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Management's Discussion and Analysis of Financial Condition and Results of Operations—Corporate Background.
−Removed: Our net loss and comprehensive losses were $31.1 million, $42.8 million, $65.3 million and $71.8 million for the three and six months ended June 30, 2020 and 2019, respectively.
−Removed: As of June 30, 2020, we had an accumulated deficit of $390.6 million.
+Added: Our net loss and comprehensive losses were $33.8 million, $36.0 million, $99.1 million and $107.8 million for the three and nine months ended September 30, 2020 and 2019, respectively.
+Added: As of September 30, 2020, we had an accumulated deficit of $424.4 million.
Substantially all of our operating losses have resulted from costs incurred in connection with our development programs and from commercial and general and administrative costs associated with our operations.
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In connection with our initial public offering, or IPO, in October 2017 and our underwritten follow-on offerings through October 2019, we raised aggregate net proceeds of approximately $450.0 million through the issuance of our common stock after deducting underwriting discounts, commissions and offering related transaction costs.
−Removed: As of June 30, 2020, our cash and cash equivalents and short-term investments were approximately $228.6 million.
+Added: As of September 30, 2020, our cash and cash equivalents and short-term investments were approximately $201.8 million.
We expect our existing cash and cash equivalents and short-term investments will enable us to fund our operating expenses through at least the end of 2021.
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Furthermore, as of September 2019, we collected samples from 13,567 individuals with severe obesity, which yielded 11.7%, or 1,584, genetically-identified individuals with a rare genetic variant of the MC4R pathway and who may be eligible for inclusion in our Phase 2 Basket Study or pivotal Phase 3 clinical trials.
−Removed: Inclusive of these results, our sequencing programs have now sequenced over 25,000 severely obese individuals.
−Removed: We plan to update results from our sequencing activity in 2020.
+Added: We plan to update results from our genetic sequencing effort with epidemiology data from more than 30,000 sequencing samples from individuals with severe obesity early in the first quarter of 2021.
The yields for the indications are outlined above, but then are subject to application of functional and/or computational filters to calculate the prevalence estimates in the United State population.
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The pandemic and government measures taken in response have also had a significant impact, both direct and indirect, on businesses and commerce, as worker shortages have occurred, supply chains have been disrupted, facilities and production have been suspended, and demand for certain goods and services, such as medical services and supplies, has spiked, while demand for other goods and services, such as travel, has fallen.
−Removed: In response to the spread of COVID-19, we have closed our principal executive office with all employees continuing their work outside of our office and restricted travel.
+Added: In response to the spread of COVID-19, we have limited access to our principal executive office with most employees continuing their work outside of our office and restricted travel.
If the COVID-19 coronavirus continues to spread in the United States and elsewhere, we may experience disruptions that could severely impact our business, preclinical studies, clinical trials and our commercialization prospects, including:
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The FDA has indicated it will work with us to identify the least burdensome analytical validation approach to a companion diagnostic for setmelanotide.
−Removed: We are engaged in ongoing discussions with the FDA regarding development of a Class II companion diagnostic.
+Added: We have been engaged in ongoing discussions with the FDA regarding development of a Class II companion diagnostic and submitted a De Novo request to the FDA in September 2020.
We may face significant delays or obstacles in obtaining approval of an NDA, or of comparable foreign marketing authorization for setmelanotide as the FDA or other equivalent competent authorities in foreign jurisdictions may take the position that a companion diagnostic device is required prior to granting approval of setmelanotide.
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With the exception of those on the FDA’s drug shortage list or properly imported by individuals, the FDCA prohibits the importation of prescription drug products for commercial use if they were manufactured in a foreign country, unless they have been approved or are otherwise authorized to be marketed in the United States and are labeled accordingly.
−Removed: We currently contract with various third parties for the manufacture of setmelanotide and intend to continue to do so in the future.
−Removed: We have entered into process development and manufacturing service agreements with three CMOs:
+Added: We currently contract with third parties for the manufacture of setmelanotide and intend to continue to do so in the future.
+Added: We have entered into process development and manufacturing service agreements with our CMOs:
Corden Pharma Brussels S.A., or Corden, (formerly Peptisyntha SA prior to its acquisition by Corden), PolyPeptide Group, Baine L’Alleud, or PPL, and Neuland Laboratories, in connection with certain process development and manufacturing services for regulatory starting materials and/or drug substance, or API in connection with the manufacture of setmelanotide.
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The agreement with Corden also provides that, subject to certain conditions, for a period following each product launch date, we will source from Corden a portion of our requirements for that product being sourced from non-affiliate third parties.
−Removed: We may need to engage additional third-party suppliers to manufacture our clinical drug supplies.
−Removed: In the future, if we approach commercialization of setmelanotide or any future product candidate, we will need to engage other third parties to assist in, among other things, labeling, packaging, distribution, post-approval safety reporting and pharmacovigilance activities.
+Added: We may need to engage additional third-party suppliers to manufacture our clinical and/or commercial, subject to approval, drug supplies.
+Added: In the future, as we approach commercialization of setmelanotide or any future product candidate, we will need to engage other third parties to assist in, among other things, labeling, packaging, distribution, post-approval safety reporting and pharmacovigilance activities.
We cannot be certain that we can engage third-party suppliers on terms as favorable as those that are currently in place.
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If the FDA or another equivalent competent foreign regulatory agency does not approve these facilities for the manufacture of setmelanotide or if it withdraws its approval in the future, we may need to find alternative manufacturing facilities, which would adversely impact our ability to develop, obtain regulatory approval for or market setmelanotide.
−Removed: We are currently in the process of manufacturing finished drug product for use in our upcoming clinical trials.
−Removed: We believe we currently have a sufficient amount of finished setmelanotide, diluent and placebo to complete our planned clinical trials.
+Added: We are manufacturing finished drug product for use in our upcoming or ongoing clinical trials.
+Added: We believe we currently have a sufficient amount of finished setmelanotide and placebo to complete our ongoing and planned clinical trials.
However, these projections could change based on delays encountered with manufacturing activities, equipment scheduling and material lead times.
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Moreover, as a result of the COVID-19 pandemic, certain of our suppliers and CMOs in Europe may be affected, which could disrupt their activities.
−Removed: As a result, we could face difficulty sourcing key components necessary to produce supply of setmelanotide, which may negatively affect our clinical development activities.
−Removed: If the COVID-19 coronavirus further impacts business operations, including our CMOs and suppliers, we could face additional disruption to our supply chain that could affect the supply of drug product for both the preclinical and clinical trials.
+Added: As a result, we could face difficulty sourcing key components necessary to produce supply of setmelanotide, which may negatively affect our clinical development and commercilization activities, subject to approval.
+Added: If the COVID-19 coronavirus further impacts business operations, including our CMOs and suppliers, we could face additional disruption to our supply chain that could affect the supply of drug product for preclinical, clinical trial and commercial use, subject to approval.
Additionally, as our CMOs are producers of drug substances and drug products, including vaccines and therapeutics, they could be compelled by a national government, or choose themselves, to shift their resources to the production of a COVID-19 vaccine and/or therapeutics for COVID-19, which could disrupt any scheduled drug substance or drug product batches we may have and may prevent us from obtaining supplies for our programs in a timely manner to meet our development timelines.
−Removed: We do not have long-term supply agreements in place with our contractors, and each batch of setmelanotide is individually contracted under a quality and supply agreement.
−Removed: If we engage new contractors, such contractors must be approved by the FDA and other equivalent competent authorities in foreign jurisdictions.
−Removed: We will need to submit
−Removed: information to the FDA and other equivalent competent authorities in foreign jurisdictions describing the manufacturing changes.
+Added: We do not have long-term supply agreements in place with our contractors, and each batch of setmelanotide is individually contracted under existing quality and supply agreements.
+Added: If we engage new contractors, such contractors must
+Added: be approved by the FDA and other equivalent competent authorities in foreign jurisdictions.
+Added: We will need to submit information to the FDA and other equivalent competent authorities in foreign jurisdictions describing the manufacturing changes.
If manufacturing changes occur post-approval, the FDA may have to approve these changes.
We plan to continue to rely upon CMOs and, potentially, collaboration partners to manufacture commercial quantities of setmelanotide, if approved.
−Removed: Our current scale of manufacturing appears adequate to support all of our current needs for clinical trial supplies for setmelanotide.
−Removed: If setmelanotide is approved, we will need to identify CMOs or partners to produce setmelanotide on a larger scale.
+Added: Our current scale of manufacturing appears adequate to support all of our current needs for clinical trial and commercial supplies for setmelanotide, subject to approval.
+Added: If setmelanotide is approved, we may need to identify additional CMOs or partners to produce setmelanotide on a larger scale.
Risks Related to Our Intellectual Property Rights
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If any of our patents covering setmelanotide are invalidated or found unenforceable, our financial position and results of operations would be materially and adversely impacted.
−Removed: In addition, if a court found that valid, enforceable patents held by third parties covered setmelanotide, our financial position and results of operations would also be materially and adversely impacted.
+Added: In addition, if a court found that valid, enforceable patents held by third
+Added: parties covered setmelanotide, our financial position and results of operations would also be materially and adversely impacted.
The degree of future protection for our proprietary rights is uncertain, and we cannot ensure that:
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Our business could be harmed if the prevailing party does not offer us a license on commercially reasonable terms.
−Removed: Our defense of litigation or interference proceedings may fail and, even if successful, may result in substantial costs and distract our management and other employees.
−Removed: We may not be able to prevent, alone or with our licensors, misappropriation of our
−Removed: intellectual property rights, particularly in countries where the laws may not protect those rights as fully as in the United States.
+Added: Our defense of
+Added: litigation or interference proceedings may fail and, even if successful, may result in substantial costs and distract our management and other employees.
+Added: We may not be able to prevent, alone or with our licensors, misappropriation of our intellectual property rights, particularly in countries where the laws may not protect those rights as fully as in the United States.
Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation.
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Our directors and executive officers and their affiliated entities own a significant percentage of our stock and, if they choose to act together, will be able to exert significant influence over matters subject to stockholder approval.
−Removed: Our executive officers and directors and their respective affiliates, in the aggregate, hold shares representing approximately 15.8% of our outstanding voting stock as of June 30, 2020.
+Added: Our executive officers and directors and their respective affiliates, in the aggregate, hold shares representing approximately 15.7% of our outstanding voting stock as of September 30, 2020.
As a result, if these stockholders were to choose to act together, they would be able to significantly influence all matters submitted to our stockholders for approval, as well as our management and affairs.
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Sales of our common stock in the public market, or the perception that these sales could occur, could cause the market price of our common stock to decline significantly.
−Removed: As of June 30, 2020, we have 44,115,612 shares of common stock outstanding.
−Removed: The holders of an aggregate of approximately 6.9 million shares of our common stock, or approximately 16% of our total outstanding common stock as of June 30, 2020, are entitled to rights with respect to the registration of their shares under the Securities Act of 1933, as amended, or the Securities Act, subject to specified conditions, until such shares can otherwise be sold without restriction under Rule 144 or until the rights terminate pursuant to the terms of the investors’ rights agreement between us and such holders.
+Added: As of September 30, 2020, we have 44,204,745 shares of common stock outstanding.
+Added: The holders of an aggregate of approximately 6.9 million shares of our common stock, or approximately 16% of our total outstanding common stock as of September 30, 2020, are entitled to rights with respect to the registration of their shares under the Securities Act of 1933, as amended, or the Securities Act, subject to specified conditions, until such shares can otherwise be sold without restriction under Rule 144 or until the rights terminate pursuant to the terms of the investors’ rights agreement between us and such holders.
We have also registered and intend to continue to register all shares of common stock that we may issue under our equity compensation plans.
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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.