What changed in this filing

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Item 1A. Risk Factors

2021-11-03 compared with 2021-08-04 · 44 added, 38 removed, 589 unchanged (12% of the section changed)

13 unchanged sentences

● Clinical development is a lengthy and expensive process with an uncertain outcome, and failure can occur at any stage of clinical development.

● Our product candidates may cause undesirable side effects or have other properties adversely impacting safety that delay or prevent their regulatory approval, restrict their approved labeling, or otherwise limit their commercial opportunity, including being required by an independent data monitoring committee or regulatory authorities to, delay or halt our clinical trials, or if such side effects or adverse events are sufficiently severe or prevalent, order us to suspend or cease altogether further development of our product candidates.

Under “ Risks Related to Financial Position and Capital Requirements ” we describe risks associated with our financial position and future capital requirements.

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Such authorities may impose a modification, suspension or termination due to a number of factors.

For example, on September 16, 2021, a full clinical hold by the FDA for the rusfertide clinical studies was triggered by a non-clinical finding in a 26-week rasH2 transgenic mouse model indicating benign and malignant subcutaneous skin tumors.

On October 8, 2021, the FDA removed the full clinical hold on our rusfertide clinical studies and dosing in all clinical studies of rusfertide could be resumed.

For additional information, see Risk Factor – “Our product candidates may cause undesirable side effects or have other properties adversely impacting safety that delay or prevent their regulatory approval, restrict their approved labeling, or otherwise limit their commercial opportunity” below.

In addition, there are a significant number of global clinical trials in inflammatory bowel disease and in hematologic disorders that are currently ongoing, especially in Phases 2 and 3, making it highly competitive and challenging to recruit subjects.

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If undesirable side effects or adverse events are caused by our product candidates or by other companies’ similar approved drugs or product candidates, then we may elect to, or be required by an independent data monitoring committee or regulatory authorities to, delay or halt our clinical trials.

If such side effects or adverse events are sufficiently severe or prevalent, the FDA or comparable foreign regulatory authorities could order us to suspend or cease altogether further development of our product candidates.

If such side effects or adverse events are

sufficiently severe or prevalent, the FDA or comparable foreign regulatory authorities could order us to suspend or cease altogether further development of our product candidates.

Even if our product candidates are approved, side effects or adverse events could result in significant delay in or denial of, regulatory approval, restrictive labeling, or potential product liability claims.

Moreover, since our product candidate PN-943 and the product candidates under development in our collaboration with Janssen are in development for indications for which injectable antibody drugs have been approved, clinical trials for those product candidates may need to show a risk/benefit profile that is competitive with those existing products in order to obtain regulatory approval or, if approved, a product label that is favorable for commercialization.

For example, on September 16, 2021 the Company’s clinical studies for rusfertide placed on a full clinical hold by the FDA.

On October 8, 2021, per the FDA, the full clinical hold was lifted and dosing in all clinical studies of rusfertide could be resumed.

We provided the FDA with all requested information as the basis for a Complete Response and subsequent removal of the clinical hold.

In particular, we provided the requested individual patient clinical safety reports, updated the investigator brochure and patient informed consent forms, performed a comprehensive review of the most recent safety database, and included new safety and stopping rules in the study protocols.

We are working closely with study investigators and clinical trial sites to resume dosing of patients in ongoing clinical trials with rusfertide after patients have been reconsented.

The clinical hold was initially triggered by a recent non-clinical finding in a 26-week rasH2 transgenic mouse model indicating benign and malignant subcutaneous skin tumors.

The rasH2 signal also prompted a re-examination of the four cases of cancer observed across all rusfertide clinical trials involving over 160 patients, and a comprehensive review of the safety database, including cases of suspected unexpected serious adverse reactions.

No additional cancer cases, and no other unexpected safety signals, surfaced in this process.

We have focused our limited resources to pursue particular product candidates and indications, and consequently, we may fail to capitalize on product candidates or indications that may be more profitable or for which there is a greater likelihood of success.

7 unchanged sentences

We have incurred significant operating losses every year since inception and expect to continue to incur operating losses for the foreseeable future.

As of June 30, 2021, we had an accumulated deficit of $338.7 million.

As of September 30, 2021, we had an accumulated deficit of $372.5 million.

We expect to continue to incur significant research, development and other expenses related to our ongoing operations and product development.

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Absent the funding support from this agreement, our further development of the collaboration product candidates would require significant additional capital from us, or the establishment of alternative collaborations with third parties, which may not be possible.

As of June 30, 2021, we had cash, cash equivalents and marketable securities of $380.4 million.

Based upon our current operating plan and expected expenditures, we believe that our existing cash, cash equivalents, and marketable securities and proceeds from our debt facility will be sufficient to fund our operations for at least the next 12 months.

However, we expect that we will need to have access substantial additional funds in the future in order to complete clinical development or commercialize our product candidates to a point where we can operate profitability.

As of September 30, 2021, we had cash, cash equivalents and marketable securities of $352.5 million.

Based upon our current operating plan and expected expenditures, we believe that our existing cash, cash equivalents, and marketable securities will be sufficient to fund our operations for at least the next 12 months.

However, we expect that we will need to have access to substantial additional funds in the future in order to complete clinical development or commercialize our product candidates to a point where our operations generate net cash inflows.

Raising additional capital may cause dilution to our existing stockholders, restrict our operations or require us to relinquish rights to our product candidates or technologies.

1 unchanged sentence

Additional funding may not be available to us on acceptable terms, or at all.

to raise additional capital may be adversely impacted by adverse economic conditions and market volatility.

Our ability to raise additional capital may be adversely impacted by adverse economic conditions and market volatility.

The incurrence of indebtedness and/or the issuance of certain equity securities could result in fixed payment obligations and could also result in certain additional restrictive covenants, such as limitations on our ability to incur debt and/or issue additional equity, limitations on our ability to acquire or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business.

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If we issue common stock or securities convertible into common stock, our common stockholders would experience additional dilution and, as a result, our stock price may decline.

Covenants in our credit and security agreement restrict our business and operations in many ways and if we do not effectively manage our covenants, our financial condition and results of operations could be adversely affected.

In October 2019, we entered into a credit and security agreement (the “Credit Agreement”) pursuant to which $20.0 million remains available.

All of our assets, except for intellectual property and certain other customary excluded property, are pledged collateral under the Credit Agreement.

The Credit Agreement contains numerous affirmative and negative covenants, including, among other things, restrictions on indebtedness, liens, investments, mergers, dispositions, prepayment of other indebtedness and dividends and other distributions, any of which could restrict our business and operations, particularly our ability to respond to changes in our business or to take specified actions to take advantage of certain business opportunities that may be presented to us.

Our failure to comply with any of the covenants could result in a default under the Credit Agreement, which would permit the lenders to declare all or part of any outstanding borrowings to be immediately due and payable, or to refuse to permit additional borrowings under the loan and security agreement.

Risks Related to Our Reliance on Third Parties

12 unchanged sentences

Even if we establish other collaboration arrangements, any such collaboration may not ultimately be successful, which could have a negative impact on our business, results of operations, financial condition and growth prospects.

If we enter into collaborations limited to certain territories, we may not maintain significant rights or control of future development and commercialization of any product candidate subject to the collaboration and potential disputes could develop in the future over the terms of the collaboration and the respective rights of the parties, such as our ongoing dispute with Zealand related to our collaboration that ended in 2014.

We rely on third parties to conduct our pre-clinical studies and clinical trials.

15 unchanged sentences

If we and our contract manufacturers are not successful in converting to commercial-scale manufacturing, then our product costs may not be competitive and the development and/or commercialization of our product candidates would be materially adversely affected.

Moreover, our contract manufacturers are the sole source of

supply for our clinical product candidates.

Moreover, our contract manufacturers are the sole source of supply for our clinical product candidates.

If we were to experience an unexpected loss of supply for any reason, whether as a result of manufacturing, supply or storage issues, natural disasters, the ongoing COVID-19 pandemic or otherwise, we could experience delays, disruptions, suspensions or termination of our clinical study and planned development program, or be required to restart or repeat, any ongoing clinical trials.

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Any failure or delay in the development of our internal sales, marketing and distribution capabilities would adversely impact the commercialization of these products.

With respect to our product candidates, we may choose to partner with third parties that have direct sales forces and established distribution systems, either to augment our own sales force and distribution systems or in lieu of our own sales force and distribution systems, and in the case of the Janssen License and Collaboration Agreement, we may elect to exercise our Co-Detailing Option (allows us to elect to provide up to 30% of the selling effort in the United States for PTG-200 and/or any second-generation compounds approved for commercial sale), which would require us to establish a U.S.

With respect to our product candidates, we may choose to partner with third parties that have direct sales forces and established distribution systems, either to augment our own sales force and distribution systems or in lieu of our own sales force and distribution systems, and in the case of the Janssen License and Collaboration Agreement, we may elect to exercise our Co-Detailing Option (allows us to elect to provide up to 30% of the selling effort in the United States for any IL-23R antagonist compounds approved for commercial sale), which would require us to establish a U.S.

If we are not successful in commercializing our product candidates, either on our own or through collaborations with one or more third parties, our future revenue will be materially and adversely impacted.

12 unchanged sentences

Additionally, on December 18, 2019, the U.S.

Court of Appeals for the 5th Circuit upheld the District Court ruling that the individual mandate was unconstitutional and remanded the case back to the District Court to determine whether the remaining provisions of the ACA are invalid as well.

Supreme Court is currently reviewing this case, but it is unclear when a decision will be made.

50 unchanged sentences

For example, one widely used treatment for PV and hereditary hemochromatosis (“HH”) patients is phlebotomy and/or chelation therapy.

While patients may not like therapies that involve frequent blood draws, these therapies are inexpensive and may present pricing challenges for us if our drug candidates are successfully developed and approved.

While patients may not like therapies that involve frequent blood draws, these

therapies are inexpensive and may present pricing challenges for us if our drug candidates are successfully developed and approved.

If we fail to comply with state and federal healthcare regulatory laws, we could face substantial penalties, damages, fines, disgorgement, integrity oversight and reporting obligations, exclusion from participation in governmental healthcare programs, and the curtailment of our operations, any of which could adversely affect our business, operations, and financial condition.

17 unchanged sentences

Federal and state enforcement bodies have continued to increase their scrutiny of interactions between healthcare companies and healthcare providers, which has led to a number of significant investigations, prosecutions, convictions and settlements in the healthcare industry.

Additionally, as a result of these investigations, healthcare providers and entities may have to agree to additional onerous compliance and reporting requirements as part of a consent decree or corporate integrity agreement.

Additionally, as a result of these investigations, healthcare providers and entities may have to agree to additional onerous compliance and reporting

requirements as part of a consent decree or corporate integrity agreement.

Any such investigation or settlement could significantly increase our costs or otherwise have an adverse effect on our business.

6 unchanged sentences

Our ability to compete in the highly competitive biotechnology and pharmaceuticals industries depends upon our ability to attract and retain highly qualified managerial, scientific, medical and regulatory personnel.

We are highly

dependent on our existing senior management team.

We are highly dependent on our existing senior management team.

The loss of the services of any of our executive officers or other key employees and our inability to find suitable replacements would harm our research and development efforts, our collaboration efforts, as well as our business, financial condition and prospects.

5 unchanged sentences

We expect to expand the size of our organization, and we may experience difficulties in managing this growth.

As of June 30, 2021, we had 101 full-time equivalent employees, including 81 full-time equivalent employees engaged in research and development.

As of September 30, 2021, we had 116 full-time equivalent employees, including 92 full-time equivalent employees engaged in research and development.

As our development and commercialization plans and strategies develop, we expect to need additional managerial, operational, scientific, sales, marketing, research, development, regulatory, manufacturing, financial and other resources.

3 unchanged sentences

Significant disruptions of information technology systems or breaches of data security could adversely affect our business.

Our business is increasingly dependent on critical, complex and interdependent information technology systems, including Internet-based systems, to support business processes as well as internal and external communications.

communications.

The size and complexity of our internal computer systems and those of our CROs, contract manufacturers, collaboration partner, and other third parties on which we rely may make them potentially vulnerable to breakdown, telecommunications and electrical failures, malicious intrusion such as ransomware and computer viruses that may result in the impairment of key business processes.

6 unchanged sentences

We are subject to numerous environmental, health and safety laws and regulations, including those governing laboratory procedures and the handling, use, storage, treatment and disposal of hazardous materials and wastes.

Our operations involve the use of hazardous and flammable materials, including chemicals and biological materials, and

produce hazardous waste products.

Our operations involve the use of hazardous and flammable materials, including chemicals and biological materials, and produce hazardous waste products.

We generally contract with third parties for the disposal of these materials and wastes.

52 unchanged sentences

The patent applications that we own or license may fail to result in issued patents in the United States or in other foreign countries, or they may fail to result in issued patents with claims that cover our product candidates or technologies in the United States or in other foreign countries.

Any failure to identify relevant prior art relating to a patent or patent applications can invalidate a patent or

prevent a patent from issuing.

Any failure to identify relevant prior art relating to a patent or patent applications can invalidate a patent or prevent a patent from issuing.

Even if patents have been issued, third parties may challenge the validity, enforceability or scope thereof, which may result in such patents being narrowed, invalidated or held unenforceable.

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Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products and, further, may export otherwise infringing products to territories where we have patent protection but enforcement is not as strong as in the United States.

These products may compete with our products in jurisdictions where we do not have any issued patents and our patent claims or other intellectual property rights may not be effective or sufficient to prevent them from so competing.

These products may compete with our products in jurisdictions where we do not have any issued patents and our patent claims or other intellectual property rights may not

be effective or sufficient to prevent them from so competing.

Also, if our trade secrets are disclosed in a foreign jurisdiction, competitors worldwide could have access to our proprietary information and we may be without satisfactory recourse.

20 unchanged sentences

The filing of a patent application or the issuance of a patent is not conclusive as to its ownership, inventorship, scope, patentability, validity or enforceability.

Issued patents and patent applications may be challenged in the courts and in the patent office in the United States and abroad.

Issued patents and patent applications may be challenged in the courts

and in the patent office in the United States and abroad.

For example, our patent applications, or any patents that grant therefrom, may be challenged through third-party submissions, opposition or derivation proceedings, and our patents may be challenged through reexamination, inter partes review or post-grant review proceedings before the USPTO, or in declaratory judgment actions or counterclaims.

5 unchanged sentences

Any issued patents covering our product candidates, including any patent that may issue as a result of our pending or future patent applications, could be found invalid or unenforceable if challenged in court in the United States or abroad.

As more groups become engaged in scientific research and product development in fields related to our product candidates, such as IL-23R, α4β7integrin or hepcidin mimetics, the risk of our patents, or patents that we have in-licensed, being challenged through patent interferences, derivation proceedings, oppositions, re-examinations,

litigation or other means will likely increase.

An adverse outcome in a patent dispute could have a material adverse effect on our business by:

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If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel.

Even if we are

successful in defending against such claims, litigation could result in substantial costs and be a distraction to management.

Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management.

We may be subject to claims challenging the inventorship or ownership of our issued patents, any patents issued as a result of our pending or future patent applications and other intellectual property.

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We may not be able to protect our rights to these trademarks and trade names or may be forced to stop using these names.

If we are unable to establish name recognition based on our

trademarks and trade names, we may not be able to compete effectively, and our business may be materially adversely affected.

If we are unable to establish name recognition based on our trademarks and trade names, we may not be able to compete effectively, and our business may be materially adversely affected.

Intellectual property rights do not necessarily address all potential threats to our business.

14 unchanged sentences

Our stock price has fluctuated in the past and is likely to be volatile in the future.

From January 1, 2020 through June 30, 2021, the reported sale price of our common stock has fluctuated between $5.30 and $45.93 per share.

From January 1, 2020 through September 30, 2021, the reported sale price of our common stock has fluctuated between $5.30 and $50.54 per share.

The stock market in general and the market for biotechnology companies in particular have experienced extreme volatility that has often been unrelated to the operating performance of particular companies.

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Accordingly, both state and federal courts have jurisdiction to entertain such claims.

The choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes, which may discourage such lawsuits.

of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes, which may discourage such lawsuits.

Alternatively, if a court were to find the choice of forum provision contained in our Certificate of Incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions.

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The resolution of any audits or litigation could have an adverse effect on our financial position and results of operations.

We and our subsidiary are engaged in intercompany transactions, the terms and conditions of which may be scrutinized by tax authorities, which could result in additional tax and/or penalties becoming due.

We and our subsidiary are engaged in

intercompany transactions, the terms and conditions of which may be scrutinized by tax authorities, which could result in additional tax and/or penalties becoming due.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

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

What changed 10-Q

Item 1A. Risk Factors