may have greater interactions with the FDA and the FDA may initiate review of sections of a Fast Track product’s application before the application is complete. This rolling review may be available if the FDA determines, after preliminary evaluation of clinical data submitted by the sponsor, that a Fast Track product may be effective. The sponsor must also provide, and the FDA must approve, a schedule for the submission of the remaining information and the sponsor must pay applicable user fees. However, the FDA’s review clock for a Fast Track application does not begin until the last section of the application is submitted. In addition, the Fast Track designation may be withdrawn by the FDA if the FDA believes that the designation is no longer supported by data emerging in the clinical trial process.
Orphan drug designation and exclusivity
Under the Orphan Drug Act, the FDA may designate a drug product as an “orphan drug” if it is intended to treat a rare disease or condition (generally meaning that it affects fewer than 200,000 individuals in the United States, or more in cases in which there is no reasonable expectation that the cost of developing and making a drug product available in the United States for treatment of the disease or condition will be recovered from sales of the product). A company must request orphan product designation before submitting an NDA. If the request is granted, the FDA will disclose the identity of the therapeutic agent and its potential use. Orphan product designation does not convey any advantage in or shorten the duration of the regulatory review and approval process.
If a product with orphan status receives the first FDA approval for the disease or condition for which it has such designation or for a select indication or use within the rare disease or condition for which it was designated, the product generally will be receiving orphan product exclusivity. The first active moiety to be approved to treat a disease with FDA's Orphan Drug designation is entitled to a seven-year period of marketing exclusivity in the United States for that product indication, except in certain limited circumstances. If a drug or drug product designated as an orphan product ultimately receives marketing approval for an indication broader than what was designated in its orphan product application, it may not be entitled to exclusivity. Orphan exclusivity will not bar approval of another product under certain circumstances, including if a subsequent product with the same active ingredient for the same indication is shown to be clinically superior to the approved product on the basis of greater efficacy or safety, or providing a major contribution to patient care, or if the company with orphan drug exclusivity is not able to meet market demand. Further, the FDA may approve more than one product for the same orphan indication or disease as long as the products contain different active ingredients. Moreover, competitors may receive approval of different products for the indication for which the orphan product has exclusivity or obtain approval for the same product but for a different indication for which the orphan product has exclusivity.
In addition, Congress is considering updates to the orphan drug provisions of the FDCA in response to a recent decision by the U.S. Court of Appeals for the Eleventh Circuit. Any changes to the orphan drug provisions could change our opportunities for, or likelihood of success in obtaining, orphan drug exclusivity and would materially adversely affect our business, results of operations, financial condition and prospects.
U.S. marketing exclusivity
Market exclusivity provisions under the FDCA also can delay the submission or the approval of certain applications. The FDCA provides a five-year period of non-patent marketing exclusivity within the United States to the first applicant to gain approval of an NDA for a new chemical entity. A drug is a new chemical entity if the FDA has not previously approved any other new drug containing the same active moiety, which is the molecule or ion responsible for the action of the drug substance. During the exclusivity period, the FDA may not accept for review an Abbreviated New Drug Application, or ANDA, or a 505(b)(2) NDA submitted by another company for another version of such drug where the applicant does not own or have a legal right of reference to all the data required for approval. However, an application may be submitted after four years if it contains a certification of patent invalidity or non-infringement. The FDCA also provides
12
three years of marketing exclusivity for a NDA, 505(b)(2) NDA or supplement to an existing NDA if new clinical investigations, other than bioavailability studies, that were conducted or sponsored by the applicant are deemed by the FDA to be essential to the approval of the application, for example, new indications, dosages or strengths of an existing drug. This three-year exclusivity covers only the conditions of use associated with the new clinical investigations and does not prohibit the FDA from approving ANDAs for the original non-modified version of the drug. Five-year and three-year exclusivity will not delay the submission or approval of a full NDA. However, an applicant submitting a full NDA would be required to conduct or obtain a right of reference to all of the preclinical studies and adequate and well-controlled clinical trials necessary to demonstrate safety and effectiveness.
Pediatric exclusivity is another type of regulatory market exclusivity in the United States. Pediatric exclusivity, if granted, adds six months to existing regulatory exclusivity periods. This six-month exclusivity may be granted based on the voluntary completion of a pediatric trial in accordance with an FDA-issued “Written Request” for such a trial.
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. After approval, most changes to the approved product, such as adding new indications or other labeling claims are subject to prior FDA review and approval. There are continuing, annual user fee requirements for any marketed products and the establishments where such products are manufactured, as well as new application fees for supplemental applications with clinical data.
The FDA may impose a number of post-approval requirements as a condition of approval of an NDA. For example, the FDA may require post-marketing testing, including Phase 4 clinical trials, and surveillance to further assess and monitor the product’s safety and effectiveness after commercialization.
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. Changes to the manufacturing process are strictly regulated and often require prior FDA approval before being implemented. FDA regulations also require investigation and correction of any deviations from cGMP requirements and impose reporting and documentation requirements upon the sponsor and any third-party manufacturers that the sponsor may decide to use. Accordingly, manufacturers must continue to expend time, money, and effort in the area of production and quality control to maintain cGMP compliance.
Once an approval of a drug is granted, the FDA may withdraw the approval if compliance with regulatory requirements and standards is not maintained or if problems occur after the product reaches the market. Later discovery of previously unknown problems with a product, including adverse events of unanticipated severity or frequency, or with manufacturing processes, or failure to comply with regulatory requirements, may result in mandatory revisions to the approved labeling to add new safety information; imposition of post-market studies or clinical trials to assess new safety risks; or imposition of distribution or other restrictions under a REMS program. Other potential consequences include, among other things:
• Restrictions on the marketing or manufacturing of the product, complete withdrawal of the product from the market or product recalls;
• Fines, 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 approvals;
• Product seizure or detention, or refusal to permit the import or export of products; and
• Injunctions or the imposition of civil or criminal penalties.
The FDA strictly regulates marketing, labeling, advertising, and promotion of products that are placed on the market. Drugs may be promoted by a manufacturer and any third parties acting on behalf of a manufacturer only for the approved indications and in a manner consistent with the approved label for the product. 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.
Other healthcare laws
Healthcare providers, physicians, and third party payors play a primary role in the recommendation and prescription of drug products for which we obtain marketing approval. Arrangements with third party payors, healthcare providers and
13
physicians, in connection with the clinical research, sales, marketing and promotion of products, once approved, and related activities, may expose a pharmaceutical manufacturer to broadly applicable fraud and abuse and other healthcare laws and regulations. In the United States, these laws include, without limitation, state and federal anti- kickback, false claims, physician payment transparency, price transparency, and patient data privacy and security laws and regulations, including but not limited to those described below:
• the federal Anti-Kickback Statute, or AKS, which makes it illegal for any person, including a prescription drug manufacturer (or a party acting on its behalf) to knowingly and willfully solicit, receive, offer or pay any remuneration (including any kickback, bribe, or rebate), directly or indirectly, overtly or covertly, in cash or in kind, that is intended to induce or reward, referrals including the purchase recommendation, order or prescription of a particular drug for which payment may be made under a federal healthcare program, such as the Medicare and Medicaid programs. A person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation. In addition, the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the federal False Claims Act, or FCA. Violations of the federal Anti-Kickback Statute are punishable by imprisonment for up to ten years and statutory fines of up to $100,000. Additional criminal fines can be imposed under federal U.S. criminal procedure laws. Civil penalties include statutory amounts of up to $100,000 (adjusted for inflation) per violation, assessments of up to three times the total payments between the parties to the arrangement, and exclusion from participation in the federal healthcare programs or suspension from future participation in Medicare and Medicaid. Further, violation of the federal Anti-Kickback Statute can also form the basis for False Claims Act liability (discussed below). Although there are a number of statutory exceptions and regulatory safe harbors to the federal Anti-Kickback Statute protecting certain common business arrangements and activities from prosecution or regulatory sanctions, the exceptions and safe harbors are drawn narrowly, and practices that involve remuneration to those who prescribe, purchase, or recommend pharmaceutical and biological products, may be subject to scrutiny if they do not fit squarely within an exception or safe harbor;
• the federal civil and criminal false claims laws, including the FCA, which can be enforced through “qui tam” or “whistleblower” actions, and civil monetary penalty laws, which impose criminal and civil penalties against individuals or entities for, among other things, knowingly presenting, or causing to be presented, claims for payment or approval from Medicare, Medicaid, or other federal health care programs that are false or fraudulent; knowingly making or causing a false statement material to a false or fraudulent claim or an obligation to pay or transmit money or property to the federal government; or knowingly concealing or knowingly and improperly avoiding or decreasing such an obligation. A person or entity does not need to have actual knowledge of these statutes or specific intent to violate them in order to have committed a violation. Violations of the False Claims Act can result in civil penalties of up to more than $25,000 per false claim or statement (an amount adjusted annually for inflation) plus three times the amount of damages sustained by the government;
• the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which created additional federal criminal statutes that prohibit 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 of the money or property owned by, or under the custody or control of, any healthcare benefit program, regardless of the payor (e.g., public or private) and knowingly and willfully falsifying, concealing or covering up by any trick or device a material fact or making any materially false statements in connection with the delivery of, or payment for, healthcare benefits, items or services relating to healthcare matters;
• HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, or HITECH, and their respective implementing regulations, which impose requirements on certain covered healthcare providers, health plans, and healthcare clearinghouses as well as their respective business associates that perform services for them that involve the creation, use, receipt, maintenance or disclosure of individually identifiable health information, relating to the privacy, security and transmission of individually identifiable health information;
• the federal Physician Payments Sunshine Act, created under Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010, or collectively, the ACA, and its implementing regulations, which require certain manufacturers of drugs, devices, biological products and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health
14
Insurance Program to report annually to the CMS, under the Open Payments Program, information related to payments or other transfers of value made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors) , nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists, anesthesiologist assistants, certified nurse-midwives, and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members; and
• analogous state and foreign laws and regulations, such as state and foreign anti-kickback, false claims, consumer protection, transparency and disclosure laws, and unfair competition laws which may apply to pharmaceutical business practices, including but not limited to, research, distribution, sales and marketing arrangements as well as submitting claims involving healthcare items or services reimbursed by any third-party payor, including commercial insurers; state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government that otherwise restricts payments that may be made to healthcare providers and other potential referral sources; state laws that require drug manufacturers to file reports with states regarding pricing and marketing information, such as the tracking and reporting of gifts, compensations and other remuneration and items of value provided to healthcare professionals and entities and, in some states, the reporting of drug wholesale acquisition costs or average manufacturer prices, information related to new drug launches, and drug price increases above certain statutory thresholds; state and local laws requiring the registration of pharmaceutical sales representatives; and state and foreign laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts.
Because of the breadth of these laws, it is possible that some of a pharmaceutical manufacturer’s business activities could be subject to challenge under one or more of such laws. Efforts to ensure that business arrangements comply with applicable healthcare laws involve substantial costs. It is possible that governmental and enforcement authorities will conclude that a pharmaceutical manufacturer’s business practices do not comply with current or future statutes, regulations or case law interpreting applicable fraud and abuse or other healthcare laws and regulations. If any such actions are instituted against a pharmaceutical manufacturer, and it is not successful in defending itself or asserting its rights, those actions could have a significant impact on its business, including the imposition of significant civil, criminal and administrative penalties, damages, disgorgement, imprisonment, monetary fines, possible exclusion from participation in Medicare, Medicaid and other federal healthcare programs, reporting obligations and oversight if a pharmaceutical manufacturer becomes subject to integrity and oversight agreements to resolve allegations of non-compliance, contractual damages, reputational harm, diminished profits and future earnings, and curtailment of operations, any of which could adversely affect a pharmaceutical manufacturer’s ability to operate its business and the results of operations. In addition, commercialization of any drug product outside the United States will also likely be subject to foreign equivalents of the healthcare laws mentioned above, among other foreign laws.
In the U.S., numerous federal and state laws, and regulations, including state data breach notification laws, state health information privacy laws, and federal and state consumer protection laws, govern the collection, use, disclosure, and protection of health-related and other personal information. For example, in June 2018, the State of California enacted the California Consumer Privacy Act of 2018, or the CCPA, which came into effect on January 1, 2020 and provides data privacy rights for consumers and operational requirements for companies, which may increase our compliance costs and potential liability. The CCPA gives California residents expanded rights to access and delete their personal information, opt out of certain personal information sharing, and receive detailed information about how their personal information is used. The CCPA provides for civil penalties for violations, as well as a private right of action for data breaches that is expected to increase data breach litigation. While there is currently an exception for protected health information that is subject to HIPAA and clinical trial regulations, as currently written, the CCPA impacts certain of our business activities. Many states have followed California in implementing comprehensive state privacy laws, and the various compliance requirements affiliated with these laws could increase our potential liability and adversely affect our business.
In the event we decide to conduct clinical trials or continue to enroll subjects in our ongoing or future clinical trials, we may be subject to additional privacy restrictions. In the European Union, the collection, use, storage, disclosure, transfer, or other processing of personal data including special categories of personal data such as health data, is subject to the EU General Data Protection Regulation, or EU GDPR. The U.K. has implemented the EU GDPR as the U.K. GDPR (together with the EU GDPR, the GDPR) which sits alongside the U.K. Data Protection Act 2018.
The GDPR is wide-ranging in scope and imposes numerous requirements on controllers (and in more limited cases, processors) that process personal data (i.e., data relating to identified or identifiable individuals), including requirements around (among others): (i) accountability and transparency, (ii) processing personal data lawfully, including specific
15
requirements for obtaining valid consent where consent is the legal basis for processing, (iii) responding to individuals’ requests to exercise their rights in respect of their personal data, (iv) implementing safeguards to protect the security and confidentiality of personal data and to provide notification of personal data breaches to data protection authorities and affected individuals in certain circumstances, (v) having data processing agreements with third parties who process personal data on our behalf, and undertaking due diligence in relation to such third-party processors, and (vi) considering data protection when any new products or services are developed and designed, as well as obligations for data protection impact assessments.
The EU GDPR also prohibits the international transfer of personal data from the EEA to the United States and other countries that are not recognized as having “adequate” data protection laws by the European Commission unless the parties to the transfer have implemented specific safeguards to protect the transferred personal data or a derogation under the EU GDPR can be relied upon. One of the primary safeguards allowing U.S. companies to import personal data from the EEA are standard contractual clauses (EU SCCs) including, a requirement for companies to carry out a transfer privacy impact assessment, or a TIA. A TIA, 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 the EU SCCs will need to be implemented to ensure an “essentially equivalent” level of data protection to that afforded in the EEA. A further potential safeguard is the EU-US Data Privacy Framework which facilitates transfers of personal data from the EU to entities in the US which are self-certified to the DPF. Underpinning the DPF is an “adequacy decision” from the European Commission which can be relied on also by entities making transfers under the EU SCCs to the U.S. as support for their TIA regarding the equivalence of U.S. national security safeguards and redress.
The U.K. GDPR also prohibits the transfer of personal data from the U.K. to countries that the U.K. Government does not recognize as having “adequate” data protection laws, including the U.S., in a similar manner to the EU. In addition, the U.K. Government has published its own form of EU SCCs, known as the International Data Transfer Agreement and an International Data Transfer Addendum to the new EU SCCs. The U.K. Information Commissioner’s Office, or the ICO, has also published its own version of the TIA although companies may choose to either use the EU-style or U.K.-style TIA. Further, on September 21, 2023, the U.K. Secretary of State for Science, Innovation and Technology established a U.K.-U.S. data bridge (i.e., a U.K. equivalent of the Adequacy Decision) and adopted U.K. regulations to implement the U.K.-U.S. data bridge. Personal data may now be transferred from the U.K. under the U.K.-U.S. data bridge through the U.K. extension to the DPF to organizations self-certified under the U.K. extension to DPF.
The GDPR permits data protection authorities to impose large penalties for violations of the GDPR, including potential fines of up to €20 million (£17.5 million under the U.K. GDPR) or 4% of annual global revenues, whichever is greater. The GDPR also confers a private right of action on data subjects and consumer associations to lodge complaints with supervisory authorities, seek judicial remedies, and obtain compensation for damages resulting from violations of the EU GDPR. The GDPR may increase our responsibility and liability in relation to personal data that we process where such processing is subject to the GDPR, and we may be required to put in place additional mechanisms to ensure compliance with the GDPR, including as implemented by individual countries in the EEA or required in connection with our clinical trials. Compliance with the GDPR is a rigorous and time-intensive process that increases our cost of doing business and increases risk that we may be subject to fines and penalties, litigation, and reputational harm in connection with our European activities.
Current and future healthcare reform legislation
In both the United States and certain foreign jurisdictions, there have been a number of legislative and regulatory changes to the health care system. For example, in the United States, in March 2010, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, collectively known as the ACA, was enacted, which substantially changed the way healthcare is financed by both governmental and private payors, and significantly affected the pharmaceutical industry. The ACA, among other things, addressed a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are inhaled, infused, instilled, implanted or injected, 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 and established annual fees and taxes on manufacturers of certain branded prescription drugs. There have been numerous historic judicial, administrative, executive, and legislative challenges and amendments (including recent amendments that aimed at expanding access to care and reforming prescription drug pricing) to certain aspects of the ACA and other healthcare laws. In June 2021, the Supreme Court dismissed a lawsuit challenging the constitutionality of certain aspects of the ACA, without ruling on the meris of the constitutionality arguments. In the future, there may be additional legislative, regulatory, executive, or judicial actions that result in healthcare reform. It remains to be seen precisely what any new reforms will provide, when or if they will be enacted, and what impact they will have on the availability and cost of healthcare items and services, including drug products.
16
Other legislative and regulatory changes have been proposed or adopted in the United States since the ACA was enacted, including several legislative and regulatory changes that are focused on capping or reducing healthcare costs, as well as measures that would address healthcare fraud and abuse, value-based care, drug pricing and other reforms. For example, in August 2022, President Biden signed into law the IRA, 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 IRA imposes inflation rebates on drug manufacturers for products reimbursed under Medicare Parts B and D if the prices of those products increase faster than inflation; implements changes to the Medicare Part D benefit that, beginning in 2025, will cap benefit annual out-of-pocket spending at $2,000, while imposing new discount obligations for pharmaceutical manufacturers (requiring manufacturers to pay 10% of the negotiated price of brands, biologics and biosimilar products when Medicare Part D beneficiaries are in the initial coverage phase, and 20% of the negotiated price during the catastrophic phase of Medicare Part D coverage); and, beginning in 2026, establishes a “maximum fair price” for a fixed number of high spend pharmaceutical and biological products covered under Medicare Parts B and D following a price negotiation process with the Centers for Medicare and Medicaid Services. The IRA explicitly excludes from price negotiation orphan drugs designated for only one rare disease or condition and for which the only approved indication is for such disease or condition. However, those drugs with multiple orphan designations are not explicitly excluded from drug price negotiation.
Since its enactment, CMS has taken a number of steps to implement various drug pricing provisions of the IRA. This includes, without limitation, issuing new and updated guidance detailing the requirements and parameters of the price negotiation process for products subject to the “maximum fair price” program under the IRA; releasing the initial list of 10 drugs covered under Medicare Part D that were subject to the first round of price negotiations under the program and subsequently announcing the “maximum fair prices” that will apply for such products in price applicability year 2026; and releasing a list of Medicare Part B products with an adjusted coinsurance rate based on the inflationary rebate provisions of the IRA. It remains to be seen how the maximum fair prices or other drug pricing provisions imposed by the IRA will affect orphan drug and small molecule development or the broader pharmaceutical industry. Several pharmaceutical manufacturers and other industry stakeholders have challenged the law, including through lawsuits brought against the HHS, the Secretary of HHS, CMS, and the CMS Administrator challenging the constitutionality and administrative implementation of the IRA’s drug price negotiation provisions. We cannot predict whether the IRA, or any of its component parts, will be overturned, repealed, replaced, or amended nor can we predict the likelihood, nature, or extent of other health reform initiatives that may arise from future legislation, administrative, or other action. However, we expect these initiatives to increase pressure on drug pricing.
The increasing efforts by governmental and third-party payors in the United States and abroad to cap or reduce healthcare costs may cause such organizations to limit both coverage and the level of reimbursement for newly approved products and, as a result, they may not cover or provide adequate payment for our product candidates. There has been increasing legislative, regulatory and enforcement interest in the United States with respect to specialty drug pricing practices. For example, there have been several recent U.S. Congressional inquiries and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to drug pricing, reduce the cost of prescription drugs under Medicare, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for drugs.
On June 28, 2024, the U.S. Supreme Court issued an opinion holding that courts reviewing agency action pursuant to the Administrative Procedure Act, or the APA, “must exercise their independent judgment” and “may not defer to an agency interpretation of the law simply because a statute is ambiguous.” The decision will have a significant impact on how lower courts evaluate challenges to agency interpretations of law, including those by the FDA, CMS and other agencies with significant oversight of the biopharmaceutical industry. The new framework is likely to increase both the frequency of such challenges and their odds of success by eliminating one way in which the government previously prevailed in such cases. As a result, significant regulatory policies may be subject to increased litigation and judicial scrutiny. Any resulting changes in regulation may result in unexpected delays, increased costs, or other negative impacts on our business that are difficult to predict.
At the state level, legislatures are increasingly passing legislation and implementing regulations designed to control biopharmaceutical and biologic product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access, marketing cost disclosure and other transparency measures, and, in some cases, legislation, regulation or other guidance designed to encourage or facilitate importation from other countries and bulk purchasing. Some states have also established prescription drug affordability boards tasked with identifying certain high-cost prescription products that may pose affordability challenges for consumers and payors, conducting cost reviews on such products, and, in some circumstances, imposing upper payment limits on such products.
These laws, regulations, and actions, and any state or federal healthcare reform measures that may be adopted in the future, could reduce coverage or reimbursement from Medicare and other government programs, may result in a similar
17
reduction in coverage or payment from private payors, and may otherwise affect the prices we may obtain for any of our product candidates for which we may obtain regulatory approval or the frequency with which any such product candidate is prescribed or used. Additionally, we expect to experience pricing pressures in connection with the sale of any future approved product candidates due to the trend toward managed healthcare, the increasing influence of health maintenance organizations, cost containment initiatives and additional legislative and regulatory changes.
Legislative and regulatory proposals, and enactment of laws, at the foreign, federal, and state levels, directed at containing or lowering the cost of healthcare, will likely continue into the future.
Rest of World Regulation
For other countries outside of the European Union and the United States, such as countries in Eastern Europe, Latin America or Asia, the requirements governing product development, the conduct of clinical trials, manufacturing, distribution, marketing approval, product licensing, pricing and reimbursement vary from country to country. Additionally, clinical trials must be conducted in accordance with GCP requirements and the applicable regulatory requirements and the ethical principles that have their origin in the Declaration of Helsinki.
If we fail to comply with applicable foreign regulatory requirements, we may be subject to, among other things, fines, suspension or withdrawal of regulatory approvals, product recalls, seizure of products, operating restrictions, and criminal prosecution.
Additionally, to the extent that any of our product candidates, once approved, are sold in a foreign country, we may be subject to applicable post-marketing requirements, including safety surveillance, anti-fraud and abuse laws and implementation of corporate compliance programs and reporting of payments or other transfers of value to healthcare professionals.
European Union clinical trials regulation and clinical data sharing
In the EU, a Clinical Trial Application, or CTA, must be submitted for each clinical trial to each country’s national competent authority, or NCA, and at least one independent Ethics Committee, or EC, much like the FDA and an IRB, respectively. Once the CTA is approved in accordance with a country’s requirements, the corresponding clinical trial may proceed. Under the current regime (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) all suspected unexpected serious adverse reactions to the investigated drug that occur during the clinical trial have to be reported to the NCA and ECs of the Member State where they occurred.
In addition to data privacy requirements, many jurisdictions have mandatory clinical trial information obligations on sponsors. In the EU this is under the Transparency Regulation No 1049/ 2001, EMA Policy 0043, EMA Policy 0070, as well as the Clinical Trials Regulation No 536/2014, all of which impose on sponsors the obligation to make publicly available certain information stemming from clinical studies, either proactively or in response to third party requests. In the EU, the transparency framework provides for a wide right for (EU-based at the moment) interested parties to submit an access to documents request to the EMA for information included in the marketing authorization application dossier for approved medicinal products. Only very limited information is exempted from disclosure, i.e. commercially confidential information (which is construed increasingly narrowly) and protected personal data. It is possible for competitors to access and use this data in their own research and development programs anywhere in the world, once this data is in the public domain.
On May 3, 2022, the European Commission published a proposal for a regulation on the European Health Data Space, or 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). The regulation was adopted by the European Parliament in April 2024 and by the European Council in 2025 and will enter into force twenty days after its publication in the Official Journal of the European Union. 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.
European drug review and approval
To obtain a marketing authorization in the EEA (comprising the EU Member States, plus Norway, Iceland, and Liechtenstein), a company may submit marketing authorization applications either under a centralized procedure administered by the EMA or one of the procedures administered by competent authorities in the EEA Member States (decentralized procedure, national procedure, or mutual recognition procedure). The centralized procedure is compulsory for certain medicines, including those produced by biotechnology, products designated as orphan medicinal products, advanced therapy medicinal products (gene therapy, somatic cell therapy and tissue-engineered products) and those with a
18
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 is optional for those medicines which contain 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. The centralized procedure provides for the grant of a single marketing authorization that is valid throughout the EEA. Under the centralized procedure, the maximum timeframe for the evaluation of a marketing authorization application, or MAA, by the EMA is 210 days, excluding clock stops, when additional written or oral information is to be provided by the applicant in response to questions asked by the EMA's Committee for Medicinal Products for Human Use, or CHMP. Clock stops may extend the timeframe of evaluation of a MAA considerably beyond 210 days. Where the CHMP gives a positive opinion, it provides the opinion together with supporting documentation to the European Commission, who make the final decision to grant a marketing authorization, which is issued within 67 days of receipt of the EMA’s positive opinion. On April 26, 2023, the European Commission adopted a proposal for a new Regulation set to replace Regulation (EC) No 726/2004 and a new Directive replacing Directive 2001/83 on the Community Code relating to medicinal products for human use. If made into law, this proposal will revise the existing general pharmaceutical legislation. This reform would provide for a simplified regulatory framework with faster authorizations of new medicines. For instance, for its assessment, EMA will have 180 days instead of 210 days. For the authorization, the Commission will have 46 days instead of 67 days. Furthermore, the scope of the centralized procedure, would be extended to include priority antimicrobial medicinal products and products seeking a pediatric use marketing authorization. Accelerated assessment might be granted by the CHMP in exceptional cases, when a medicinal product is expected to be of major public health interest, particularly from the point of view of therapeutic innovation. The timeframe for the evaluation of a MAA under the accelerated assessment procedure is 150 days, excluding clock stops, but it is possible that the CHMP may revert to the standard time limit for the centralized procedure if it determines that it is no longer appropriate to conduct an accelerated assessment. As far as pediatric marketing authorization applications are concerned, all applications for marketing authorization for new medicines have to include the results of studies as described in an agreed Pediatric Investigation Plan (PIP), unless the medicine is exempt because of a deferral or waiver
Through the decentralized procedure, a medicinal product that has not yet been authorized in the EEA can be simultaneously authorized in several EEA Member States. The mutual recognition procedure provides for mutual recognition of national approval decisions. Under this procedure, the holder of a national marketing authorization may submit an application to other EEA Member States. Within 90 days of receiving the applications and assessment reports, each Member State involved must decide whether to recognize the approval. If a Member State does not recognize the marketing authorization, the disputed points are eventually referred to the European Commission, whose decision is binding.
To obtain a marketing authorization in Switzerland, a company must submit a marketing authorization application to Swissmedic, Switzerland’s national authorization and supervisory authority for medicinal products and medical devices. There are no international agreements on mutual recognition of authorizations in relation to medicinal products. However, marketing authorization dossiers can be submitted to Swissmedic with clinical data, irrespective of the location where a clinical trial was conducted, that were collected in accordance with globally applicable international standards such as the Good Clinical Practice, or GCP, of the International Conference on Harmonization, or ICH, which are based on the Declaration of Helsinki. Furthermore, if a medicinal product or procedure is already authorized in a country having equivalent medicinal product control, the results of tests carried out for this purpose shall be taken into account. According to Swissmedic's practice, this includes the authorization procedures of the following countries: Australia, the member states of the EU, the EFTA states in the EEA (Liechtenstein, Norway and Iceland), Japan, Canada, New Zealand, Singapore, the United Kingdom and the United States.
Since the U.K. (which comprises Great Britain and Northern Ireland) left the EU, Great Britain is no longer covered by centralized marketing authorizations, but they continued to be recognized in Northern Ireland under the Northern Irish Protocol. However, this has changed since January 1, 2025, when new measures implemented by the Windsor Framework came into effect in the U.K. The new measures include, among others, the removal of EU licensing processes in relation to Northern Ireland for novel medicines (i.e. those that were authorized under the EU centralized procedure). This means that marketing authorizations granted by the European Commission are no longer valid in Northern Ireland. Companies therefore no longer need to apply for separate licenses for Great Britain and Northern Ireland to market the same novel medicines across the whole U.K. All medicinal products with an existing centralized marketing authorization were automatically converted to Great Britain marketing authorizations on January 1, 2021. 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, or ILAP, a new accelerated assessment procedure for marketing authorization applications facilitating the interaction with pricing authorities and HTA bodies and aiming to enable companies to enter the U.K. market faster. On January 1, 2024, the MHRA launched a new International Recognition Procedure for Great Britain (England, Scotland and Wales) marketing authorization applications whereby the MHRA will, when considering such
19
applications, recognize the approval of medicines by Australia, Canada, Switzerland, Singapore, Japan, United States and the EU following its own abbreviated assessment.
European orphan drug designation and exclusivity
As in the U.S., we may apply for designation of a product candidate as an orphan drug for the treatment of a specific indication in the EEA before the application for marketing authorization is made. The criteria for designating an “orphan medicinal product” in the EEA are similar in principle to those in the United States. Under Article 3 of Regulation (EC) 141/2000, a medicinal product may be designated as an orphan medicinal product if it meets the following criteria: (1) is intended for the diagnosis, prevention or treatment of a life-threatening or chronically debilitating condition; and (2) either the prevalence of such condition must not be more than five in 10,000 persons in the EU when the application is made, or without the benefits derived from orphan status, it must be unlikely that the marketing of the medicine would generate sufficient return in the EU to justify the investment needed for its development; and (3) there exists no satisfactory method of diagnosis, prevention or treatment of such condition authorized for marketing in the EU or if such a method exists, the product will be of significant benefit to those affected by the condition, as defined in Regulation (EC) 847/2000. Sponsors of orphan drugs can enjoy economic and marketing benefits, including a reduction of fees or fee waivers and up to ten years of market exclusivity for the approved indication which can be further extended by two years under certain circumstances; namely when the pediatric studies have been conducted in accordance with an agreed PIP and other requirements are satisfied. During such period of market exclusivity, marketing authorization applications for “similar medicinal products” will not be accepted, unless another applicant can show that its product is safer, more effective or otherwise clinically superior to the orphan-designated product, the marketing authorization holder consents to the second orphan medicinal product application, or where the marketing authorization holder cannot supply enough orphan medicinal product. In the EEA, a “similar medicinal product” is a medicinal product containing a similar active substance or substances as contained in a currently authorized orphan medicinal product, and which is intended for the same therapeutic indication. 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.
The general pharmaceutical legislative framework, as well as the framework applicable to orphan and pediatric medicinal products in the EU, is under review. On April 26, 2023, the European Commission adopted a proposal for a new Regulation set to replace Regulation (EC) No 726/2004 and a new Directive replacing Directive 2001/83 on the Community Code relating to medicinal products for human use. If made into law, this proposal will revise the existing general pharmaceutical legislation and may reduce applicable regulatory exclusivities which will significantly affect all medicinal products that will be authorized after the legislative changes have taken effect.
Brexit and the regulatory framework in the United Kingdom
The U.K. officially left the EU on January 31, 2020. A transition period began on February 1, 2020, during which EU pharmaceutical law remained applicable to the U.K. This transition period ended on December 31, 2020. Since the regulatory framework in the U.K. covering the quality, safety and efficacy of pharmaceutical products, clinical trials, marketing authorization, commercial sales and distribution of pharmaceutical products is derived from EU Directives and Regulations, it continues to apply presently as “Retained EU Law”. However, as U.K. legislation now has the potential to diverge from EU legislation, the future regulatory regime which applies to products and the approval of product candidates in the U.K. may change. It remains to be seen how Brexit will impact regulatory requirements for product candidates and products in the U.K. in the long-term. The MHRA published detailed guidance for industry and organizations to follow which will be updated as the U.K.’s regulatory position on medicinal products evolves over time.
‘Retained EU Law,’ generally has prevented substantial divergence to the regulation of medicines. However, some changes to the U.K. legislation have been necessary, including the implementation of the Northern Ireland Protocol (NIP), pursuant to which the EU pharmaceutical legal framework continues to apply in Northern Ireland (subject to periodic consent of the Northern Ireland Legislative Assembly), and only products compliant with EU law can be placed in the Northern Ireland market. This dynamic adds an extra layer of regulatory complexity for companies withing to commercialize medicinal products in Great Britain (namely, England, Wales and Scotland, as EU law continues to apply in Northern Ireland), as such companies now need to comply with separate U.K. regulatory legal framework. In 2023, the U.K. enacted the Retained EU Law (Revocation and Reform) Act 2023 which allows for the revocation of Retained EU Law. In particular, this Act:
• revokes a long list of specific EU-derived subordinate legislation and retained direct EU legislation,
• renames any continuing Retained EU Law as ‘assimilated law’,
20
• changes the way in which assimilated law is interpreted by removing the general principles of EU law as an aid to interpretation and ceasing the application of the supremacy of EU law from 1 January 2024, and
• provides ministers with wide-ranging powers to restate, revoke or replace assimilated law.
The U.K. Government and the European Union recently adopted a new agreement, the “Windsor Framework,” which modifies the Northern Ireland Protocol. According to the Windsor Framework, medicinal products intended for the U.K. market, including Northern Ireland, will be authorized by the MHRA and will bear a “U.K. only” label. These new measures became effective January 1, 2025. The Trade and Cooperation Agreement signed between the U.K. and the EU allows for future deviation from the current regulatory framework and it is not known if and/or when any deviations may occur, which may have an impact on development, manufacture, marketing authorization, commercial sales and distribution of pharmaceutical products.
Coverage and reimbursement
Successful commercialization of new drug products depends in part on the extent to which coverage and reimbursement, as applicable, for those drug products will be available from government health administration authorities, private health insurers, and other organizations. Government authorities and third-party payors, such as private health insurers and health maintenance organizations, decide which drug products they will cover and pay for and establish reimbursement levels. The availability and extent of coverage and reimbursement by governmental and private payors is essential for most patients to be able to afford a drug product. Sales of drug products depend substantially, both domestically and abroad, on the extent to which drugs are covered and the costs of drugs products are paid for by health maintenance, managed care, pharmacy benefit and similar healthcare management organizations, or covered and reimbursed by government health administration authorities, private health coverage insurers and other third-party payors.
A primary trend in the U.S. healthcare industry and elsewhere is cost containment. Government authorities and third-party payors have attempted to control costs by limiting coverage and the amount of reimbursement for particular drug products. In many countries, the prices of drug products are subject to varying price control mechanisms as part of national health systems. In general, the prices of drug products under such systems are substantially lower than in the United States. Other countries allow companies to fix their own prices for drug products but monitor and control company profits. Accordingly, in markets outside the United States, the reimbursement for drug products may be reduced compared with the United States.
In the United States, the decisions about Medicare reimbursement for new drug products are typically made by CMS, an agency within the U.S. Department of Health and Human Services, or HHS. CMS decides whether and to what extent a new drug product will be covered and reimbursed under Medicare, and private payors tend to follow CMS coverage guidelines. However, no uniform policy of coverage and reimbursement for drug products exists among third-party payors and coverage and reimbursement levels for drug products can differ significantly from payor to payor.
The Medicare Prescription Drug, Improvement, and Modernization Act of 2003, or the MMA, established the Medicare Part D program to provide a voluntary prescription drug benefit to Medicare beneficiaries. Under Part D, Medicare beneficiaries may enroll in prescription drug plans offered by private entities that provide coverage of outpatient prescription drugs. While all Medicare drug plans must give at least a standard level of coverage set by Medicare, Part D prescription drug plan sponsors are not required to pay for all covered Part D drugs, and each Part D prescription drug plan can develop its own drug formulary that identifies which drugs it will cover and at what tier or level. However, Part D prescription drug formularies must include drugs within each therapeutic category and class of covered Part D drugs, though not necessarily all the drugs in each category or class and with some exceptions for certain classes of drugs. Any formulary used by a Part D prescription drug plan must be developed and reviewed by a pharmacy and therapeutic committee. Government payment for some of the costs of prescription drugs may increase demand for drugs for which we obtain marketing approval. Any negotiated prices for any of our products covered by a Part D prescription drug plan will likely be lower than the prices we might otherwise obtain. Additionally, beginning in 2025, manufacturers must pay additional discounts for products covered under Medicare Part D. Moreover, while the MMA Part D plan policies applies only to drug benefits for Medicare beneficiaries, private payors often follow Medicare coverage policies and payment limitations in setting their own payment rates and coverage guidelines. Any reduction in payment restrictions in Part D coverage that results from the MMA may result in a similar reduction in payment restrictions from non-governmental payors.
For a drug product to receive federal reimbursement under the Medicaid or Medicare Part B programs or to be sold directly to U.S. government agencies, the manufacturer must participate in certain other Federal health care programs and also extend discounts to entities eligible to participate in the 340B drug pricing program. The required 340B discount on a given product is calculated based on the average manufacturer price, or AMP, and Medicaid rebate amounts reported by the manufacturer. As of 2010, the ACA expanded the types of entities eligible to receive discounted 340B pricing, although
21
under the current state of the law these newly eligible entities (with the exception of children’s hospitals) will not be eligible to receive discounted 340B pricing on orphan drugs. As 340B drug pricing is determined based on AMP and Medicaid rebate data, any revisions to the Medicaid rebate formula or AMP definition could cause the required 340B discount to increase. The 340B drug pricing program may be subject to future changes in light of ongoing litigation and attempts to reform the program, including legislative proposals to reform the 340B program. It is unclear how any such changes could affect our obligation to offer 340B pricing to certain entities.
These laws, and future state and federal healthcare reform measures may be adopted in the future, any of which may result in additional reductions in Medicare and other healthcare funding and otherwise affect the prices we may obtain for any product candidates for which we may obtain regulatory approval or the frequency with which any such product candidate is prescribed or used.
Outside of the United States, the pricing of pharmaceutical products and medical devices is subject to governmental control in many countries. For example, in the European Union, pricing and reimbursement schemes vary widely from country to country. Some countries provide that products may be marketed only after a reimbursement price has been agreed. Some countries may require the completion of additional studies that compare the cost effectiveness of a particular therapy to currently available therapies or so-called health technology assessments, or HTA, in order to obtain reimbursement or pricing approval. The outcome of HTA assessments is decided on a national basis and some payors may not reimburse the use of assessed products or may reduce the rate of reimbursement for such products. In December 2021, the EU adopted a new Regulation on Health Technology Assessment. The Regulation creates collaborative structures and procedures that allow Member States to carry out joint clinical assessments, effect joint clinical consultations and identify jointly emerging health technologies and came into effect on January 12, 2025.
Other countries may allow companies to fix their own prices for products but monitor and control product volumes and issue guidance to physicians to limit prescriptions. Efforts to control prices and utilization of pharmaceutical products and medical devices will likely continue as countries attempt to manage healthcare expenditures.
Human Capital Resources
As of December 31, 2024, we had 171 full-time employees, including 51 with Ph.D. or M.D. degrees. Of our employees, 117 were engaged in research and development activities, and 54 were engaged in general and administrative activities. None of our employees are represented by labor unions or covered by collective bargaining agreements, and we have experienced no work stoppages. We consider our relationship with our employees to be good.
We rely on skilled, experienced, and innovative employees to conduct the operations of our company and we continue to face intense competition for our personnel from our competitors and other companies throughout our industry. The biotechnology industry is very competitive and recruiting and retaining such employees is important to the continued success of our business. We are committed to building an outstanding, committed team and fostering a rewarding work environment and a culture that values scientific innovation, inclusion, collaboration, and equity. We believe that each employee brings unique perspectives and strengths, and by embracing these strengths, we can do our best work for patients. We focus on recruiting, retaining, and developing employees from a wide range of backgrounds to conduct our research, development, and clinical activities.
As part of our measures to attract and retain a highly skilled workforce, we offer a competitive suite of benefits to our full-time employees to help support their health and financial well-being, including medical, dental and vision insurance, life insurance, 401k retirement program with a company match, flexible spending accounts, paid holiday and vacation time, and flexible work arrangements. We provide our employees with competitive salaries and bonuses, opportunities for equity ownership, development opportunities that enable continued learning and growth and a robust recognition program that recognizes and celebrates their accomplishments. In addition, we regularly conduct an employee survey to gauge employee engagement and identify areas of focus.
Corporate and Available Information
We were incorporated under the laws of the State of Delaware in June 2015. Our principal executive office is located at 331 Oyster Point Boulevard, South San Francisco, California 94080, and our telephone number is (650) 481-6770. Our website address is https://pliantrx.com.
We file or furnish electronically with the SEC annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act. We make copies of these reports available free of charge through our investor relations website as soon as reasonably practicable after we file or furnish them with the SEC. The SEC maintains an Internet site that contains reports, proxy and information statements and other information regarding our filings at www.sec.gov.
22
Information contained on or accessible through our websites is not incorporated into, and does not form a part of, this Annual Report or any other report or document we file with the SEC, and any references to our websites are intended to be inactive textual references only.