What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2023-03-23 compared with 2022-03-31 · 929 added, 669 removed, 22 unchanged (99% of the section changed)

As used in this Annual Report on Form 10-K, unless the context indicates or otherwise requires, “Silverback,”

“our company,”

As used in this Annual Report, unless the context indicates or otherwise requires, “ARS,”

the “company,”

“we,”

“us,”

and “our”

refer to Silverback Therapeutics, Inc., a Delaware corporation.

We are a biopharmaceutical company focused on leveraging our proprietary ImmunoTAC technology platform to develop systemically delivered, tissue targeted therapeutics for the treatment of chronic viral infections, cancer, and other serious diseases.

Our ImmunoTAC platform is the result of a focused effort to discover ways to systemically deliver disease-modifying small molecules in a directed fashion to sites of disease.

Our platform enables us to strategically pair proprietary linker-payloads that modulate key disease-modifying pathways with monoclonal antibodies directed to specific disease sites.

Many potentially promising systemic therapies fail to maximize their therapeutic potential due to toxicities in healthy tissues.

Our approach is designed to expand the therapeutic window and avert unacceptable toxicities by directly targeting specific disease sites where our therapeutics are locally active.

In July of 2020, we initiated clinical development of our first ImmunoTAC product candidate, a TLR8 agonist conjugated to a HER2 antibody, SBT6050.

Preclinical data suggested that we would be able to demonstrate a therapeutic window and advance SBT6050 through clinical development as a monotherapy and in combination with standard-of-care agents that had a complementary mechanism-of-action.

Our Phase 1/1b program was designed to measure safety and tolerability, pharmacokinetics (PK), pharmacodynamics (PD) and anti-tumor activity as monotherapy and in combination with pembrolizumab.

On March 28, 2022, we made the decision to discontinue our clinical development program for SBT6050 due to limited monotherapy activity and dose-limiting adverse events when used in combination with pembrolizumab.

SBT6290, comprised of the same linker payload conjugated to a Nectin4 antibody, was expected to show a similar clinical profile and, therefore, we also terminated this program prior to dosing patients.

We have prioritized our resources to focus on the development of SBT8230 and early-stage discovery programs.

Our understanding of TLR8 conjugates in preclinical species and in the clinic guides our interpretation of the preclinical characteristics of SBT8230, an ASGR1 antibody conjugated to a TLR8 agonist linker payload for the treatment of chronic hepatitis B virus (cHBV), which is currently in preclinical development.

ASGR1 is highly expressed in liver and is restricted in its expression to this organ.

Other ASGR1-directed agents, such as those used in RNAi therapies, have shown robust liver localization.

SBT8230 shows biodistribution profiles in non-human primates (NHP) consistent with these agents, which is distinct from SBT6050 and SBT6290.

We believe that efficient liver targeting of SBT8230 via ASGR1 binding has the potential to lead to markedly lower serum exposures of SBT8230 in patients compared to those observed with SBT6050 in the clinic at any dose evaluated.

We believe the preclinical to clinical experience for SBT6050, coupled with the NHP PK, PD, and tolerability data for SBT8230, suggest that the clinical safety, PK and PD profiles for SBT8230 has the potential to be notably different than those for SBT6050, given the large differences in serum exposures and overall conjugate disposition for SBT8230 that are expected in patients due to its efficient liver targeting.

SBT8230 is designed to elicit an anti-viral immune response by targeting TLR8 activation to the liver.

The anti-viral immune response is achieved through activation of myeloid cells and subsequent activation of immune cells that drive an IFNγ

signal, which has been observed in the clinic with SBT6050.

This has been shown by others to drive seroconversion, an important determinant of a functional cure.

We see a significant opportunity in liver-localized immunotherapies as a potential way of achieving durable responses in these patients.

We are focused on advancing SBT8230, our liver-targeted conjugate designed to potently activate human myeloid cells in the liver for the treatment of cHBV.

Further support for investigating TLR8 agonism for the treatment of cHBV comes from selgantolimod (GS-9688), an existing untargeted, orally administered TLR8 agonist being developed by Gilead Sciences.

Selgantolimod has generated anti-viral immune responses in a cHBV animal model.

The clinical development of this untargeted TLR8 agonist has shown promise, but we believe that toxicity prevented the use of a sufficient dose to elicit optimal clinical activity.

We believe liver-localized TLR8 agonism could better realize the potential for effective therapy and potentially lead to functional cure, which is defined as sustained loss of hepatitis B surface antigen (HBsAg) in the blood, in patients suffering from cHBV.

We presented a preclinical update on SBT8230 in the fourth quarter of 2021.

In the first quarter of 2022, we began a Phase 1-enabling toxicology study.

We plan to complete a P hase 1 regulatory submission in the fourth quarter of 2022 and begin a Phase 1 single ascending dose (SAD) study in healthy volunteers in the first half of 2023.

After completing the SAD study, we anticipate initiating a Phase 1 multiple ascending dose (MAD) study in patients with chronic HBV, who are virally suppressed on nucleoside reverse transcriptase inhibitors (NRTI) therapy.

In addition, our internal discovery programs are focused on evaluating and developing new antigen binding domains specific for targets of interest (including antibodies), next-generation linker technologies, and both agonist and antagonist small molecule payloads, that may be combined to create novel tissue-targeted antibody conjugates.

The integration of medicinal chemistry, bioconjugation, protein engineering, bioinformatics, pharmacology, and translational medicine expertise focused on developing tissue-targeted therapies allows us to leverage key learnings from our previous clinical program to bring forward the next generation of therapeutics.

We anticipate providing an update on our discovery pipeline in the fourth quarter of 2022.

Our ImmunoTAC Platform

Our ImmunoTAC platform is the result of a focused effort to systemically deliver disease-modifying small molecules in a directed fashion to sites of disease.

Many potentially promising systemic therapies fail to maximize their therapeutic potential due to toxicities in healthy tissues.

Our approach is designed to localize disease-modifying payloads to specific sites of disease where our therapeutics are locally active.

Our Development Pipeline

Our ImmunoTAC platform drives our development pipeline of tissue targeted therapeutic candidates as summarized in the chart below:

Our goal is to transform the treatment of cHBV, cancer and other serious diseases with unmet need using our ImmunoTAC platform to deliver a new class of systemically delivered, tissue-directed, and locally active therapies.

The key elements of our business strategy are to:

Demonstrate anti-viral properties of TLR8 in cHBV .

We are applying learnings from our TLR8 agonist oncology programs and clinical experience to maximize the potential of SBT8230.

Maximize the therapeutic potential of SBT8230.

The immune activating mechanism of SBT8230 is complimentary to other treatments for cHBV that interfere with components of the viral life cycle such as nucleoside and nucleotide analogs, capsid inhibitors, and RNAi-based therapies.

Furthermore, our ASGR1 antibody does not cross block GalNAc, allowing for combinations with RNAi-based therapies.

Leverage our ImmunoTAC platform for promising new antibody-linker-payload combinations .

We are strategically pairing our disease-modulating payloads with tissue targeted binding domains to create new therapeutic agents with the goal of providing benefits to patients.

We plan to continue to leverage our ImmunoTAC platform, discovery of antigen binding domains (including antibodies), new linker technologies and therapeutic discovery infrastructure to discover and develop novel small molecule therapeutics conjugated to antibodies.

Internally and externally source potentially transformative assets and technologies that align with our mission to develop tissue-targeted therapies.

We have extensive expertise in protein engineering, small molecule linker and payload chemistry, and translational medicine that we apply to the discovery and advancement of new tissue-targeted agents to the clinic. 

Our clinical development team is a seasoned group with experience in developing antibody-drug conjugates and other therapeutics across all phases of development.

While we have robust internal discovery capabilities, we also believe that innovative technologies can be acquired through business development activities.

We therefore plan to continue to pursue synergistic, in-licensing opportunities to augment our internal discovery efforts.

Evaluate opportunities to accelerate development timelines and/or enhance the commercial potential of our programs in partnership with third parties .

We plan to selectively explore potential strategic partnerships on a program-by-program basis with biopharmaceutical partners whose research, development, commercial, and/or geographic capabilities complement our own.

We believe strategic partnerships can help mitigate clinical and commercial risk, accelerate timelines, and/or maximize global commercial potential.

We have an accomplished management team with a proven track record of therapeutic research and development expertise and of generating meaningful stockholder value.

The members of our team have deep experience in discovering and developing therapeutics, including acalabrutinib, brentuximab vedotin, entrectinib, etanercept, ibrutinib, lisocabtagene maraleucel, sunitinib, tezepelumab, tucatinib, and venetoclax.

Activating the Myeloid Cell Compartment Through Liver-Targeted TLR8 Agonism

As shown in the figure below, TLR8 activation of human myeloid cells plays an important role in the anti-viral immune response in cHBV.

HBV-infected liver is highly immunosuppressive and the activation of macrophages and other myeloid cells in the liver can serve to overcome this immunosuppression.

We believe TLR8 is the optimal target for activating these myeloid cell types due to its restricted expression and function within these cells.

TLR8 is also highly expressed in conventional dendritic cells which promote antigen presentation and the production of cytokines important for the generation of T and B cell responses against hepatitis B virus.

TLR8 is not expressed in T or B lymphocytes, but TLR8 activation in human myeloid cells secondarily induces IFNγ

production by T cells and antibody production by B cells, both shown to be associated with the generation of functional cure in cHBV.

TLR8 is Highly Expressed in Human Myeloid Cell Types That Drive Anti-Viral Responses when Activated

Silverback’s Preclinical and Clinical Development Experience with a HER2-Directed TLR8 Agonist Conjugate, SBT6050

We have gained pre-clinical and clinical experience with TLR8 conjugates through our recently discontinued SBT6050 program.

In this program, a HER2-TLR8 agonist conjugate was administered to 58 patients as monotherapy and in combination with a checkpoint inhibitor at dose levels ranging from 0.15 mg/kg through 1.2 mg/kg with the length of patient experience ranging from 2 weeks through 41 weeks.

We observed a dose response for adverse events related to immune activation, serum PK, serum pharmacodynamic markers, tumor exposure and intratumoral pharmacodynamic markers inclusive of data that demonstrates activation of immune mechanisms in biopsies collected from patients after treatment.

However, antitumor activity was limited in the monotherapy arm, and increased toxicity in combination with checkpoint inhibitors limited dose escalation beyond 0.3 mg/kg.

In the 18 patients treated in combination with pembrolizumab, while we observed decreasing volume stable disease in some patients, we did not see responses meeting RECIST criteria.

Furthermore, at 0.3 mg/kg in combination with pembrolizumab, although there were no DLTs with additional patients and longer follow-up, it was determined that long-term tolerability was challenging.

Several patients experienced grade 3 adverse events in later cycles, including grade 3 hypotension.

Finally, PK and PD at 0.3 mg/kg were suboptimal.

On the other hand, there were important learnings from the SBT6050 clinical program that we are applying to SBT8230.

In the SBT6050 clinical trial, exposures increased with dose and the data demonstrated that the conjugate was stable in circulation.

F ree payload was undetectable in ~98% of blood samples evaluated and in the few samples in which payload was detectable, the levels were at least an order of magnitude below the lowest active concentrations of payload.

SBT6050 induced PD activity indicative of myeloid and natural killer (NK) and/or T cell activation at all dose levels, confirming the proposed mechanism of action of TLR8 agonism, and PD activity was maintained with repeat dosing.

ASGR1 is highly expressed in liver and is restricted in its expression to this organ.

Other ASGR1-directed agents, such as those used by RNAi therapies, have shown robust liver localization.

SBT8230 shows biodistribution profiles in NHP consistent with these agents and is distinct from SBT6050 and SBT6290 in this regard.

TLR8 Agonist Conjugated to an ASGR1 Antibody

We have engineered SBT8230 to treat cHBV by eliciting an anti-viral immune response through targeting TLR8 activation to the liver.

SBT8230 is comprised of an ASGR1 monoclonal antibody conjugated to the same TLR8 linker-payload as SBT6050, but with an average drug antibody ratio (DAR) of about 2 as opposed to the average DAR of about 4 used in SBT6050.

cHBV infection remains a worldwide problem affecting approximately 257 million people and contributing to an estimated 887,000 deaths in 2015.

In the United States alone, approximately 860,000 people suffer from cHBV.

cHBV is estimated to be the cause of 60-80% of the world’s primary liver cancers.

There is a significant unmet need for therapies that can elicit a functional cure for the disease, which is defined as sustained loss of HBsAg in the blood.

Many of the approved therapies for cHBV have low functional cure rates or lack durability over time.

Clinical and preclinical evidence by third parties have demonstrated that IFN g -mediated immune responses, including the activation of IFN g + T cell and IgG B cell anti-viral responses, can lead to a functional cure in cHBV patients and animal models of HBV.

In HBV transgenic mice, HBV-specific CD4 and CD8 T cells have exhibited the ability to inhibit hepatocellular replication by a noncytopathic process that is mediated primarily by IFN g .

In acutely infected chimpanzees, viral replication was almost completely abolished soon after CD3 and IFN g mRNA increased in the liver.

Evidence by third parties has demonstrated that HBV-specific IFN g producing CD4 T cells were associated with viral clearance in patients with cHBV infection.

Additionally, these studies have demonstrated that TLR8 agonists were particularly effective in activation of myeloid cells and the induction of IFN g .

The figure below shows IFN g production after human blood or liver-derived mononuclear cells were stimulated with the indicated TLR agonist.

TLR8 was unique in its ability to induce IFN g .

TLR8 Drove IFN g Production from Liver Mononuclear Cells in Third Party Preclinical Studies

In addition, the figures below show concentrations of individual cytokines quantified in the supernatant of purified peripheral blood mononuclear cells (PBMC) or isolated mononuclear cells from the liver after stimulation with either a TLR8 or TLR7 agonist.

TLR8 agonism, but not TLR7 agonism, induced IFNγ

production, along with the production of other cytokines important in the generation of anti-viral immunity such as TNFα, IL-1ß, and IL-6, from both liver and blood immune cells.

We believe these data from third parties demonstrate that TLR8 is the agonist of choice for improving the outcome for patients with cHBV.

TLR8 Agonism Drove Cytokine Production

Figure source:

Jo et al, PLOS Pathogens, 2014.

In a preclinical woodchuck model of cHBV conducted by a third party, oral administration of a TLR8 agonist small molecule, GS-9688 (selgantolimod), was shown to drive seroconversion and reduce woodchuck hepatitis virus S antigen and woodchuck hepatitis B viral levels.

Selgantolimod’s effectiveness in cHBV patients has been limited, however.

We believe (i) this is due to not achieving necessary exposures because of DLTs associated with activation of myeloid cells outside of the liver and (ii) that systemically delivered but liver localized TLR8 agonism could improve the potential for effective therapy and lead to functional cures in cHBV.

SBT8230 is a Liver-Localized TLR8 Agonist Designed to Combine with other cHBV Drugs to Achieve Functional Cure in cHBV

As shown in the figure below, we designed SBT8230 to be comprised of an ASGR1 monoclonal antibody conjugated to a TLR8 linker-payload with the goal of activating the myeloid cell compartment in liver tissue only.

The conjugate is designed to be internalized in myeloid cells in an FcR-mediated manner when ASGR1 is present on adjacent liver cells.

In addition, the ASGR1 mAb of SBT8230 was designed to bind to an epitope distinct from that recognized by GalNAc to allow for combination with GalNAc-based therapies.

SBT8230 ImmunoTAC is Designed for Liver-localized TLR8 Activation

Background on ASGR1

As with all ADC-based therapeutics, an expression profile differential of the target antigen on healthy tissue relative to target tissues is critical.

As shown in the figure below, the expression of ASGR1 is a liver-restricted scavenger receptor that is highly restricted to this organ.

Furthermore, it is a clinically validated target that has been successfully targeted by GalNAc-based therapeutics.

ASGR1 Expression is Restricted to the Liver

The antibody backbone of SBT8230 has been designed to possess high affinity and specificity for ASGR1 and is not an efficient binder to ASGR2 or CLEC10A.

The specificity and binding profile of the SBT8230 antibody is identical between human and monkey (not shown).

SBT8230’s Backbone Antibody is Highly Specific to ASGR1

The SBT8230 antibody has also been designed to recognize an epitope distinct from that bound by the ASGR1 ligand, GalNAc, allowing for possible combination of SBT8230 with GalNAc-targeted RNAi therapies currently in development for cHBV.

SBT8230’s Backbone Antibody Does Not Block Ligand Binding Allowing for Combination Therapy with GalNAc Targeted Molecules

Potential Mechanism of Action:

SBT8230 is Designed to Localize TLR8 Activation of Myeloid Cells in the Liver Via a Directed ASGR1 Antibody

The diagram below walks through the potential mechanism of action of SBT8230.

SBT8230 is designed to be administered subcutaneously.

In the liver, the ASGR1 binding domain engages hepatocytes and the Fc domain of the conjugate binds to the Fc g R receptors on myeloid cells.

The increase in Fc g R binding avidity is a result of ASGR co-binding and results in the internalization of the conjugate into the endo-lysosome where TLR8 resides.

SBT8230 directly activates myeloid cells, and these cells in turn activate anti-viral IFN g + T cell and anti-viral B cell immune responses.

As shown in the figures below, ASGR1-TLR8 induced IFNγ-promoting activity through activation of myeloid cells in our preclinical studies utilizing human PBMCs ex vivo.

ASGR1-TLR8 Potently Activated Human Myeloid Cells, Resulting in a Robust IFN g Response

Activation of human myeloid cells by TLR8 was mirrored in mouse myeloid cells by TLR7 as was previously demonstrated in our SBT6050 program.

Therefore, to evaluate the ability of a liver-targeted myeloid cell agonist conjugate to drive seroconversion in a mouse model of cHBV, we engineered a surrogate for SBT8230 comprised of an anti-mouse ASGR1 monoclonal antibody conjugated to a TLR7 agonist (SBT8230-S).

The antibody contained an IgG2a Fc domain to facilitate uptake into mouse myeloid cells.

Seroconversion, together with reductions in HBsAg levels and expansion of IFN g -producing anti-viral T cells, is associated with achievement of functional cures in cHBV.

The AAV-HBV (adenovirus-hepatis B virus) mouse model is a commonly used preclinical model for cHBV.

Paralleling their inability to drive seroconversion in cHBV patients, cHBV standard-of-care therapies and other agents that target the HBV life cycle such as capsid inhibitors, have not resulted in seroconversion in this or similar models.

In contrast, statistically significant increases in seroconversion and reductions in HBsAg were demonstrated with SBT8230-S as compared to the vehicle and unconjugated antibody control groups in the AAV-HBV model, as shown in the figures below.

SBT8230-S Reduced HBsAg and Drove Seroconversion in Mouse AAV-HBV Model

In addition, SBT8230-S treatment generated potent anti-viral T cell and B cell immune responses, as indicated by the significantly increased anti-HBV core and S antigen IFN g + T cells and anti-HBsAg+ B cells, as shown in the figures below.

SBT8230-S Increased IFN g + Anti-Viral T Cells

SBT8230-S Increased B Cells Producing Anti-HBs Antigen Antibodies

Importantly, as shown in the figures below, no changes in serum ALT or body weight were noted after treatment with SBT8230-S as compared to controls.

In addition, there were no findings in the liver by histopathology after treatment with SBT8230-S.

Together, these data indicated that SBT8230-S was well tolerated in the mouse AAV-HBV model.

SBT8230-S was Well Tolerated in Mice

SBT8230 is Highly Localized to the Liver in Non-Human Primates, Suggestive of Pharmacological Activity at Low Doses in the Clinic

SBT8230 demonstrates comparable activity on NHP immune cells, supporting the use of NHP to characterize its tolerability, efficiency of liver uptake, and ability to produce robust and localized PD effects.

As shown in the figure below, SBT8230 was targeted to the liver with high efficiency in NHP.

SBT8230 liver exposures (area under the curve, AUC) were over 300 times greater than serum exposures, the latter of which also displayed a very short half-life.

SBT8230 concentration in NHP liver vs serum

Because of the robust liver-localization of SBT8230, the systemic (serum) exposure of SBT8230 is distinct from SBT6050.

As shown in the figure below, when SBT8230 and SBT6050 are dosed at equivalent dose levels, SBT8230 has far lower serum exposure than SBT6050 due to its efficient localization to liver.

The mean estimated liver SBT8230 concentration at this dose in NHP was ~300-fold the maximum serum exposure, which is consistent with the reported liver to plasma exposure ratio of ~260 in NHP for the approved GalNAc-siRNA givosiran (US FDA Pharmacology Review, Givlaari).

Serum exposures of SBT8230 vs SBT6050 in NHP

Liver PD assessments demonstrate that the highly efficient liver uptake of SBT8230 in NHP leads to robust liver-localized PD effects.

The figures below illustrate that RNA levels for multiple markers of myeloid cell activation in liver are markedly increased with SBT8230 treatment.

Of note, PD effects at 0.5 mg/kg are similar overall to those at higher doses, indicating that maximal liver PD effects are achieved at this dose level.

Based on the totality of our preclinical data, we believe that SBT8230 has the potential to induce pharmacological effects in the liver at doses as low as 0.03 mg/kg.

This is below the lowest dose level evaluated for SBT6050, 0.15 mg/kg, that was found to be well-tolerated in patients.

SBT8230 Induced Cytokine mRNA in the Liver but not in Serum

The non-clinical safety and tolerability of SBT8230 has been assessed in two NHP toxicity studies.

In a dose range finding non-GLP study, dose levels of 6, 12 and 25 mg/kg were administered every 2 weeks (Q2W) for 4 doses.

The 6 and 12 mg/kg dose levels were well-tolerated.

At the 25 mg/kg dose level the first dose was well tolerated, but the second or third doses were associated with toxicities that included injection site reactions.

This dose level is >800-fold higher than the dose noted above (0.03 mg/kg) that is expected to be pharmacologically active in patients with HBV.

Across all dose levels, t here were transient, dose-related hematological, clinical chemistry, and cytokine and chemokine changes reflective of the potential mechanism of action of SBT8230.

There was no evidence of cytokine release syndrome (CRS) or liver enzyme elevations observed at any dose level.

SBT8230 Phase 1-Enabling Study Update

We initiated a Phase 1-enabling GLP toxicology study in the first quarter of 2022.

Dose levels of 6, 12 and 18 mg/kg were evaluated on a Q2W schedule for 4 doses.

The in-life portion has recently completed, and bioanalytical assessments are now in progress.

SBT8230 was generally well-tolerated.

Two animals out of 26, one in the 12 mg/kg group and one in the 18 mg/kg group, displayed clinical signs consistent with ADA-mediated toxicity after the fourth and third doses, respectively, and were euthanized.

Repeat administration of fully human or humanized proteins, such as the mAb in SBT8230, to NHP can frequently lead to the generation of ADA and development of associated toxicities, which have been extensively investigated over the years and found to generally not be predictive of toxicities in humans (van Meer 2013;

Kronenberg 2017).

Similar toxicities were also observed with SBT6050 in NHP studies (at 12 mg/kg dose level), but acute ADA-mediated toxicities were not observed in patients dosed with SBT6050.

As noted above, we believe that SBT8230 has the potential to be pharmacologically active in the liver at doses as low as 0.03 mg/kg in humans.

Additional assessments (e.g., histopathology, PK, PD) are ongoing in the GLP toxicology study, and we believe that overall results of the study has the potential to provide favorable safety margins in support of the first-in-human study.

SBT8230 Next Steps

Upon completion of the GLP toxicology studies and GMP manufacturing of SBT8230, we plan to complete a Phase 1 regulatory submission in the fourth quarter of 2022, which includes an umbrella trial with a Phase 1 SAD study in healthy volunteers anticipated to start in the first half of 2023.

GMP manufacturing of the antibody intermediate and ADC drug substance have been completed, with release testing in progress.

Manufacturing and release of lyophilized SBT8230 drug product is on track to be completed in the third quarter of 2022.

After completing the SAD study, we anticipate initiating a Phase 1 MAD study in patients with chronic HBV, who are virally suppressed on NRTI therapy.

Additional ImmunoTAC conjugates

We anticipate providing an update on our discovery pipeline in the fourth quarter of 2022.

The pharmaceutical industry is highly competitive and dynamic, owing to rapidly advancing technologies.

We face potential competition from many different sources, including major pharmaceutical, specialty pharmaceutical and biotechnology companies, academic institutions, government agencies and public and private research institutions.

Any product candidates that we successfully develop and commercialize will compete with existing treatments and new treatments that may become available in the future.

We compete with other companies working to develop immunotherapies and tissue targeted therapies for the treatment of hepatitis B virus infections, cancer, and other serious diseases, including divisions of large pharmaceutical and biotechnology companies of various sizes.

These companies are developing therapies of many different modalities including small molecules, monoclonal antibodies, antibody-drug conjugates, bi-specific antibodies, cell therapies, oncolytic viruses and vaccines.

Specifically, there are many companies pursuing a variety of approaches to immune modulation and more specifically TLR-directed therapies.

Companies engaging in TLR-directed therapies include Ambrx, Apros Therapeutics, Ascendis, BioNTech, Bolt Biotherapeutics, Bristol Myers Squibb, Checkmate Pharmaceuticals, CureVac, Exicure, Galderma, Gilead, Idera, Mologen, Nektar, Novartis, Primmune Therapeutics, Roche, Seven&Eight Biopharmaceuticals, Shanghai De Novo, Sumitomo Dainippon, Tallac Therapeutics, TriSalus, and UroGen.

Other companies using antibody-drug conjugates to target innate immune receptors include Actym Therapeutics, Mersana, and Takeda Pharmaceuticals.

Immunotherapy and validated pathway approaches are further being pursued by many smaller biotechnology companies as well as larger pharmaceutical companies.

We also face competition from (i) validated pathway therapy treatments offered by companies such as AstraZeneca, Byondis, Daiichi Sankyo, Klus Pharma, MacroGenics, Pieris, Puma, RemeGen, Seagen, Spectrum Pharmaceuticals, and Zymeworks;

(ii) companies that continue to invest in innovation in the antibody-drug conjugate field, including but not limited to AbbVie, ADC Therapeutics, Astellas, BioAtla, Bicycle Therapeutics, Celldex, CytomX, Eli Lilly and Company, GlaxoSmithKline, Genmab, ImmunoGen, Millennium Pharmaceuticals, MorphoSys AG, Novartis, Pfizer, Sanofi, Seagen, and Sutro Biopharma;

and (iii) companies that are developing assets for the treatment of chronic HBV infection, which include 3SBio, AICuris, Albireo, Aligos, Allovir, Alnylam, Altimmune, Antios, Arbutus, Arcus, Arrowhead, Ascentage, Assembly Biosciences, Blue Jay Therapeutics, Bristol Myers Squibb, Door Pharmaceuticals, Enanta, ENYO Pharma, Excision Bio, Finch Therapeutics, GC Pharma, Gilead, GlaxoSmithKline, Golden Biotechnology Group, Grifols, HEC Pharm, Hepion, Immunocore, ISA pharmaceuticals, Johnson & Johnson, Kineta, Lupin Limited, Merck, Nucorion, Replicor, Roche, SciClone Pharma, Shanghai Henlius Group, Spring Bank, Tasly, TeneoTen, TRACON, Vaccitech, VBI Vaccines, VenatoRx, Vir, VLP Biotech, and Zydus Cadila.

Many of our competitors, either alone or with their collaboration partners, have significantly greater financial resources and expertise in research and development, preclinical testing, clinical trials, manufacturing, and marketing than we do.

Future collaborations and mergers and acquisitions may result in further resource concentration among a smaller number of competitors.

Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies.

These competitors will also compete with us in recruiting and retaining qualified scientific and management personnel and establishing clinical trial sites and subject registration for clinical trials, as well as in acquiring technologies complementary to, or that may be necessary for, our programs.

Our commercial potential could be reduced or eliminated if our competitors develop and commercialize products that are safer, more effective, have fewer or less severe side effects, are more convenient or are less expensive than products that we may develop.

Our competitors also may obtain FDA or other regulatory approval for their products more rapidly than we may obtain approval for ours, which could result in our competitors establishing a strong market position before we are able to enter the market or make our development more complicated.

The key competitive factors affecting the success of all of our programs are likely to be efficacy, safety and convenience.

Manufacturing

Our antibody-drug conjugate is produced by chemical conjugation of a non-cytotoxic linker-payload to a monoclonal antibody.

We have significant internal expertise in engineering and humanization of antibodies and designing linker-payloads to customize the drug conjugate for a desired target profile.

The small molecule linker-payload is chemically synthesized, and the antibody is produced by conventional biological process technology.

The manufacturing process involves production of the linker-payload and antibody process intermediates, the conjugation of the intermediates to produce bulk therapeutic substance, and fill/finish of the therapeutic product.

We do not own or operate, and currently have no plans to establish, any manufacturing facilities subject to compliance with current good manufacturing practices (cGMP).

We operate on an outsourced model and rely on contracts with third-party development and manufacturing organizations designed to comply with cGMPs to produce and test the intermediates, therapeutic substance and therapeutic product to support clinical development, and commercialization, if any of our product candidates obtain marketing approval.

We are working with these manufacturers to scale up our manufacturing capabilities to support our clinical plans.

We also rely on third parties to package, label, store and distribute our product candidates, as well as for our commercial products if marketing approval is obtained.

We believe that this strategy allows us to maintain a more efficient infrastructure by eliminating the need for us to invest on our own manufacturing facilities, equipment and personnel while also enabling us to focus our expertise and resources on the design and development of our product candidates.

Commercialization Plan

We intend to retain significant development and commercial rights to our product candidates and, if we obtain marketing approval, to commercialize our product candidates on our own, or potentially with a partner, in the United States and other regions.

We currently have no sales, marketing or commercial product distribution capabilities and have no experience as a company commercializing products.

We intend to build the necessary infrastructure and capabilities over time for the United States, and potentially other regions, following further advancement of our product candidates.

Clinical data, the size of the addressable patient population, the size of the commercial infrastructure and manufacturing needs may all influence or alter our commercialization plans.

License Agreement

Cell Line License Agreement with WuXi Biologics (Hong Kong) Limited

In October 2019, we entered into a cell line license agreement with WuXi Biologics (Hong Kong) Limited (WuXi Bio), pursuant to which we received a non-exclusive, worldwide, sublicensable license under certain of WuXi Bio’s intellectual property rights, know-how and biological materials (WuXi Bio Licensed Technology), to make, use, sell, offer for sale and import a product developed through the use of the WuXi Bio Licensed Technology (WuXi Bio Licensed Product).

The WuXi Bio Licensed Technology is used to manufacture a component of our ImmunoTAC platform.

In January 2020, we paid a license fee of $100,000 to WuXi Bio.

In December 2020, we incurred an additional license fee of $50,000 to WuXi Bio.

Additionally, if we do not engage WuXi Bio to manufacture the WuXi Bio Licensed Products for our clinical and commercial supplies, we are required to make milestone payments to WuXi Bio upon the achievement of certain sales milestones.

Under such scenarios, upon achieving certain thresholds for the aggregate annual net sales of a WuXi Bio Licensed Product, we would owe WuXi Bio aggregate milestone payments of up to $10.8 million.

The WuXi Bio Agreement will continue indefinitely unless terminated in accordance with the agreement.

The WuXi Bio Agreement may be terminated (i) by us upon six months’

written notice provided we pay all amounts due to WuXi Bio through the effective date of termination, (ii) by either party for the other party’s material breach that remains uncured for 30 days after written notice, and (iii) by WuXi Bio after 45 days’

written notice if we fail to make a payment within 30 days after receiving notice of such failure.

“our,”

and other similar terms refer to ARS Pharmaceuticals, Inc., a Delaware corporation and its consolidated subsidiaries.

Company Summary

We are a biopharmaceutical company focused on the development of our novel, potentially first-in-class product candidate, neffy ® (previously referred to as ARS-1) for the emergency treatment of Type I allergic reactions, including anaphylaxis.

neffy is a proprietary composition of epinephrine with an innovative absorption enhancer called Intravail ® , which allows neffy to provide injection-like absorption of epinephrine at a low dose, in a small, easy-to-carry, easy-to-use, rapidly administered and reliable nasal spray.

Type I severe allergic reactions are serious and potentially life-threatening events that can occur within minutes of exposure to an allergen and require immediate treatment with epinephrine injection, the only FDA-approved medication for these reactions.

While epinephrine injection devices have been shown to be highly effective, there are well published limitations that result in many patients and caregivers delaying or not administering treatment in an emergency situation.

These limitations include fear of the needle, lack of portability, needle-related safety concerns, lack of reliability, and complexity of the devices.

Delay in treatment can allow the allergic reaction to progress in severity leading to symptoms that seriously impact patient quality of life, to potential need for emergency services and/or hospitalizations, and to life-threatening symptoms or events.

There are approximately 25 to 40 million people in the United States who experience Type I allergic reactions.

Of this group, approximately 16 million people have been diagnosed and experienced severe Type I allergic reactions that may lead to anaphylaxis, but only 3.3 million currently have an active epinephrine autoinjector prescription, and of those, only half consistently carry their prescribed autoinjector.

Even if patients or caregivers carry an autoinjector, more than half either delay or do not administer the device when needed in an emergency.

In aggregate, we estimate that 90% of patients prescribed an epinephrine device are not achieving an optimal treatment outcome today.

We believe neffy ’s “no needle, no injection”

delivery that eliminates needle-related apprehension and injury concerns, with its small pocket size, ease of use, and high reliability would, if approved, increase prescriptions for epinephrine and make it more likely for patients and caregivers to administer epinephrine sooner, achieve more rapid symptom relief and prevent the allergic reaction from progressing to a level of severity that could lead to hospitalization or even death.

Data from our studies of neffy in more than 600 subjects demonstrated nasally delivered epinephrine reached blood levels comparable to those of already approved epinephrine injectable products.

Our NDA was accepted for review by FDA in the fourth quarter of 2022 with an anticipated mid-2023 PDUFA target action date, and if our NDA is approved, we believe neffy will be the first “no needle, no injection”

marketed epinephrine product for the emergency treatment of Type I allergic reactions.

However, the timing for regulatory approvals is outside of our control and may be delayed and is uncertain.

Epinephrine and Allergic Reactions Background

Type I allergic reactions are potentially life-threatening hypersensitivity reactions that can occur within minutes of exposure to an allergen and need to be treated immediately to relieve symptoms and prevent further progression.

Initial symptoms significantly impact patient quality of life and include difficulty breathing, bronchospasms, hypotension, presyncope, itching, hives, swelling of eyes and lips, and abdominal pain and vomiting.

If not treated immediately, more severe reactions known as anaphylaxis that involve constriction of the airways, swelling of the throat, rapid heart rate, severe hypotension and other respiratory and cardiac symptoms can develop and potentially present a medical and life-threatening emergency.

Immediate administration of epinephrine is currently the only first-line treatment for Type I allergic reactions, including anaphylaxis.

The only out-of-hospital delivery option today is an intra-muscular injectable product, typically offered as prefilled syringes or auto-injector devices, such as EpiPen ® , which is marketed by Viatris Inc., and generic versions of EpiPen, marketed by Teva Pharmaceuticals, Inc.

These intra-muscular auto-injection devices have several limitations that result in under-utilization by patients and may lead to serious complications and hospitalizations.

These limitations include:

lack ease of portability with only 50% of patients filling prescriptions carrying the device;

reluctance to use the device with approximately 25% to 50% of patients carrying the device refusing to administer;

apprehension stemming from the use of a needle that leads to approximately 40% to 60% of patients delaying administration by up to 18 minutes even if they are carrying the device;

a high rate of dosing errors, with meta-analyses reporting up to 35% of patients still failing to dose correctly even after training;

safety concerns including lacerations, caregiver self-injection and frequent potentially cardiotoxic blood vessel injections, which occurred in approximately 14% of EpiPen subjects in our patient self-administration studies.

As a result, many of the approximately 25 to 40 million patients at risk of severe Type I allergic reactions do not receive or fill prescriptions for intra-muscular injectables.

Of 3.3 million patients that do fill their prescriptions, approximately half do not carry the intra-muscular injectable products with them on a regular basis, while many of the other half delay or hesitate treatment during a severe Type I allergic reaction.

This may contribute to treatment postponement, prolonging troublesome symptoms, reducing quality of life and increasing the risk of complications or even death.

In addition to the 3.3 million patients who currently fill their prescriptions for an epinephrine injectable device, we estimate that approximately 2.5 million patients received a prescription in the last 3 years, but either did not fill or renew it.

We believe the advantages of neffy will be attractive to this group and lead to an increase in the number of patients filling their prescription as further described below.

These patients are additive to the 3.3 million patients that do fill a prescription per year.

Notwithstanding their widespread lack of use, we estimate that net sales of intra-muscular injectable products approved for outpatient use in the United States was approximately $1 billion in 2021 among the approximately 3.3 million patients who filled a prescription.

neffy TM is an investigational drug currently in clinical trials for the emergency treatment of allergic reactions (type I) including anaphylaxis.

neffy TM is not approved by the FDA, EMA or other health authorities.

neffy is designed to address the shortcomings of intra-muscular injectable devices.

neffy is a convenient “no needle, no injection,”

solution designed to be easier to carry, more reliable and easier to administer, without the aversion, safety concerns and fear and pain of needles associated with intra-muscular injectables.

Based on the factors set forth below, we believe that neffy can transform the paradigm of epinephrine delivery from cumbersome, unreliable, intra-muscular injectable devices to an intranasal delivery method that makes patients more likely to administer epinephrine sooner, thus achieving more rapid symptom relief and preventing symptoms from becoming serious or life-threatening.

Comparable PK and PD to injection products .

In our clinical trials, we observed that neffy has comparable pharmacokinetics (“PK”) and pharmacodynamics (“PD”) compared to marketed epinephrine injectables.

Needle-free, easy-to-use, pocket-sized and highly reliable nasal spray.

neffy is easier to carry than approved intra-muscular injectables because it is pocket-sized, increasing the likelihood that the device is available for use in an emergency.

Our registrational self-administration study (EPI-17) with 2.0 mg neffy demonstrated that adult patients had zero critical dosing errors, and 100% of trained adults and trained children were able to dose successfully in two human factors validation study with a total of 150 subjects.

No risk of needle-related injuries .

neffy has no risk of needle-related injuries including injection into a blood vessel, lacerations, or caregiver self-injection since the sprayer device does not have a needle.

Less hesitation to dose epinephrine.

Early administration of epinephrine can reduce the severity, risk of hospitalization and mortality associated with severe Type I allergic reactions.

In patient surveys we have conducted, patients indicated a relief from fear of injection and an expectation to utilize neffy without delay in a manner more consistent with recommended guidelines due to neffy being a nasal spray.

Low potent dose of epinephrine .

Delivery of higher exposures of epinephrine increases the risk of overexposure and potential adverse events.

neffy has high bioavailability matching the approved doses of injection at a low dose of 2.0 or 1.0 mg intranasally.

Even in the unlikely situation where epinephrine would be 100% bioavailable after administration of neffy , the resulting exposure is expected to be tolerable.

Increased stability over existing treatment options .

neffy is expected to have a shelf-life at least comparable to the 18 month shelf-life of auto-injector products, but with improved stability and shelf-life at high-temperature than existing products in the market (up to 3 months at 50 o C or 122 o F) that allows neffy to retain potency even if accidentally left in a high temperature environment.

Combination of previously validated product components .

neffy consists of a unique combination of three validated products, which we believe will significantly reduce neffy’s clinical and commercial development risks:

epinephrine, which has been approved by regulators and accepted by the physician community as the only effective option to treat Type I allergic reactions;

the intranasal device, which has been commercially proven with millions of sprayers sold to date across four FDA-approved products, including NARCAN ® for opioid overdose (marketed by Emergent BioSolutions);

and Intravail, an innovative absorption enhancer that has been previously included in the formulations of FDA approved products, such as VALTOCO ® and TOSYMRA ® nasal spray.

We believe the cost of goods for neffy will allow us to achieve gross profit margins similar to branded oral small molecule drugs assuming prices comparable to the marketed injectable products.

Well positioned for regulatory submissions, and if approved, advance to commercialization.

Our NDA was accepted for review by FDA in the fourth quarter of 2022 with an anticipated mid-2023 PDUFA target action date and we believe that the completed trials are sufficient to serve as the basis for its approval in the United States.

In Europe, our Market Authorization Application (“MAA”) was filed and validated for review by EMA in the fourth quarter of 2022.

Potential for high demand and attractive product uptake conditions.

We have conducted extensive market research with physicians, patients, parents and other caregivers that shows neffy has a clinical product profile that is highly desirable and addresses key unmet needs.

We believe we can successfully commercialize neffy by targeting high-prescribing allergists, pediatricians and primary care physicians who we believe will prescribe neffy as it would be a very attractive treatment option within the patient community.

In addition, our market research indicates that insurance plans (payors) perceive neffy as a differentiated product candidate, which we believe supports the potential for favorable market access for neffy at net prices comparable to, or at a premium to, the approved intra-muscular injectables.

We currently own or exclusively license a robust global intellectual property portfolio including issued composition of matter and method patents relating to neffy that are not expected to expire until 2038 before consideration of any potential patent term extension.

Our Management Team, Financing History and Investors

We were created to innovate, develop and commercialize neffy , a novel, potentially first-in-class treatment that addresses Type I allergy patients’

desire and need for a no needle, no injection, easy-to-use, portable and reliable solution for delivering epinephrine.

To achieve this goal, we have assembled a management team with extensive experience in the development and commercialization of drugs, such as recently approved nasal sprays NARCAN (naloxone nasal spray) and VALTOCO (diazepam nasal spray).

Our company was founded by Richard Lowenthal, M.S., MSEL, Robert Bell, Ph.D.

and Sarina Tanimoto, M.D., M.B.A.

Pratik Shah, Ph.D.

was our first external investor.

Lowenthal, our Co-Founder and Chief Executive Officer, has more than 25 years of biotechnology and pharmaceutical development experience including leading the regulatory approvals of VALTOCO (diazepam nasal spray) and NARCAN (naloxone nasal spray).

Bell, our Co-Founder and Chief Scientific Officer, has more than 25 years of product development experience including leading R&D at Barr Laboratories, Somerset Pharmaceuticals and UDL Laboratories.

Tanimoto, our Co-Founder and Chief Medical Officer, has more than 20 years of pharmaceutical experience in clinical drug development including supporting the approval of multiple nasal spray products such as VALTOCO and NARCAN.

Shah, our Chairman, has more than 30 years of experience founding and leading biopharmaceutical companies and healthcare investment decisions including his role as Executive Chairman of Design Therapeutics, former Chairman of Synthorx (now part of Sanofi) and former Chief Executive Officer of Auspex Pharmaceuticals (now part of Teva Pharmaceuticals).

Our commercial team is led by Eric Karas, Chief Commercial Officer, who has more than 25 years of sales, marketing, market access and strategic planning experience across multiple specialty products, including leading commercial initiatives for NARCAN ® nasal spray at Emergent BioSolutions and Adapt Pharmaceutical (now part of Emergent BioSolutions).

Harris Kaplan, Executive Vice President, Commercial Strategy has been involved in the development and launch of 125 new products totaling more than $300 billion in peak revenues, and Dan Relovsky, Senior Vice President of Marketing, has extensive and relevant launch experience across a number of therapeutic categories.

The other key members of the ARS team bring extensive finance, business development and commercial operations experience and include Kathleen Scott, Chief Financial Officer;

Justin Chakma, Chief Business Officer;

Brian Dorsey, Chief Operating Officer and Alex Fitzpatrick, Chief Legal Officer.

Since our inception, we have raised over $360 million in proceeds, including equity financing from a syndicate of leading life sciences investors that include, among others, RA Capital, SR One and Deerfield, from our licensing and collaboration agreements and from our reverse merger with Silverback Therapeutics, Inc.

We have entered into licensing and collaboration agreements for neffy with Alfresa Pharma for Japanese rights, and Pediatrix Therapeutics (founded by F-Prime Capital, Eight Roads and Creacion Ventures) for Chinese rights.

We previously entered into a licensing and collaboration agreement with Recordati for development and commercialization rights in the European Union (“EU”), Iceland, Liechtenstein, Norway, Switzerland, the United Kingdom, Russia/CIS, Turkey, the Middle East and French-speaking African countries.

In the first quarter of 2023, we entered into an agreement with Recordati to terminate our prior agreement with it and reacquire Recordati’s rights to develop and commercialize neffy .

Our Pipeline:

Suite of neffy Programs

We are focused on advancing neffy through regulatory approvals for the emergency treatment of Type I allergic reactions, including anaphylaxis, and commercialization.

neffy is an intranasal composition of epinephrine that is designed to address the limitations of epinephrine intra-muscular injectable products that are available on the market today.

We submitted our NDA for the 2.0 mg neffy dose for adults and children greater than 30 kg in weight to the FDA in the third quarter of 2022.

Our NDA was accepted for review by FDA in the fourth quarter of 2022 with an anticipated mid-2023 PDUFA target action date.

In the EU, our MAA for the 2.0 mg neffy dose for subjects greater than 30 kg in weight was filed and validated for review by EMA in the fourth quarter of 2022.

We have also entered into partnerships for the development and commercialization of neffy in regions outside of the U.S., including our partnerships with Alfresa Pharma in Japan and Pediatrix Therapeutics in China to develop and commercialize neffy in those countries.

Furthermore, we also plan to pursue additional expansion in our pediatric labeling with neffy and are conducting a single-arm pharmacokinetic study in subjects 4 to 18 years of age.

The interim pediatric data including subjects greater than 30 kg in weight is included in our initial NDA.

We plan to submit a supplemental NDA (“sNDA”) for neffy for children weighing 15 to 30 kilograms to the FDA in 2023.

We also plan to submit a post-approval variation to EMA for 1.0 mg neffy following the potential approval of our MAA for the 2.0 mg neffy dose.

In addition, we believe neffy may be able to target other conditions in addition to Type I allergic reactions, and we have identified additional indications for further examination and potential future development.

Our strategy is focused on developing and commercializing neffy as a potentially first-in-class approved intranasal treatment for the approximately 16 million patients in the United States who have been diagnosed and experienced severe Type I allergic reactions and are at risk of anaphylaxis, in geographic regions outside of the United States and for other allergy indications.

Key elements of our strategy include:

Obtain FDA approval of neffy .

Our NDA was accepted for review by FDA in the fourth quarter of 2022 with an anticipated mid-2023 PDUFA target action date.

If approved within our expected timeframe, neffy would be the first FDA-approved emergency treatment for Type I allergic reactions that is not an injection and that has no needle, which we believe would be an attractive treatment option for these patients.

neffy has received Fast Track designation.

However, the timing for regulatory approvals is outside ARS Pharma’s control, may be delayed and is uncertain.

Commercialize neffy in the United States .

If neffy is approved by the FDA, we plan to initially commercialize it in the United States by deploying a combination of direct promotion, virtual sales consultants, and non-personal promotion intended to reach, at a minimum, the healthcare professionals that account for 45% of the current epinephrine prescriptions.

Our promotion will target high-prescribing allergists, pediatricians and primary care physicians through both traditional and non-traditional professional channels.

Through these efforts, combined with direct-to-consumer omnichannel strategies to drive awareness and patients asking for neffy , we believe we can quickly and efficiently reach a majority of the approximately 3.3 million patients in the United States who filled a prescription for an epinephrine intra-muscular injectable device in 2021.

In addition, we believe that the potential for neffy to address the limitations of auto-injectors will allow us to expand the market opportunity for neffy over time to include the broader population of approximately 2.5 million patients who have received a prescription, but either refused or discontinued treatment in the last three years, as well as the approximately 11 million patients who are diagnosed and under the care of physicians, but have not been prescribed an epinephrine intra-muscular injectable.

Commercialize neffy outside of the United States with our partners .

We believe that there is significant commercial potential for neffy in markets outside of the United States.

In Europe, our MAA was filed and validated for review by EMA in the fourth quarter of 2022.

We intend to submit regulatory filings equivalent to an NDA in Japan and China in collaboration with Alfresa Pharma and Pediatrix Therapeutics, respectively, to whom we have granted exclusive licenses in those regions for the development and commercialization of neffy .

Conduct additional studies of neffy to address additional Type I allergic reactions .

There remains a significant unmet need for treatments for allergies that can produce Type I reactions.

We are conducting clinical studies to support the expansion of labeling for neffy to outpatient epinephrine use in other Type I allergy conditions for which epinephrine intra-muscular injectables are not approved.

Overview of Type I Allergic Reactions and Current Challenges

Overview of Type I Allergic Reactions

The immune system plays an important role in monitoring and protecting the body against microbial threats.

However, this system can lead to overstated immune and inflammatory responses that results in adverse outcomes known as hypersensitivity reactions.

Type I allergic reactions are potentially life-threatening hypersensitivity reactions that can occur within minutes following exposure to an allergen and need to be treated immediately to relieve troublesome symptoms, mitigate severity and avoid a potentially fatal event.

These severe reactions are caused by exposure to a specific allergen, typically foods (most commonly, nuts, eggs, shellfish), drugs and venoms and are mediated by immunoglobulin E IgE antibodies that bind to mast cells causing the release of histamines.

The histamines induce smooth muscle contraction in the airways and a wheal and flare response in the skin producing swelling and inflammation.

At the same time, widespread activation of mast cells leads to systemic effects of circulatory shock, hypotension or vascular collapse, and in the most severe cases respiratory arrest and death.

The severity of a Type I allergic reaction is a function of the speed of onset and the number of organ systems affected by the reaction.

As such, early intervention within minutes is critical in order to provide symptom relief and to prevent severe allergic reactions, known as anaphylaxis.

Symptoms of Type I Allergic Reactions including Anaphylaxis

Common Symptoms of Type I Allergic Reactions

Chest tightness, wheezing, difficulty breathing

Upper airway or laryngeal angioedema including swelling of throat

Cardiovascular

Hypotension, presyncope (feeling faint), loss of consciousness

Dermatological

Urticaria (hives) and pruritus (itching)

Gastrointestinal

Abdominal pain and vomiting

* Reprinted with permission from Dr.

Pete Smith (Medical Media Kits) and Mary Johnson

Role of Epinephrine in Treating Type I Allergic Reactions

Epinephrine intra-muscular injectables are the only current out-of-hospital treatment for severe Type I allergic reactions and are recommended to be prescribed to all patients who have experienced a severe Type I allergic reaction and have either experienced anaphylaxis or are at risk of anaphylaxis.

When properly used, these devices can allow for the early administration of epinephrine to stop or reduce the intensity of the systemic allergic reaction before refractory anaphylaxis develops.

Even a few minutes delay in the administration of epinephrine can lead to the need for emergency services and/or hospitalizations, comorbidities and life-threatening symptoms or events, while also prolonging the significant negative impact on patient quality of life by delaying symptom relief.

EpiPen epinephrine autoinjector was first approved by the FDA for the emergency treatment of Type I hypersensitivity reactions, including anaphylaxis, in December 1987.

Other FDA-approved epinephrine intra-muscular injection products include Twinject ® approved in May 2003, Adrenaclick ® approved in November 2009, and Auvi-Q ® approved in August 2012.

In June 2017, the FDA approved Symjepi epinephrine injection, which is a pre-filled syringe for the same indication.

These injection devices were approved by the FDA without pharmacokinetic data based on an assumption that injections and devices were all effectively the same as the reference listed drug of intra-muscular injection with a needle and syringe.

Intra-muscular injection with a needle and syringe is considered the gold standard, and is almost exclusively used in non-community use clinical settings.

Although there are no known differences in efficacy or time to observed effect in clinical practice between these devices, current data indicates that different devices deliver an intra-muscular dose of epinephrine with a range of PKs.

A single dose with either an intra-muscular injection with needle and syringe or an auto-injector device results in resolution of allergic reaction for approximately 90% of cases within 5 to 15 minutes.

Epinephrine works due to its agonistic effects on the body’s adrenergic receptors (alpha and beta receptors).

By activating alpha-1 receptors, epinephrine prevents and relieves airway edema, hypotension and shock.

By activating beta-1 receptors, epinephrine increases the rate and force of cardiac contractions.

Lastly, epinephrine’s effect on beta-2 receptors leads to bronchodilation and decreased allergy causing mediator release by mast cells.

Treatment guidelines recommend that epinephrine be administered immediately at the first sign of a severe allergic reaction.

Epinephrine is the only medication that can reverse severe allergic reactions and reduce hospitalization and death.

Early administration of epinephrine is associated with better outcomes and decreased likelihood of hospitalizations.

The sooner epinephrine is administered following allergen exposure, the less severe the systemic allergic reaction may become, and the less likely it will develop into an anaphylaxis event.

A short delay of even a few minutes in the recognition and treatment of anaphylaxis can lead to more serious symptoms, including potential hypoxia or death.

Additionally, accompanying symptoms of even non-life-threatening allergic reactions can adversely impact health-related quality of life and can lead to loss of productivity, negatively impact social life, as well as lead to depression and anxiety and feelings of fear, frustration, worry and lack of control.

A second dose of epinephrine is required for adequate treatment in about 10% of cases, irrespective of whether epinephrine was dosed using an auto-injector such as EpiPen or needle and syringe.

While antihistamines such as diphenhydramine, also known as Benadryl ® (marketed by Johnson & Johnson), can sometimes relieve the dermatological symptoms and pruritus associated with severe Type I allergic reactions, treatment guidelines state that antihistamines should never be administered instead of epinephrine because they do not reverse the cardiovascular symptoms such as hypotension and shock, or respiratory distress.

Instead, antihistamines can potentially mask symptoms and allow the disease to continue to progress silently.

In the United States, dosing recommendations for epinephrine use by intra-muscular injection are from 0.1 mg to 0.5 mg depending on weight with repeat dosing administered as needed to control a severe allergic reaction.

0.1 mg, 0.15 mg and 0.3 mg are the approved doses for the epinephrine auto-injectors.

Approximately 80% of epinephrine auto-injectors prescribed in the United States for outpatient use are the 0.3 mg dose level for persons greater than 30 kg in weight, approximately 15% contain doses of 0.15 mg for persons between 15 to 30 kg and less than 5% contain 0.1 mg doses for persons less than 15 kg.

A low dose of epinephrine is important for safety as overexposure to epinephrine can lead to adverse events.

Limitations of Existing Epinephrine Products

* Reprinted from RECAPEM (image described in the public-domain and freely available).

Epinephrine intra-muscular injectables have been proven to be highly effective if they are administered timely and effectively, and work as intended, but the limitations of these products include painful application, inconvenient size and a complicated mechanism of administration.

These limitations discourage patients and caregivers from carrying these devices and administering epinephrine in a timely manner.

Both uptake and use of intra-muscular injection devices has been limited among eligible patients with severe Type I allergic reactions at risk of anaphylaxis.

Of the approximately 16 million people in the United States who have been diagnosed and experienced Type I severe allergic reactions, only 3.3 million currently have an active and filled epinephrine autoinjector prescription.

In studies published in peer-reviewed journals, only 23% to 48% of patients self-administered with an auto-injector during a severe Type I allergic reaction, likely due to less than half of patients actually carrying their prescribed injection device, and only half administering even if the device was available.

Across our market research studies, approximately 40% to 60% of patients reported using an antihistamine first, which is not known to be effective, and if carrying an intra-muscular injectable, waited an average of 8 to 18 minutes to administer the device.

The principal device-related reasons for delay were presence of a needle, concern about serious cardiac side effects, and potential pain.

Patients, and particularly parents who administer to their child, perceive injection to be traumatic, which leads to a fear and avoidance of administering timely treatment.

Further, the potentially life-threatening nature of a severe Type I allergic reaction is often accompanied with psychological stress and panic which can lead to delays or errors in proper intra-muscular injection, which can result in hospitalization or even death.

In a meta-analysis of 32 studies evaluating epinephrine injectable administration techniques, 23% to 35% of participants failed to achieve the correct administration technique following training.

Further, there is variability in respect to whether auto-injector devices are able to reliably deliver a sufficient dose of epinephrine.

The FDA has reported that EpiPen device failures lead to multiple deaths and dozens of hospitalizations annually.

The injection needle can be painful and dangerous not just due to the risk of skin lacerations and the possibility of the needle hitting a patient’s bone during administration, but also the risk of serious, sudden cardiovascular events resulting from accidental blood vessel injection.

In our clinical studies, we observed instances of potential accidental blood vessel injection in approximately 14% of patients dosing themselves with EpiPen.

In comparison, neffy is perceived by patients and parents as a potentially “game changing”

device that, if approved, could improve the management of severe Type I allergic reactions by addressing the current limitations of epinephrine intra-muscular injectable devices.

Clinical Development of neffy

neffy is designed to provide injection-like absorption of epinephrine at a 1.0 or 2.0 mg dose comparable to 0.3 mg injection, in a small, easy-to-carry, easy-to-use, rapidly administered and reliable nasal spray.

Based on our development work to date, we believe neffy ’s “no needle, no injection”

clinical profile supports differentiation over intra-muscular injections for the emergency treatment of Type I allergic reactions, including anaphylaxis.

We submitted our NDA to the FDA in the third quarter of 2022 based on a rigorous clinical development program agreed upon during pre-NDA meeting discussion with the FDA in mid-2021.

Our NDA was accepted for review by FDA in the fourth quarter of 2022 with an anticipated mid-2023 PDUFA target action date.

The FDA reference listed drug is intra-muscular needle-in-syringe injection products but there are several approved epinephrine intra-muscular injection products, including intra-muscular auto-injectors such as EpiPen, that establish a range of exposures that have indistinguishable efficacy, time to observed clinical effect and safety.

During our pre-NDA meeting in mid-2021, FDA agreed that bracketing based on the primary parameters of C max , t max and early partial AUCs from the range of PKs observed in listed epinephrine injection products was the best approach to ensure efficacy and safety, while bracketing by AUC 0-t was considered an important parameter to ensure safety.

PD measures of epinephrine activity such as systolic blood pressure and pulse rate were agreed to be supportive, and to be not meaningfully lower than injection.

FDA also agreed that successfully demonstrating that neffy met these criteria in three primary studies described below would be sufficient to serve as a basis for our registration program for adults.

Furthermore, FDA also agreed that a single study in pediatric subjects also described below would be sufficient to support our pediatric labeling.

We have completed three registrational clinical trials in adults using our 2.0 neffy dose for which we submitted our NDA to the FDA in the third quarter of 2022.

The adult registrational program using the 2.0 mg neffy was intended to generate bioavailability, PDs and safety data in three primary studies:

(i) during single and repeat dosing in healthy subjects (EPI-15), (ii) during self-administration by subjects with severe Type I allergies (EPI-17), and (iii) during rhinitis induced by a nasal challenge with an allergen (EPI-16).

EPI-15 was conducted in the United States on behalf of ARS Pharma by WCCT Global, Inc., a third-party contract research organization, and selected for 59 healthy male or female volunteers between the ages of 18 to 55 years.

EPI-16 was conducted in the United States on behalf of ARS Pharma by Altasciences Clinical Los Angeles, Inc., a third-party contract research organization, and selected 36 male or female volunteers between the ages of 18 to 55 years with a positive history of seasonal allergic rhinitis related to tree or grass allergens as demonstrated by skin prick test and nasal allergen challenge at screening.

EPI-17 was conducted in the United States on behalf of ARS Pharma by Novum Pharmaceutical Research Services, a third party contract research organization, and selected 45 male or female volunteers between the ages of 18 to 55 years who had an ongoing history of Type I allergies.

To support our proposed pediatric labeling, we are also conducting a single-arm pharmacokinetic study in subjects 4 to 18 years of age with either 1.0 mg or 2.0 mg of neffy depending on the subject’s weight (EPI-10).

EPI-10 is being conducted in the United States by ARS Pharma and selected 42 male or female subjects between the ages of 4 and 18 years who have Type I allergies that required that the subject or caregiver been prescribed an epinephrine product.

The interim results of this study from 57 subjects including 16 subjects dosed with 2.0 mg neffy were included in our initial NDA that was accepted for review by FDA in the fourth quarter of 2022.

In addition, we have completed two proof of concept clinical studies that evaluated the bioavailability of our 2.0 mg neffy dose.

These two earlier-stage studies were conducted in the United States on behalf of ARS Pharma by WCCT Global, Inc.

and Altasciences Clinical Los Angeles, Inc, respectively, and selected a total of 26 healthy male or female volunteers between the ages of 18 to 55 years, and 42 male or female volunteers between the ages of 18 to 55 years who had an ongoing history of type I allergies.

2.0 mg neffy is intended to be the dose that is comparable to approved 0.3 mg epinephrine intra-muscular injection products for persons greater than 30 kg in weight, which represents approximately 80% of the prescriptions in the United States.

1.0 mg neffy is intended to be the dose for persons 15 to 30 kg in weight.

Our NDA for the 2.0 mg dose of neffy for adults and children 30 kg and greater in weight was accepted for review by FDA in the fourth quarter of 2022 with an anticipated mid-2023 PDUFA target action date.

We plan to submit a supplemental NDA for the 1.0 mg dose of neffy in 2023 for subjects 15 to 30 kg in weight.

In our clinical studies in both adults and children, 2.0 mg neffy gave comparable epinephrine exposures that were within the range of approved intra-muscular injection products (needle-in-syringe products and EpiPen) on key pharmacokinetic parameters (C max , t max , early partial AUCs, AUC 0-t ).

The integrated data analysis summarizing the key outcomes for registration are shown below.

The hemodynamic response, measured by systolic blood pressure and heart rate, after administration of neffy was comparable to some injection products including EpiPen, and was greater than 0.3 mg intra-muscular needle-with-syringe.

These hemodynamic responses were within normal physiologic ranges that are typically experienced during exercise or climbing stairs.

Across all the clinical trials, a total of more than 600 subjects have been exposed to neffy .

All doses of neffy ranging from 0.5 mg to 2.0 mg single doses, as well as repeat doses up to 4 mg within 10 minutes, were well-tolerated by patients.

There is no meaningful pain upon administration of neffy with average scores of 5 to 8 as assessed on a 100 mm visual analogue scale, across studies.

There was no irritation observed based on formal scoring in all studies.

There were no serious treatment-related adverse events, and adverse events reported have generally not resulted in side effects more severe than grade 1, and were comparable to injection products.

Since neffy is given without needle, there was also no needle-related injuries or accidental blood vessel injections.

In contrast, for patients self-administering devices, which involved 132 subjects dosed for each of EpiPen and Symjepi, approximately 14% of subjects dosed with EpiPen (auto-injector) and 2% of subjects dosed with Symjepi (pre-filled needle-in-syringe) experienced a potential blood vessel injection leading to a rapid bolus dose of epinephrine, which could lead to serious side effects including cardiovascular events and cerebral hemorrhage according to the FDA EpiPen label.

No subjects dosed with neffy experienced a blood vessel injection since it is not possible via the nasal route of administration.

Furthermore, our registrational self-administration study of 2.0 mg neffy by adults with severe Type I allergies (EPI-17) showed no critical dosing errors with neffy as evaluated by human factors professionals.

Furthermore, neffy also showed zero dosing errors in two human factor validation studies involving 150 subjects when used by trained adults or trained children across multiple demographic groups, as well as when used by passers-byers with no prior experience or training with an epinephrine device.

Key features of neffy demonstrated in our clinical, human factors or stability studies include:

Clinical Feature

Supporting Clinical Data

Comparable PKs at a low dose of epinephrine

C max , t max and AUCs were within the range of approved intra-muscular injection products with a low intranasal dose of 2.0 mg n effy (people >30 kg in weight) and 1.0 mg n effy

(people 15 –

30 kg weight).

Robust PDs within a range comparable to injection products with no risk of accidental blood vessel injections

PD responses including systolic blood pressure and heart rate were within normal physiologic changes and comparable to auto-injector products, with maximum changes less that of the EpiPen.

neffy has no potential for the accidental blood vessel injections observed with injection products such as EpiPen, which can lead to rapid and high epinephrine exposures that cause rapid increases in systolic blood pressure and can lead to cerebral hemorrhage or other cardiovascular side effects.

No meaningful pain or irritation after administration

Visual analogue scale scores were an average of 5 to 8 on a 100 mm scale, and show no meaningful pain (or burning or stinging sensation) after administration, attributable to n effy being an aqueous formulation.

There is also no irritation observed based on formal scoring.

Needle containing intra-muscular injection products are known to be painful and cause reluctance to dose.

No critical dosing errors during self-administration with 2.0 mg n effy by type I allergy adult subjects (EPI-17).

Zero percent error rate in two human factors studies with 150 persons, when used by trained adults or trained children and when used by untrained passers-byers.

Easy to carry

neffy is comparable in size to a wireless earbud case, and multiple neffy devices can fit in a patient or parent’s pocket to satisfy guideline recommendations.

High reliability

neffy ’s sprayer device is designed to deliver the effective dose more than 99.999% of the time, with no recalls or warnings among the millions of the same nasal sprayer devices sold to date.

No breathing or inhalation required

neffy is designed to be absorbed passively through the nasal mucosa without any inhalation, sniffing or breathing required, with its particles too large to enter the lungs.

Injection-like absorption even with nasal congestion

neffy reaches exposures comparable to approved injectable products even after induction of moderate to severe nasal rhinitis and/or edema (e.g., nasal congestion)

Shelf-life at least comparable to injection products, but also with high temperature stability

Drug stability studies show that n effy has a shelf-life at least comparable to the 18 month shelf-life of EpiPen, but with high temperature stability, based on stability data from the 2.0 mg dose of neffy for 12 months and the 1.0 mg dose of neffy for 24 months.

neffy remains within specifications even when exposed to temperatures of 50 o C (122 o F) for at least three months, or temperatures of 40 o C (104 o F) for at least six months.

Planned Clinical Trials in Additional Indications

Epinephrine has been used empirically by physicians and included in treatment guidelines for multiple allergy conditions that do not fall under the emergency treatment of Type I allergic reactions indication that epinephrine auto-injectors are labelled for.

The needle-free, portable, easy-to-use and potentially safer clinical profile of neffy supported by pharmacokinetic and pharmacodynamic data could enable the broader adoption of epinephrine in the outpatient setting for these other indications.

We are conducting proof of concept studies evaluating neffy in additional allergy indications where neffy could potentially be used multiple times a year to treat acute episodes.

Development outside the United States

In Europe, our MAA was filed and validated for review by EMA in the fourth quarter of 2022.In the Day 120 comments, we received during EMA’s review of our prior 1.0 mg dose neffy MAA submission, EMA required a preclinical dog anaphylaxis study, which we completed with data showing no meaningful differences in epinephrine absorption of neffy in dogs in a normal state or an anaphylactic state.

In April 2022, we voluntarily withdrew our 1.0 mg neffy MAA submission to re-submit a 2.0 mg neffy MAA submission and allow EMA to review both our 2.0 mg neffy and preclinical dog anaphylaxis study results.

We are also pursuing pediatric approval of neffy in Europe based on the same US pediatric study.

We plan to submit a post-approval variation to EMA for the 1.0 mg neffy following the potential approval of the 2.0 mg neffy dose.

Our partners in Japan and China expect that they will file for regulatory approval in their respective regions at end of 2023 or early 2024 following our anticipated FDA approval of neffy .

Commercialization Opportunity and Commercialization Plan

Type I Allergy Market Overview

neffy is a needle-free, low-dose intranasal epinephrine nasal spray in clinical development for use as a rescue medication for people with Type I severe allergic reactions including anaphylaxis.

neffy was designed to provide injection-like absorption of epinephrine, in a small, easy-to-carry, easy-to-use, rapidly administered, and reliable nasal spray device.

All systemic allergic reactions have the potential of progressing to anaphylaxis and becoming life-threatening.

These reactions can be unpredictable and progress quickly to develop severe symptoms within a few minutes after exposure and can progress to a life-threatening event if not treated immediately.

Patient and caregiver preparedness to act quickly and confidently during a severe allergic reaction is imperative.

Hesitation can lead to worse clinical outcomes and can be fatal.

Epinephrine is the first-line treatment for the emergency treatment of Type I allergic reactions including anaphylaxis.

Epinephrine needs to be given as soon as symptoms occur because it is the only medication proven to stop a potentially life-threatening allergic reaction.

Needle-free and easy-to-use neffy may allow for improved patient and caregiver preparedness to give epinephrine quickly, confidently, and without hesitation that is caused by fear of the needle.

Intended for use at the first signs of an allergic response, neffy is designed to provide patients and their families with a new option to rapidly resolve symptoms and prevent progression to severe anaphylaxis.

If approved for use, we believe our first-in-class nasal spray may transform the way we think about and use life-saving epinephrine.

Existing US Market Opportunity

We estimate approximately 25 to 40 million people in the United States have experienced Type I allergic reactions.

Of this group, approximately 16 million people have been diagnosed and experienced severe Type I allergic reactions that may lead to anaphylaxis, but only about 3.3 million of them filled a prescription in 2021 for an epinephrine intra-muscular injectable device, including auto-injectors, equating to approximately 10 million devices.

Of those 3.3 million people, roughly half don’t carry these devices due to many drawbacks that can result in patient and caregiver injury, hesitation, and delays in administration principally because of apprehension and pain of needles.

In turn, the failure or delay of epinephrine delivery can allow the allergic reaction to progress in severity causing life-threatening symptoms or events that potentially require emergency services and/or hospitalization.

We believe neffy could address the needs of not only the approximately 3.3 million patients in the United States who currently fill intra-muscular injectable prescriptions, but also the more than 22 million eligible Type I allergy patients in the United States who are at risk of severe allergic reactions that are not prescribed or do not fill their epinephrine prescriptions, including approximately 2.5 million former injectable patients in the United States in the last three years that either refused to fill, or did not renew an intramuscular injectable device prescription.

Based on market access research and data from IQVIA, we estimate that 2021 U.S.

net sales for intra-muscular injectable devices were approximately $1 billion.

Approximately 80% of the epinephrine intra-muscular injectables sold in the United States in 2021 were for the 0.3 mg dose for adults and children greater than 30 kg in weight.

We have conducted multiple market research studies with caregivers, generally parents, and patients with severe Type I allergic reactions in the United States to evaluate potential market perceptions of neffy and currently available epinephrine delivery devices.

Based on two independent quantitative market research studies including a total of 350 patients and 75 allergists, pediatricians and primary care physicians, approximately 80% of patients with a current epinephrine auto-injector prescription stated that they would prefer neffy .

Furthermore, 100% of the physicians surveyed stated they would prescribe if their patient asked for neffy, indicating that neffy prescriptions would likely be highly driven by patient preference and awareness of neffy .

In our market research, parents and people with current or prior epinephrine auto-injector prescriptions were asked if and when they would adopt a new nasal spray device product such as neffy .

A majority indicated they would adopt neffy within three months of it coming to market,

69% of patients indicated they would use neffy sooner than their current auto-injector device,

65 to 72% of patients indicated that they would use neffy first instead of an over-the-counter antihistamine

88% reported they would be more willing to use neffy in public.

These data suggest that neffy has the potential to be rapidly adopted by most of the approximately 3.3 million patients in the United States today who fill their epinephrine auto-injector prescription, if approved.

These patients serve as our base estimate for the current epinephrine market for neffy .

Key potential growth levers for neffy within the existing epinephrine market for the emergency treatment of Type I allergic reactions, which currently consists of only intra-muscular injectable products include:

Consistent base market growth observed with the epinephrine intra-muscular injectable products.

From 2007 to 2021, the number of epinephrine intra-muscular injectable devices sold in the United States has increased by approximately 5% annually based on IQVIA unit sales data, primarily due to the increasing size of the overall population affected by severe Type I allergies, led by food-based allergies.

Potential promotional lift due to new marketing and education efforts by a branded product such as neffy .

The existing market for epinephrine intra-muscular injectable products is characterized by being highly promotionally sensitive, particularly from a consumer perspective, and our market research has indicated that neffy ’s user-friendly product profile has the potential to resonate significantly with consumers.

We estimate that branded marketing of EpiPen prior to generic entry contributed a promotional lift of 31% over base epinephrine intra-muscular injectable market trends.

We plan to reach and support patients directly through efficient direct-to-consumer advertising after educating professional physician practices and securing appropriate payer coverage for neffy .

Targeting the approximately 2.5 million former patients that either do not fill their epinephrine intra-muscular injectables prescriptions or whose prescriptions have recently lapsed .

The exodus of patients who have received prescriptions from the market has been attributed to a number of factors, including reduced promotional activities in recent years, limited adherence program effectiveness (lapsed prescriptions) and patient adversity to currently marketed products (i.e., fear of needles and concerns regarding poor reliability).

In our market research of 100 former patients who refused to fill or renew a prescription, approximately 75% indicated a willingness to return to the market and request neffy if approved.

We hope to engage with these patients through programs to encourage appropriate epinephrine use with neffy and increase consistency of epinephrine acquisition to help manage their condition.

Increased per patient device acquisition by patients and parents.

In our market research of 350 patients with an active intra-muscular injectable prescription, approximately 70% to 80% of patients reported an intention to acquire additional devices compared to their current injectable device if neffy is approved by the FDA.

Currently, we estimate only between 20% to 30% of patients currently obtain more than one pack (containing two devices) per year today.

US Market Expansion Opportunity

While we believe the existing epinephrine intra-muscular injectables market is a large commercial opportunity for neffy with multiple independent opportunities for further growth, IQVIA claims data indicates that many diagnosed, identifiable eligible patients do not receive prescriptions for intra-muscular injectables.

Outside of the five million patients who were recently prescribed an epinephrine injectable device, there are approximately 11 million patients who are under the care of physicians per IQVIA claims data, but have not been prescribed an epinephrine intra-muscular injectable device, as well as another approximately 9 million patients not currently under the care of physicians.

Over time, targeting the approximately 11 million identified and diagnosed in-office patients in IQVIA claims data with Type I allergic reactions that are eligible but have not been prescribed epinephrine device.

In our market research, physicians indicated they would prescribe neffy to more than half of the patients who were eligible, but do not currently receive an intra-muscular injectable prescription.

Development in new allergy indications.

There are approximately 10 million patients with allergy conditions (e.g., urticaria flares and asthma exacerbations) where epinephrine has never been formally developed as a prescription product, despite being used in-hospital to resolve such acute symptoms.

Such patients in other conditions experience multiple episodes each year, and we believe they would likely use multiple neffy each year to resolve their symptoms.

Therefore, the market opportunity for treating such conditions may be as large as the type I allergy including anaphylaxis indication.

We are conducting a randomized, placebo-controlled proof of concept study evaluating the safety and efficacy of neffy in approximately 24 subjects with frequent urticaria flares.

We expect to complete enrollment and report topline data from this study in the second half of 2023.

Ex-US Market Opportunity

Outside of the United States, we estimate that there are an additional 15 million patients in Europe, and over 30 million patients in Asia including China and Japan, that experience Type I allergic reactions that are clinically appropriate for being prescribed neffy .

In 2021, epinephrine intra-muscular injectable sales outside the United States were approximately $250 million based on IQVIA data.

In Europe and Japan, sales of epinephrine injectable devices are approximately $160 million.

We believe education around Type I allergic reactions and marketing of intra-muscular injectables has been limited in these regions, and that promotion and the availability of neffy would significantly expand the market.

Market research conducted in Europe with 120 patients who have an epinephrine auto-injector prescription indicated that 98% would prefer neffy , and that they would acquire approximately twice as many neffy devices compared to their current injectable device, if approved.

To target these opportunities outside of the United States, we have entered into licensing and collaboration agreements with Alfresa Pharma for Japanese rights to neffy and Pediatrix Therapeutics (founded by F-Prime Capital, Eight Roads and Creacion Ventures) for Chinese rights to neffy .

We intend to pursue strategic partnerships for the commercialization of neffy in additional regions outside of the United States, subject to FDA approval of neffy .

We previously entered into a licensing and collaboration agreement with Recordati for development and commercialization rights in the EU, Iceland, Liechtenstein, Norway, Switzerland, the United Kingdom, Russia/CIS, Turkey, the Middle East and French-speaking African countries.

In the first quarter of 2023, we entered into an agreement with Recordati to terminate our prior agreement with it and reacquire Recordati’s rights to develop and commercialize neffy .

Commercial Strategy

We believe that the epinephrine market is a highly consumer driven market .

We expect this to be especially true for neffy , given that 100% of the physicians surveyed in our quantitative market research studies indicated that they would prescribe neffy if asked by a patient and approximately 70% of physicians would recommend neffy .

As a result, we believe that driving consumer awareness, so that patients and parents ask their healthcare provider for neffy , while minimizing both access and educational barriers to acceptance is essential.

Our plan to execute on our go-to-market strategy for neffy includes the following:

We plan to create healthcare professional and consumer awareness and anticipation prior to launch .

We are refining our go-to-market strategy and creating awareness about our company and our technology.

We expect to expand medical affairs capabilities prior to commercial launch to establish additional relationships with key opinion leaders and gain insight into current practice patterns and burdens.

The medical affairs team will also collaborate with the commercial team to help payers fully understand neffy’s value proposition and the limitations associated with needle injectors.

We also plan to begin to raise awareness and support meaningful education through partnership with patient advocacy groups and medical societies as well as a disease education campaign including through social media and digital.

Based on the unmet needs that we identified, our pre-launch activities may be focused on delivering disease awareness and education surrounding the appropriate epinephrine use to prevent anaphylaxis to allergists and pediatricians as well as parents and patients in partnership with allergy and professional advocacy groups.

These disease education efforts will more specifically reinforce the importance of early administration of epinephrine at the first sign of a severe Type I allergic reaction, help stakeholders understand the factors that are associated with hesitation to fill and use epinephrine earlier in a reaction, and the importance of alternative epinephrine delivery options to support those affected by severe allergic reactions.

In our market research, 42% of patients who had used an epinephrine injectable device during a recent episode reported that they delayed use by an average of approximately 9 minutes.

If neffy were available, these patients reported that they would reduce their average wait time to use by 45%.

Additionally, 47% of patients reported they were more likely to fill prescriptions and 86% of patients reported they would carry neffy with them.

We believe a broad understanding of this evidence will help to establish and increase the urgency to treat patients with neffy and support our rapid launch uptake following FDA approval, if achieved.

We plan to initially commercialize neffy in the United States with a combination of direct promotion, virtual sales consultants, and non-personal promotion intended to reach, at a minimum, the healthcare professionals that account for 45% of the current epinephrine prescriptions.

Our promotion will focus the launch on the highest potential practicing allergists, pediatricians, and primary care physicians.

In our market research, approximately 80% of patients see their treating physicians at least every six months, and 98% at least once a year.

We plan to optimize our field representatives based on planned research on current market dynamics, geo-targeting and assessment of current professional-industry interaction preferences initially to reach these professionals.

We expect significant reach to be achieved based on expanded use of non-personal promotional tactics and virtual sales representatives to reach healthcare professionals and focus on the sequential activation of patient demand through direct-to-consumer tactics that will help also drive physician awareness due to overlapping exposure.

We intend to partner with patient advocacy organizations as well as influencers and leverage an omnichannel strategy including direct-to-patient and parent tactics, social and traditional media, digital presence, and additional public relations to drive awareness, for patients to ask for neffy , and communicate our value proposition .

The pent-up patient demand that we believe is ready to be activated by neffy is reflected in our market research where 87% of patients indicated a high likelihood to proactively visit their physician in-person and ask about getting a new prescription for neffy (43% of patients indicating a 10 out of 10 likelihood, and 44% of patients indicating a 7-9 out of 10 likelihood).

Our research also showed that physicians would recommend neffy to approximately 70% of their patients.

In addition, the severe Type I allergy market has historically been highly promotionally sensitive, and in recent years, there has been limited investment in education or promotion, which we believe provides an opportunity for significant promotional lift from our planned marketing efforts.

We intend to establish neffy as the dominant and most recognized brand in the category.

We believe neffy ’s potential brand recognition and user-friendly profile can be an important driver of growth and source of competitive differentiation, especially as the first “no needle, no injection”

solution for severe Type I allergic reactions.

We have designed neffy to offer healthcare professionals, patients and caregivers a simple, injection-free, portable, highly reliable and user-friendly alternative that facilitates early administration of epinephrine to provide rapid symptom relief and to stop the allergic reaction from progressing to more serious events.

We believe the attractiveness and meaningful differentiation of neffy across both physicians and payers will stimulate a high patient and parent desire to switch to or return to managing their condition with neffy .

We intend to secure affordable market access for all consumers by optimizing contracting, co-pay support and distribution of neffy .

To ensure access and affordability for neffy , we plan to engage with payors to convey the clinical rationale and value proposition of neffy .

To date, we have conducted extensive market research with approximately 50 decision-makers at payors to help forecast the potential commercial opportunity for neffy in the United States.

Health insurers surveyed have indicated that neffy is perceived as differentiated brand from epinephrine auto-injector products, with its needle-free route of administration and increased likelihood of being carried as the most important product attributes.

Based on these analyses and our planned contracting strategy, we believe payers can support favorable and broad market access for neffy .

Further, we will offer comprehensive patient support programs in the form of co-pay buydowns to help ensure access and affordability for all patients.

We intend to expand the market beyond the 3.3 million patients currently filling epinephrine injection device prescriptions.

We believe that the severe Type I allergy market is currently significantly underpenetrated due to the lack of, and limitations in, current treatment options.

We believe the availability of neffy could drive increased device uptake among the existing 3.3 million patients currently filling epinephrine injection device prescriptions, adoption by the approximately 2.5 million patient that receive, but do not fill their prescription, and the 11 million patients diagnosed and managed by physicians who do not currently have an epinephrine auto-injector, especially those incorrectly using antihistamines as a substitute.

Other launches of intranasal products for emergency use into previously injection-only markets such as NARCAN (marketed by Emergent BioSolutions), VALTOCO (marketed by Neurelis), NAYZILAM (marketed by UCB) and BAQSIMI (marketed by Eli Lilly) have rapidly captured a significant percentage of the existing market, and also expanded their respective markets.

Both products use the same device that we have chosen for neffy .

We believe that NARCAN’s widespread use clearly demonstrates market uptake in response to the advantages of an intranasal product via proven device over injection, considering in particular that NARCAN is used in life threatening rescue situations where reliable administration is required for confident administration, similar to severe Type I allergic reactions.

Beyond just reliability, we believe that an intranasal product has unique advantages for treating a severe Type I allergic reaction due to patient and parent fear and avoidance of injection and because time is of the essence.

This perspective is distinct from other diseases with chronic use of injection products, administration by a trained professional is required, or where the injection is more manageable and tolerated.

In our market research, respondents have described neffy as “game-changing”

and we believe neffy , if approved, can make a significant difference in patient lives and outcomes.

If approved, we plan to establish a distribution channel in the United States for the commercialization of neffy .

We expect to sell neffy to wholesalers, who, in turn, will sell our neffy to retailors and other customers.

We expect to use a third-party logistics provider for key services related to logistics, warehousing and inventory management, distribution, contract administration, order management and chargeback processing and accounts receivable management.

We also plan to explore other non-traditional distribution channels including telemedicine.

To target markets outside of the United States, we have entered into strategic partnerships with several pharmaceutical companies to obtain regulatory approval and market neffy .

These include Alfresa Pharma for Japan and Pediatrix Therapeutics for China.

We intend to pursue strategic partnerships for the commercialization of neffy in additional regions outside of the United States, subject to FDA approval of neffy .

We anticipate that in certain markets additional clinical trials of neffy may be required to obtain regulatory approval and/or ensure market access.

Our industry is highly competitive and subject to rapid technological changes.

Our potential competitors include large pharmaceutical and biotechnology companies, specialty pharmaceutical and generic drug companies, academic institutions, government agencies and research institutions.

Many of our potential competitors have substantially greater financial, technical, commercial and human resources than we do and significantly more experience in the discovery, development and regulatory approval of product candidates and the commercialization of those products.

We believe that the key competitive factors that will affect the development and commercial success of neffy and the other product candidates that we may develop are their efficacy, safety and tolerability profile, convenience in dosing, product labeling, value and price, in addition to whether there are alternative therapies approved for other indications and prescribed for off-label use and the availability of reimbursement from the government and other third parties.

Our commercial opportunity could be reduced if our competitors have products which are better in one or more of these categories.

We expect that, if approved, neffy would compete with a number of existing products and other product candidates that target Type I allergic reactions, including certain products that are or may become generic products.

Additionally, the development of new treatment methods for the diseases we are targeting could render our current or future product candidates non-competitive or obsolete.

We anticipate that, if approved, neffy will compete primarily against epinephrine intra-muscular injectable products, for the emergency treatment of Type I allergic reactions including EpiPen and its generics, which are marketed by Viatris, Inc.

and Teva Pharmaceuticals, Inc., respectively;

Adrenaclick, which is marketed by Amneal Pharmaceuticals, Inc.;

Auvi-Q, which is marketed by Kaleo, Inc.;

and Symjepi, which is marketed by Sandoz, Inc., a Novartis division.

We are not aware of any other company that has a “no needle, no injection”

epinephrine product candidate in clinical development in the United States that has demonstrated PKs bracketed by the approved injection products for all pharmacokinetic parameters requested by the FDA.

We are also not aware of any “no needle, no injection”

epinephrine product candidate for the pediatric population that is in clinical development.

We are aware of several companies developing higher dose intranasal candidates including Bryn Pharma, Hikma Pharmaceuticals, Inc.

(previously INSYS Therapeutics, Inc.), Nasus Pharma and Orexo AB.

Amphastar Pharmaceuticals, Inc.

is reported to be developing an intranasal candidate, but has not disclosed its dose.

Aquestive Therapeutics is developing a sublingual candidate based on a prodrug of epinephrine.

Manufacturing and Supply

We do not own or operate manufacturing facilities for the production of neffy , nor do we have plans to develop our own manufacturing operations for clinical materials or commercial products in the foreseeable future.

We currently depend on third-party contract manufacturing organizations (“CMOs”) for all of our required raw materials, drug substance and drug product for our preclinical research and clinical trials.

We currently rely on suppliers for raw materials including drug substance and multiple manufacturers for our product candidates and expect to rely on third-party suppliers and manufacturers for the commercial supply of any approved products.

We currently employ internal resources and third-party consultants as needed to manage our CMOs.

These CMOs offer a comprehensive range of contract manufacturing and packaging services and have successfully handled the scale up of neffy in preparation for commercialization.

neffy is presented as a nasal spray in aqueous solution with epinephrine as the active pharmaceutical ingredient (“API”) filled into glass vials and closed with a rubber stopper and assembled into the unit dose sprayer device.

Over time, epinephrine is oxidized and loses potency resulting in a finite shelf-life, and the neffy solution inside the unit dose sprayer changes to an amber to brown color.

Epinephrine is the API used in neffy .

We intend to use Cambrex Profarmco (“Cambrex”) as one of our commercial sources for epinephrine API.

Cambrex holds a U.S.

drug master file for epinephrine produced at its facility in Italy, and its manufacturing process is fully validated.

We have entered into a commercial supply agreement with Cambrex, and while we believe that Cambrex has sufficient capacity to satisfy our long-term requirements, there are several sources of API available, and we intend to launch with a second source of API and are in the process of qualifying this second API source.

Dodecyl maltoside or Intravail is purchased through our license agreement with Aegis Therapeutics, Inc.

from two manufacturers, Dr.

Reddy Laboratories and Inalco, which are based in India and Italy, respectively.

The unit dose sprayer device used to delivery drug product in neffy is produced by Aptar Pharma (“Aptar”).

Aptar produces devices in France and we believe Aptar has sufficient capacity to satisfy our long-term requirements.

The patent for the Aptar unit dose nasal spray device expired in early 2020, and we believe there will be generic supplies available soon after launch.

Manufacturing drug product for neffy is conducted by Renaissance Pharmaceuticals, Inc.

(“Renaissance Pharma”), which has been actively involved in supporting the manufacture of neffy devices in our clinical development.

We intend to use its facility in Lakewood, New Jersey as our primary source for drug product manufacturing and final packaging.

We have entered into a commercial supply agreement with Renaissance Pharma, and believe they have sufficient capacity to satisfy our long-term requirements, although we are evaluating alternating sourcing options.

Ongoing stability studies demonstrate that neffy is stable at room temperature for at least 18 months, based on stability data from the 2.0 mg dose of neffy for 12 months and the 1.0 mg dose of neffy for 24 months, and we plan to continue to conduct ongoing registration stability studies that we anticipate will enable us to indicate on our label, if approved, that neffy is stable at room temperature for 18 months at 25 o C.

We have also conducted studies indicating that neffy is also stable at temperature excursions including 40 o C for up to six months, and at 50 o C for up to three months.

Intellectual Property

We strive to protect and enhance the proprietary technology, inventions, and improvements that are commercially important to our business, including seeking, maintaining and defending patent rights, whether developed internally or licensed from third parties.

We own the issued patents and patent applications relating to our ImmunoTAC platform and SBT8230.

Our policy includes seeking to protect our proprietary position by, among other methods, filing patent applications, in the United States and in jurisdictions outside of the United States, directed to our proprietary technology, inventions, improvements, and product candidates that are important to the development and implementation of our business.

We also rely on trade secrets and know-how relating to our proprietary technology and product candidates, continued innovation, and in-licensing opportunities to develop, strengthen and maintain our proprietary position in the field of immunotherapy.

We also plan to rely on data exclusivity, market exclusivity, and patent term extensions when available.

Our commercial success will depend in part on our ability to obtain and maintain patent and other proprietary protection for our technology, inventions, and improvements;

to preserve the confidentiality of our trade secrets and know-how;

to obtain and maintain licenses to use intellectual property owned by third parties;

to defend and enforce our proprietary rights, including any patents that we may own in the future;

and to operate without infringing on the valid and enforceable patents and other proprietary rights of third parties.

As of February 28, 2022, our licensed and owned patent portfolio included five owned U.S.

patents, 30 owned U.S.

provisional and non-provisional patent applications, eight owned patent applications filed under the Patent Cooperation Treaty (PCT), 19 owned foreign patents, 118 owned foreign patent applications filed in a number of different foreign jurisdictions, including in Australia, Brazil, Canada, China, European region, Hong Kong, Israel, India, Japan, South Korea, Mexico, New Zealand, Russia, Singapore, Taiwan, and South Africa, directed to TLR8 agonists and conjugates, including SBT8230, TGFßR1 antagonists and conjugates, TGFßR2 antagonists and conjugates, TLR7 agonists and conjugates, and various applications of our proprietary antibody conjugates and antibodies, including antibodies specific for ASGR1, as well as certain of our other proprietary antibodies, compounds, conjugates, formulations, technology, inventions, improvements, and other product candidates.

Any patents that issue from these pending patent applications will expire between March 2038 and November 2042, absent any patent term adjustments or extensions.

We also possess and/or in-license substantial know-how and trade secrets relating to the development and commercialization of our product candidates, including related manufacturing processes and technology.

Specifically, our patent portfolio includes the following families and/or groups of families:

TLR8 Agonists and Conjugates and Combination Therapies.

We have four issued U.S.

patents with composition of matter, method of treatment, and method of making claims to TLR8 agonist payloads, linker-payloads and conjugates.

The issued U.S.

patents are projected to expire in March 2038, absent any patent term extensions.

As of February 28, 2022, we have eight pending U.S.

patent applications, one pending PCT application, 19 granted foreign patents, and 56 pending foreign patent applications filed in a number of different foreign jurisdictions, including Australia, Brazil, Canada, China, European region, Hong Kong, Israel, India, Japan, South Korea, Mexico, New Zealand, Russia, Singapore, Taiwan and South Africa, with composition of matter claims directed to TLR8 agonists, conjugates and formulations, including substituted TLR8 agonist variants and conjugates, as well as claims to methods of administering TLR8 agonists and conjugates, to methods of treatment with TLR8 agonists and conjugates, in combination with other therapies.

Any patents that issue from these pending patent applications are projected to expire between March 2038 and October 2040, absent any patent term adjustments or extensions.

We own all the issued U.S.

patents and all the pending patent applications in these patent families.

Anti-ASGR1 Antibodies and Conjugates in Viral Infections.

As of February 28, 2022, we have five pending U.S.

patent applications, one pending PCT application, and 37 pending foreign patent applications filed in a number of different foreign jurisdictions, including Australia, Brazil, Canada, China, European region, Hong Kong, Israel, India, Japan, South Korea, Mexico, New Zealand, Russia, Singapore, and South Africa, with composition of matter claims and method of treatment claims directed to our product candidate, SBT8230, including claims directed to anti-ASGR1 antibodies, anti-ASGR1 antibody conjugates to TLR8 or TLR7 agonists, as well as to methods for treating viral infection, such as chronic HBV infections.

Any patents that issue from these pending patent applications will expire between December 2038 and July 2041, absent any patent term adjustments or extensions.

We own all the pending patent applications in these patent families.

With respect to our product candidates and processes, we intend to develop and commercialize in the normal course of business, and we intend to pursue patent protection directed to, when possible, compositions, methods of use, methods of making, dosing, and formulations.

We may also pursue patent protection with respect to manufacturing, therapeutic development processes and technologies, and therapeutic delivery technologies.

Issued patents can provide protection for varying periods of time, depending upon the date of filing of the patent application, the date of patent issuance, and the legal term of patents in the countries in which they are obtained.

In general, patents issued for applications filed in the United States can provide exclusionary rights for 20 years from the earliest effective filing date.

In addition, in certain instances, the term of an issued U.S.

patent that is directed to or claims an FDA approved product can be extended to recapture a portion of the term effectively lost as a result of the FDA regulatory review period, which is called patent term extension.

The restoration period cannot be longer than five years and the total patent term, including the restoration period, must not exceed 14 years following FDA approval.

The term of patents outside of the United States varies in accordance with the laws of the foreign jurisdiction, but typically is also 20 years from the earliest effective filing date.

However, the actual protection afforded by a patent varies on a product-by-product basis, from country-to-country, and depends upon many factors, including the type of patent, the scope of its claims, the availability of regulatory-related extensions, the availability of legal remedies in a particular country, and the validity and enforceability of the patent.

The patent positions of companies like ours are generally uncertain and involve complex legal and factual questions.

No consistent policy regarding the scope of claims allowable in patents in the field of immunotherapy has emerged in the United States.

The relevant patent laws and their interpretation outside of the United States is also uncertain.

Changes in either the patent laws or their interpretation in the United States and other countries may diminish our ability to protect our technology or product candidates and enforce the patent rights that we license, which could affect the value of such intellectual property.

In particular, our ability to stop third parties from making, using, selling, offering to sell, or importing products that infringe our intellectual property will depend in part on our success in obtaining and enforcing patent claims that cover our technology, inventions, and improvements.

With respect to both licensed and company-owned intellectual property, we cannot guarantee that patents will be granted with respect to any of our pending patent applications or with respect to any patent applications we may file in the future, nor can we be sure that any patents that may be granted to us in the future will be commercially useful in protecting our products, the methods of use or manufacture of those products.

Moreover, even the issued patents that we license do not guarantee us the right to practice our technology in relation to the commercialization of our products.

Patent and other intellectual property rights in the pharmaceutical and biotechnology space are evolving and involve many risks and uncertainties.

For example, third parties may have blocking patents that could be used to prevent us from commercializing our product candidates and practicing our proprietary technology, and the issued patents that we in-license and those that may issue in the future may be challenged, invalidated, or circumvented, which could limit our ability to stop competitors from marketing related products or could limit the term of patent protection that otherwise may exist for our product candidates.

In addition, the scope of the rights granted under any issued patents may not provide us with protection or competitive advantages against competitors with similar technology.

Furthermore, our competitors may independently develop similar technologies that are outside the scope of the rights granted under any issued patents that we own or exclusively in-license.

For these reasons, we may face competition with respect to our product candidates.

Moreover, because of the extensive time required for development, testing and regulatory review of a potential product, it is possible that, before any particular product candidate can be commercialized, any patent protection for such product may expire or remain in force for only a short period following commercialization, thereby reducing the commercial advantage the patent provides.

Government Regulation

Government authorities in the United States at the federal, state and local level and in other countries and jurisdictions, including the European Union, extensively regulate, among other things, the research, development, testing, manufacture, quality control, approval, labeling, packaging, storage, record-keeping, promotion, advertising, distribution, post-approval monitoring and reporting, marketing and export and import of drug and biological products, such as our investigational medicines and any future investigational medicines.

Generally, before a new drug or biologic can be marketed, considerable data demonstrating its quality, safety and efficacy must be obtained, organized into a format specific for each regulatory authority, submitted for review and approved by the regulatory authority.

Failure to comply with the applicable requirements at any time during the product development process, approval process or after approval may subject an applicant and/or sponsor to a variety of administrative or judicial sanctions, including imposition of a clinical hold, refusal to approve marketing applications, withdrawal of an approval, import/export delays, issuance of warning letters and other types of enforcement letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, refusals of government contracts, restitution, disgorgement of profits or civil or criminal investigations and penalties.

Regulatory Approval in the United States

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

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

Biological products used for the prevention, treatment or cure of a disease or condition of a human being are subject to regulation under the FDCA, except the section of the FDCA that governs the approval of new drug applications, NDAs.

Biological products, such as our ImmunoTAC product candidates, are approved for marketing under provisions of the Public Health Service Act (PHSA), via a biologics license application (BLA).

However, the application process and requirements for approval of BLAs are very similar to those for NDAs, and biologics are associated with similar approval risks and costs as drugs.

Failure to comply with applicable U.S.

requirements may subject a company to a variety of administrative or judicial sanctions, such as clinical hold, FDA refusal to approve pending NDAs or BLAs, warning or untitled letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, civil penalties and criminal prosecution.

Our investigational medicines and any future investigational medicines must be approved by the FDA pursuant to a BLA before they may be legally marketed in the United States.

The process generally involves the following:

completion of extensive preclinical laboratory and animal studies in accordance with applicable regulations, including studies conducted in accordance with GLP requirements;

submission to the FDA of an investigational new drug application (IND), which must become effective before human clinical trials may begin;

approval by an institutional review board (IRB) or independent ethics committee at each clinical trial site before each clinical trial may be commenced;

completion of adequate and well-controlled human clinical trials in accordance with applicable IND regulations, GCP requirements and other clinical trial-related regulations to establish the safety and efficacy of the investigational product for each proposed indication;

submission to the FDA of a BLA;

payment of any user fees for FDA review of the BLA;

a determination by the FDA within 60 days of its receipt of a BLA to accept the filing for review;

satisfactory completion of one or more FDA pre-approval inspections of the manufacturing facility or facilities where the biologic, or components thereof, will be produced to assess compliance with cGMP requirements to assure that the facilities, methods and controls are adequate to preserve the biologic’s identity, strength, quality and purity;

satisfactory completion of any potential FDA audits of the clinical trial sites that generated the data in support of the BLA to assure compliance with GCPs and integrity of the clinical data;

FDA review and approval of the BLA, including consideration of the views of any FDA advisory committee;

compliance with any post-approval requirements, including REMS, where applicable, and post- approval studies required by the FDA as a condition of approval.

The preclinical and clinical testing and approval process requires substantial time, effort and financial resources, and we cannot be certain that any approvals for our product candidates will be granted on a timely basis, or at all.

Preclinical Studies

Before testing any biological product candidates in humans, the product candidate must undergo rigorous preclinical testing.

Preclinical studies include laboratory evaluation of product candidates and formulations, as well as in vitro and animal studies to assess the potential for adverse events and in some cases to establish a rationale for therapeutic use.

The conduct of preclinical studies is subject to federal regulations and requirements, including GLP regulations for safety/toxicology studies.

An IND sponsor must submit the results of the preclinical tests, together with manufacturing information, analytical data, any available clinical data or literature and plans for clinical studies, among other things, to the FDA as part of an IND.

An IND is a request for authorization from the FDA to administer an investigational product to humans and must become effective before human clinical trials may begin.

Some long-term preclinical testing may continue 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 trial on clinical hold.

We strive to protect our intranasal epinephrine product candidates by seeking, maintaining, and defending our patent rights in the United States and internationally.

Our policy is to pursue, maintain and defend patent rights in strategic areas, whether developed internally or licensed from third parties, and to protect the technology, inventions and improvements that are commercially important to the development of our business.

We also rely on trade secrets that may be important to the development of our business.

We co-own or exclusively license the patents and patent applications relating to our intranasal epinephrine product candidates.

As of December 31, 2022, our patent portfolio consisted of issued patents and pending patent applications that we co-own or exclusively license from Aegis Therapeutics LLC in the United States and other countries throughout the world.

In total, as of that date, our patent portfolio consisted of four issued U.S.

patents, one granted Australian patent, one granted Japanese patent, one granted Chinese patent, one granted patent in South Korea, one granted European patent, three granted United Kingdom patents, three pending U.S.

non-provisional patent applications, and over fifteen pending foreign patent applications directed to intranasal epinephrine formulations and methods of their use.

These issued patents and pending patent applications are expected to expire as early as 2038, absent any patent term adjustments or patent term extensions for regulatory delay.

In addition to patent protection, we also rely on trademark registration, trade secrets, know how, and other proprietary information to develop and maintain our competitive position.

We seek trademark protection in the United States and in certain other jurisdictions where available and when we deem appropriate.

We currently have registrations for our “

neffy ”

mark in the United States as well as in foreign jurisdictions, including the United Kingdom, European Union, and Japan.

Our commercial success will depend in part on obtaining and maintaining patent protection and trade secret protection of our current and future product candidates and the methods used to develop and manufacture them, as well as successfully defending these patents against third-party challenges.

Our ability to stop third parties from making, using, selling, offering to sell or importing our products depends on the extent to which we have rights under valid and enforceable patents or trade secrets that cover these activities.

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 product candidates and processes.

For this and more comprehensive risks related to our intellectual property, please see “

Risk Factors—Risks Related to Our Intellectual Property.

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

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

In the United States, the patent term of a patent that covers an FDA-approved drug may also be eligible for patent term extension, which permits patent term restoration as compensation for the patent term lost during the FDA regulatory review process.

The Drug Price Competition and Patent Term Restoration Act of 1984 (the “Hatch-Waxman Act”) permits a patent term extension of up to five years beyond the expiration of the patent.

The length of the patent term extension is related to the length of time the drug is under regulatory review.

Patent term extension cannot extend the remaining term of a patent beyond a total of 14 years from the date of product approval, only one patent applicable to an approved drug may be extended and only those claims covering the approved drug, a method for using it, or a method for manufacturing it may be extended.

Similar provisions are available in Europe and other foreign jurisdictions to extend the term of a patent that covers an approved drug.

In the future, if and when our products receive FDA approval, we expect to apply for patent term extensions on patents covering those products.

We plan to seek patent term extensions to any of our issued patents in any jurisdiction where these are available, however there is no guarantee that the applicable authorities, including the FDA in the United States, will agree with our assessment of whether such extensions should be granted, and if granted, the length of such extensions.

For more information regarding the risks related to our intellectual property, see “

Risk Factors—Risks Related to Our Intellectual Property.

We also seek to protect our intellectual property in part by entering into confidentiality agreements with companies with whom we share proprietary and confidential information in the course of business discussions, and by having confidentiality terms in our agreements with our employees, consultants, scientific advisors, clinical investigators, and other collaborators and contractors and also by requiring our employees, commercial contractors, and certain consultants and investigators, to enter into invention assignment agreements that grant us ownership of any discoveries or inventions made by them while in our employ.

However, such confidentiality agreements and invention assignment agreements can be breached, and we may not have adequate remedies for any such breach.

For more information regarding the risks related to our intellectual property, see “

Risk Factors—Risks Related to Our Intellectual Property.

The patent positions of specialty pharmaceutical companies like ours are generally uncertain and involve complex legal, scientific and factual questions.

Our commercial success will also depend in part on not infringing upon the proprietary rights of third parties.

It is uncertain whether the issuance of any third-party patent would require us to alter our development or commercial strategies, or our drugs or processes, obtain licenses or cease certain activities.

Our breach of any license agreements or our failure to obtain a license to proprietary rights required to develop or commercialize our future products may have a material adverse impact on us.

If third parties prepare and file patent applications in the United States that also claim technology to which we have rights, we may have to participate in interference or derivation proceedings in the U.S.

Patent and Trademark Office (the “USPTO”) to determine priority of invention.

For more information, see “

Risk Factors—Risks Related to Our Intellectual Property.

Our Collaboration and Licensing Agreements

License Agreement with Aegis

In June 2018, we entered into a license agreement with Aegis Therapeutics, LLC (“Aegis”), which was amended in July 2020 and January 2021.

Pursuant to the agreement, Aegis granted us an exclusive, worldwide, sublicensable license under patents and know-how relating to the INTRAVAIL drug delivery technology to research, develop, make (subject to Aegis supplying the INTRAVAIL drug delivery technology to us under a supply agreement), use, sell, offer for sale, import, and otherwise commercialize products incorporating epinephrine compounds (“Aegis Licensed Compounds”), including the neffy nasal spray.

During the term of the agreement, we are required to use commercially reasonable efforts to obtain regulatory approval for products containing one or more Aegis Licensed Compounds and using the excipient (including INTRAVAIL) (“Aegis Licensed Products”) and to thereafter maximize sales of the Aegis Licensed Products, and Aegis may not directly or indirectly exploit an Aegis Licensed Product or Aegis Licensed Compound or derivatives thereof without our consent.

Under the agreement, Aegis received an upfront license fee of $50,000 and is entitled to receive development milestone payments of up to $3.95 million in aggregate and commercialization milestone payments up to $16.0 million in the aggregate for each Aegis Licensed Product.

We made a $0.5 million milestone payment to Aegis upon the achievement of a regulatory milestone during 2019, and a $1.0 million payment to Aegis upon the FDA’s acceptance of our US NDA filing, which occurred in the third quarter of 2022.

We will be required to pay Aegis a milestone payment of $2.5 million contingent upon the FDA approval of the first Aegis Licensed Product and a milestone payment of $5.0 million contingent upon first commercial sale of the first Aegis Licensed Product.

Additionally, Aegis is entitled to receive a low- to mid-single-digit percentage royalty, subject to reductions under certain conditions including due to generic competition or below threshold levels of profitability in specific countries around the world, on net sales of all Aegis Licensed Products during the applicable royalty term, which commences on the first commercial sale of a Aegis Licensed Product in a country and ends upon the later of the expiration of all licensed patents covering such Aegis Licensed Product in such country or 15 years after the date of the first commercial sale of the Aegis Licensed Product in such country (“Aegis Royalty Term”).

The agreement will continue until the expiration of the last-to-expire Aegis Royalty Term, unless sooner terminated.

We have the right to terminate the agreement at any time after a specified notice period to Aegis.

Either party may terminate the agreement for uncured material breach of the other party, or upon notice for insolvency-related events of the other party that are not discharged within a defined time period.

Collaboration and License Agreement with Alfresa

In April 2020, we entered into a collaboration and license agreement with Alfresa Pharma Corporation (“Alfresa”).

Pursuant to the agreement, we granted Alfresa (i) an exclusive, sublicensable license under our patents relating to neffy to develop, use and import epinephrine compositions (“Alfresa Licensed Compositions”) and related products (“Alfresa Licensed Products”) in Japan (the “Alfresa Territory”) and to promote, distribute, offer for sale and sell Alfresa Licensed Products in the Alfresa Territory, and (ii) a non-exclusive, sublicensable license to manufacture and commercialize Alfresa Licensed Products under the license described in clause (i), under our technology to make and have made Alfresa Licensed Compositions and Alfresa Licensed Products in and outside the Alfresa Territory solely for the purpose of exercising the license described in clause (i) in the Alfresa Territory.

We expressly reserved all rights to practice and grant licenses under our technology outside the scope of the licenses granted to Alfresa, including the right to manufacture Alfresa Licensed Compositions and Alfresa Licensed Products in the Alfresa Territory.

During the term of the agreement, (1) we and Alfresa are obligated to use commercially reasonable efforts to develop a Alfresa Licensed Product throughout the Alfresa Territory, and (2) Alfresa is obligated to use commercially reasonable efforts to (A) seek pricing and reimbursement approval, (B) seek and maintain regulatory approval for the Alfresa Licensed Products through the Alfresa Territory, and (C) market, promote and otherwise commercialize Alfresa Licensed Products in the field throughout the Alfresa Territory.

Under the agreement, we received a one-time upfront payment of $2.0 million and earned $5 million upon the achievement of a clinical milestone during 2021.

We are eligible to receive regulatory milestones of up to $8.0 million in the aggregate.

Further, we are eligible to receive a negotiable transfer price expected to be in the low double-digit percentage on net sales subject to the regulatory approval to commercialize neffy in Japan.

We share the cost of any additional clinical studies required for approval of neffy in Japan.

Additionally, Alfresa is obligated to either (i) enter into a commercial supply agreement with us pursuant to which we will supply drug product for commercial sale at an agreed upon transfer price, or (ii) if Alfresa elects to manufacture its own supply of drug product, pay us a royalty payment on the net sales of drug product in the Alfresa Territory in an amount equal to monetary value we would receive by supplying drug product to Alfresa at the transfer price.

The agreement will continue until the later of (i) expiration of the last-to-expire valid claim of our patents or joint patent with Alfresa covering the composition, method of manufacture or method of use in the field of any Alfresa Licensed Product in the Alfresa Territory, and (ii) 10 years after the first commercial sale of any Alfresa Licensed Product in the Alfresa Territory.

Alfresa has the right to terminate the agreement (1) at any time after a specified notice period to us, or (2) upon notice to us if a binding decision is rendered invalidating any of our patents.

Collaboration and Distribution Agreement with Pediatrix

In March 2021, we entered into a collaboration and distribution agreement with Pediatrix Therapeutics (“Pediatrix”).

Pursuant to the agreement, we granted Pediatrix (i) an exclusive, royalty-bearing, sublicensable license under our patents relating to neffy to develop, use, register and import epinephrine compositions (“Pediatrix Licensed Compositions”) and related products (“Pediatrix Licensed Products”) in China, Macau, Hong Kong and Taiwan (the “Pediatrix Territory”) and to promote, offer for sale and sell Pediatrix Licensed Products in the Pediatrix Territory;

and (ii) an exclusive, royalty-bearing, sublicensable license to manufacture Pediatrix Licensed Compositions and Pediatrix Licensed Products solely for the purpose of exercising the license described in clause (i) in the Pediatrix Territory.

We expressly reserved all rights to practice and grant licenses under our technology outside the scope of the licenses granted to Pediatrix.

During the term of the agreement, Pediatrix is obligated to use commercially reasonable efforts to (1) develop the Pediatrix Licensed Products throughout the Pediatrix Territory, (2) prepare, obtain, maintain and renew all necessary regulatory approvals for the Pediatrix Licensed Products in the Pediatrix Territory, and (3) market, promote and otherwise commercialize the Pediatrix Licensed Products throughout the Pediatrix Territory.

Under the agreement, we received a one-time upfront payment of $3.0 million and are eligible to receive a regulatory milestone payment of $4.0 million and net sales milestone payments of up to $80.0 million in the aggregate.

We will receive a per unit supply price for any sale of commercial supply to Pediatrix.

Additionally, we are eligible to receive a tiered royalty on the net sales of all Pediatrix Licensed Products during the applicable royalty term, which is less than one percent below a minimum annual sales threshold, and increasing to low-to-mid double-digit percentages above the minimum annual sales threshold, subject to reductions under certain conditions including due to generic competition.

Pediatrix’s obligation to pay us royalties continues on a Pediatrix Licensed Product-by- Pediatrix Licensed Product and region-by-region basis in the Pediatrix Territory, until the latest of (i) expiration of the last-to-expire valid claim of our patents covering such Licensed Product in such region;

(ii) the expiration of all regulatory exclusivities that cover such Licensed Product in such region;

or (iii) ten years after the first commercial sale of such Pediatrix Licensed Product in such region (the “Pediatrix Royalty Term”).

The agreement will continue until the expiration of the last-to-expire Pediatrix Royalty Term.

Pediatrix has the right to terminate the agreement at any time after a specified notice period to us.

Manufacturing Agreement with Renaissance

In September 2020, we entered into a manufacturing agreement with Renaissance Lakewood, LLC (“Renaissance”).

Pursuant to the agreement, Renaissance agreed to manufacture for, and provide to us, neffy nasal unit dose sprays (“Renaissance Products”).

We are obligated to provide Renaissance with certain supplies to manufacture the Renaissance Products and to purchase from Renaissance a mid double-digit percentage of our annual aggregate Renaissance Product requirements in the EU, and a high double-digit percentage of our annual aggregate Renaissance Product requirements in the U.S.

The agreement contains conventional commercial pharmaceutical manufacturing provisions including certain minimum purchase amounts to be determined in the future based on forecast needs and minimum batch size projections.

We may also request Renaissance perform certain services related to the Renaissance Product, for which we will pay reasonable compensation to Renaissance.

The initial term of the agreement commenced on the date it was entered into and continues (a) for Renaissance Product designated for commercial sale in the U.S.

until the earlier of the fifth anniversary of the (i) target U.S.

launch date and (ii) the initial U.S.

launch date (“U.S.

Initial Term”), and (b) for Renaissance Product designated for commercial sale in the EU and other countries, the earlier of the fifth anniversary of (i) the target EU launch date and (ii) the initial EU launch date (“EU Initial Term”), in each case unless earlier terminated by one of the parties.

Initial Term and EU Initial Term automatically renew for successive two-year terms (“Renewal Term”).

Either party may elect not to renew the U.S.

Renewal Term and/or the EU Renewal Term by providing the requisite prior notice to the other party.

Either party may terminate the agreement (1) for uncured material breach of the other party, (2) upon notice for insolvency-related events of the other party that are not discharged within a defined time period, (3) on a product-by-product basis if the manufacture, distribution or sale would materially contravene any applicable law, (4) by providing the requisite notice if (a) we have not submitted a regulatory filing for any Renaissance Product in the U.S.

on or before June 30, 2022, (b) the authorization and approval to distribute or sell Renaissance Product in the U.S.

is not granted on or before the target U.S.

launch date, (c) the authorization and approval representing more than a targeted number of units of Renaissance Product sold in the U.S.

during the last calendar year is withdrawn by the FDA, or (d) we decided in our sole discretion to cease commercializing the Renaissance Product in the U.S., (5) in the case of a force majeure event that continues for six months or more, or (6) a violation by the other party of trade control or anti-corruption laws.

Government Regulation and Product Approval

As a pharmaceutical company that operates in the United States, we are subject to extensive regulation.

Government authorities in the United States (at the federal, state and local level) and in other countries extensively regulate, among other things, the research, development, testing, manufacturing, quality control, approval, labeling, packaging, storage, record-keeping, promotion, advertising, distribution, post-approval monitoring and reporting, marketing and export and import of drug products such as those we are developing.

Product candidates that we develop must be approved by the FDA, before they may be legally marketed in the United States and by the appropriate foreign regulatory agency before they may be legally marketed in foreign countries.

Generally, our activities in other countries will be subject to regulation that is similar in nature and scope as that imposed in the United States, although there can be important differences.

Additionally, some significant aspects of regulation in Europe are addressed in a centralized way, but country-specific regulation remains essential in many respects.

Regulation of Combination Products in the United States

neffy is comprised of drug and delivery device components that would normally be subject to different regulatory frameworks by the FDA and frequently regulated by different centers at the FDA.

These products are known as combination products.

Under the Federal Food, Drug and Cosmetic Act (“FDCA”), the FDA is charged with assigning a center with primary jurisdiction, or a lead center, for review of a combination product.

The determination of which center will be the lead center is based on the “primary mode of action”

of the combination product.

Thus, if the primary mode of action of a drug-device combination product is attributable to the drug product, the FDA center responsible for premarket review of the drug product would have primary jurisdiction for the combination product.

A combination product with a primary mode of action attributable to the drug component, such as neffy , generally would be reviewed and approved pursuant to the drug approval processes set forth in the FDCA.

In reviewing the NDA for such a product, however, FDA reviewers would consult with their counterparts in the device center to ensure that the device component of the combination product –

the sprayer - met applicable requirements regarding safety, effectiveness, durability and performance.

In addition, under FDA regulations, combination products such as neffy are subject to cGMP requirements applicable to both drugs and devices, including the Quality System Regulations applicable to medical devices.

Drug Development Process

In the United States, the FDA regulates drugs under the FDCA, and implementing regulations.

A new drug must be approved by the FDA through the NDA process before it may be legally marketed in the United States.

Drugs are also subject to other federal, state and local statutes and regulations.

The process of obtaining regulatory approvals and the subsequent compliance with appropriate federal, state, local and foreign statutes and regulations require 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 administrative or judicial sanctions.

FDA sanctions could include, among other actions, refusal to approve pending applications, withdrawal of an approval, a clinical hold, warning letters, product recalls or withdrawals from the market, product seizures, total or partial suspension of production or distribution injunctions, fines, refusals of government contracts, restitution, disgorgement or civil or criminal penalties.

Any agency or judicial enforcement action could have a material adverse effect on us.

The process required by the FDA before a drug may be marketed in the United States generally involves the following:

completion of extensive preclinical laboratory tests, preclinical animal studies and formulation studies in accordance with applicable regulations, including the FDA’s Good Laboratory Practice (“GLP”) regulations and other applicable regulations;

submission to the FDA of an investigational new drug (“IND”), which must become effective before human clinical trials may begin;

approval by an independent institutional review board (“IRB”) at each clinical site before each trial may be initiated;

performance of adequate and well-controlled human clinical trials in accordance with applicable regulations, including the FDA’s good clinical practice (“GCP”) regulations to establish the safety and efficacy of the proposed drug for its proposed indication;

submission to the FDA of an NDA after completion of all pivotal trials;

a determination by the FDA within 60 days of its receipt of an NDA to file the NDA for review;

satisfactory completion of an FDA pre-approval inspection of the manufacturing facility or facilities where the drug is produced to assess compliance with cGMP requirements to assure that the facilities, methods and controls are adequate to preserve the drug’s identity, strength, quality and purity;

potential FDA audit of the preclinical and/or clinical trial sites that generated the data in support of the NDA to assess compliance with GCP regulations;

satisfactory completion of an FDA advisory committee review, if applicable;

FDA review and approval of the NDA prior to any commercial marketing or sale of the drug in the United States.

Before testing any compounds with potential therapeutic value in humans, the product candidate enters the preclinical testing stage.

Preclinical tests include laboratory evaluations of product chemistry, toxicity and formulation, as well as animal studies, to assess the potential safety and activity of the product candidate.

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

The sponsor must submit the results of the preclinical tests, together with manufacturing information, analytical data, any available clinical data or literature and a proposed clinical protocol, to the FDA as part of the IND.

An IND is a request for authorization from the FDA to administer an investigational drug product to humans.

The central focus of an IND submission is on the general investigational plan and the protocol(s) for human trials.

Some preclinical testing may continue even after the IND is submitted.

The IND automatically becomes effective 30 days after receipt by the FDA, unless the FDA raises concerns or questions regarding the proposed clinical trials and places the IND on clinical hold within that 30-day time period.

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 commence.

Clinical Trials

The clinical stage of development involves the administration of the investigational product to healthy volunteers or patients under the supervision of qualified investigators, generally physicians not employed by or under the trial sponsor’s control.

Clinical trials must be conducted:

(i) in compliance with federal regulations;

(ii) in compliance with GCPs, an international standard meant to protect the rights and health of patients and to define the roles of clinical trial sponsors, administrators and monitors;

as well as (iii) 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 in the trial.

Each protocol involving testing on U.S.

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

Furthermore, each clinical trial must be reviewed and approved by an IRB for each institution at which the clinical trial will be conducted to ensure that the risks to individuals participating in the clinical trials are minimized and are reasonable in relation to anticipated benefits.

The FDA may also impose clinical holds on a product candidate at any time before or during clinical trials due to safety concerns or non-compliance.

Clinical trials involve the administration of the product candidate to healthy volunteers or patients under the supervision of qualified investigators, generally physicians not employed by or under the trial sponsor’s control, in accordance with GCPs, which include the requirement that all research subjects provide their informed consent for their participation in any clinical trial.

Clinical trials are conducted under protocols detailing, among other things, the objectives of the clinical trial, dosing procedures, subject selection and exclusion criteria and the parameters to be used to monitor subject safety and assess efficacy.

Each protocol, and any subsequent amendments to the protocol, must be submitted to the FDA as part of the IND.

Further, each clinical trial must be reviewed and approved by an independent IRB at or servicing each institution at which the clinical trial will be conducted.

An IRB is charged with protecting the welfare and rights of trial participants and considers such items as whether the risks to individuals participating in the clinical trials are minimized and are reasonable in relation to anticipated benefits.

The IRB also approves the informed consent form that must be provided to each clinical trial subject or his or her legal representative and must monitor the clinical trial until completed.

There also are requirements governing the reporting of ongoing clinical trials and completed clinical trial results to public registries.

Information about certain clinical trials, including clinical trial results, must be submitted within specific timeframes for publication on the www.clinicaltrials.gov website.

Information related to the product, patient population, phase of investigation, clinical trial sites and investigators and other aspects of the clinical trial is then made public as part of the registration.

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

A sponsor who wishes to conduct a clinical trial outside of the United States may, but need not, obtain FDA authorization to conduct the clinical trial under an IND.

If a foreign clinical trial is not conducted under an IND, the sponsor may submit data from the clinical trial to the FDA in support of a BLA.

The FDA will accept a well- designed and well-conducted foreign clinical trial not conducted under an IND if the clinical trial was conducted in accordance with GCP requirements, and the FDA is able to validate the data through an onsite inspection if deemed necessary.

Clinical trials are generally conducted in three sequential phases, known as Phase 1, Phase 2 and Phase 3:

Phase 1 clinical trials generally involve a small number of healthy volunteers or disease-affected patients who are initially exposed to a single dose and then multiple doses of the product candidate.

The primary purpose of these clinical trials is to assess the metabolism, pharmacokinetics, pharmacologic action, side effect tolerability, safety of the product candidate, and, if possible, early evidence of effectiveness.

Phase 2 clinical trials generally involve studies in disease-affected patients to evaluate proof of concept and/or determine the dosing regimen(s) for subsequent investigations.

At the same time, safety and further pharmacokinetic and pharmacodynamic information is collected, possible adverse effects and safety risks are identified, and a preliminary evaluation of efficacy is conducted.

Phase 3 clinical trials generally involve a large number of patients at multiple sites and are designed to provide the data necessary to demonstrate the effectiveness of the product for its intended use, its safety in use and to establish the overall benefit/risk relationship of the product and provide an adequate basis for product labeling.

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

These Phases may overlap or be combined.

For example, a Phase 1/2 clinical trial may contain both a dose-escalation stage and a dose expansion stage, the latter of which may confirm tolerability at the recommended dose for expansion in future clinical trials (as in traditional Phase 1 clinical trials) and provide insight into the anti-tumor effects of the investigational therapy in selected subpopulation(s).

Phase 1, Phase 2, Phase 3 and other types of clinical trials may not be completed successfully within any specified period, if at all.

The FDA, the IRB, or the sponsor may suspend or terminate a clinical trial at any time on various grounds, including non-compliance with regulatory requirements or a finding that the patients are being exposed to an unacceptable health risk.

Similarly, 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 or biologic has been associated with unexpected serious harm to patients.

There are also requirements governing the reporting of ongoing clinical trials and completed clinical trial results to public registries.

Human clinical trials are typically conducted in three sequential phases that may overlap or be combined:

The drug is initially introduced into healthy human subjects and tested for safety, dosage tolerance, absorption, metabolism, distribution and excretion, the side effects associated with increasing doses and if possible, to gain early evidence of effectiveness.

In the case of some products for severe or life-threatening diseases, especially when the product may be too inherently toxic to ethically administer to healthy volunteers, the initial human testing is often conducted in patients.

The drug is evaluated in a limited patient population to identify possible adverse effects and safety risks, to preliminarily evaluate the efficacy of the product for specific targeted diseases or conditions and to determine dosage tolerance, optimal dosage and dosing schedule.

Multiple Phase 2 clinical trials may be conducted to obtain information prior to beginning larger and more expensive Phase 3 clinical trials.

The drug is administered to an expanded patient population to further evaluate dosage and clinical efficacy at geographically dispersed clinical trial sites.

These clinical trials are intended to establish the overall benefit/risk ratio of the product and provide an adequate basis for product approval.

Generally, two adequate and well-controlled Phase 3 clinical trials are required by the FDA for approval of an NDA.

Post-approval studies, or Phase 4 clinical trials, may be conducted after initial marketing approval.

These trials are used to gain additional experience from the treatment of patients in the intended therapeutic indication.

In certain instances, FDA may mandate the performance of Phase 4 trials.

In certain instances, the FDA may mandate the performance of Phase 4 clinical trials as a condition of approval of an NDA.

During the development of a new drug, sponsors are given opportunities to meet with the FDA at certain points.

These points may be prior to submission of an IND, at the end of Phase 2, and before an NDA is submitted.

Meetings at other times may be requested.

These meetings can provide an opportunity for the sponsor to share information about the data gathered to date, for the FDA to provide advice, and for the sponsor and the FDA to reach agreement on the next phase of development.

Sponsors typically use the meetings at the end of the Phase 2 trial to discuss Phase 2 clinical results and present plans for the pivotal Phase 3 clinical trials that they believe will support approval of the new drug.

Progress reports detailing the results of the clinical trials must be submitted at least annually to the FDA and written IND safety reports must be submitted to the FDA and the investigators for serious and unexpected AEs or any finding from tests in laboratory animals that suggests a significant risk for human subjects.

Phase 1, Phase 2 and Phase 3 clinical trials may not be completed successfully within any specified period, if at all.

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

Similarly, 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.

Additionally, some clinical trials are overseen by an independent group of qualified experts organized by the clinical trial sponsor, known as a data safety monitoring board or committee.

This group provides authorization for whether a trial may move forward at designated checkpoints based on access to certain data from the trial.

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

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

Additionally, appropriate packaging must be selected and tested, and stability studies must be conducted to demonstrate that the investigational medicines do not undergo unacceptable deterioration over their shelf life.

FDA Review Process

Following completion of the clinical trials, the results of preclinical studies and clinical trials are submitted to the FDA as part of a BLA, along with proposed labeling, chemistry and manufacturing information to ensure product quality and other relevant data.

To support marketing approval, the data submitted must be sufficient in quality and quantity to establish the safety and efficacy of the investigational product to the satisfaction of the FDA.

FDA approval of a BLA must be obtained before a biologic or drug may be marketed in the United States.

The cost of preparing and submitting a BLA is substantial.

Under the PDUFA, each BLA must be accompanied by a substantial user fee.

The FDA adjusts the PDUFA user fees on an annual basis.

Fee waivers or reductions are available in certain circumstances, including a waiver of the application fee for the first application filed by a small business.

Additionally, no user fees are assessed on BLAs for products designated as orphan drugs, unless the product also includes a non-orphan indication.

The applicant under an approved BLA is also subject to an annual program fee.

The FDA reviews all submitted BLAs before it accepts them for filing and may request additional information.

The FDA must make a decision on accepting a BLA for filing within 60 days of receipt, and such decision could include a refusal to file by the FDA.

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

Under the goals and policies agreed to by the FDA under PDUFA, the FDA has 10 months, from the filing date, in which to complete its initial review of an original BLA for a new molecular entity and respond to the applicant, and six months from the filing date of an original BLA designated for priority review.

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

The FDA does not always meet its PDUFA goal dates for standard and priority BLAs, and the review process can be extended by FDA requests for additional information or clarification.

Before approving a BLA, the FDA will conduct a pre-approval inspection of the manufacturing facilities for the new product to determine whether they comply with cGMP requirements.

This group provides authorization for whether or not a trial may move forward at designated check points based on access to certain data from the trial.

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

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

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

Review and Approval Processes

Assuming successful completion of all required testing in accordance with all applicable regulatory requirements, the results of product development, preclinical studies and clinical trials, along with descriptions of the manufacturing process, analytical tests conducted on the chemistry of the drug, proposed labeling and other relevant information are submitted to the FDA as part of an NDA requesting approval to market the product.

Data may come from company-sponsored clinical trials intended to test the safety and effectiveness of a use of a product, or from a number of alternative sources, including studies initiated by investigators.

To support marketing approval, the data submitted must be sufficient in quality and quantity to establish the safety and effectiveness of the investigational drug product to the satisfaction of the FDA.

The submission of an NDA is subject to the payment of substantial user fees;

a waiver of such fees may be obtained under certain limited circumstances.

In addition, the Pediatric Research Equity Act (“PREA”) requires a sponsor to conduct pediatric clinical trials for most drugs, for a new active ingredient, new indication, new dosage form, new dosing regimen or new route of administration.

Under PREA, original NDAs and supplements must contain a pediatric assessment unless the sponsor has received a deferral or waiver.

The required assessment must evaluate the safety and effectiveness of the product for the claimed indications in all relevant pediatric subpopulations and support dosing and administration for each pediatric subpopulation for which the product is safe and effective.

The sponsor or FDA may request a deferral of pediatric clinical trials for some or all of the pediatric subpopulations.

A deferral may be granted for several reasons, including a finding that the drug is ready for approval for use in adults before pediatric clinical trials are complete or that additional safety or effectiveness data need to be collected before the pediatric clinical trials begin.

The FDA must send a non-compliance letter to any sponsor that fails to submit the required assessment, keep a deferral current or fails to submit a request for approval of a pediatric formulation.

Unless otherwise required by regulation, the Pediatric Research Equity Act does not apply to any drug for an indication for which orphan designation has been granted.

However, if only one indication for a product has orphan designation, a pediatric assessment may still be required for any applications to market that same product for the non-orphan indication(s).

The FDA reviews all NDAs submitted before it accepts them for filing and may request additional information rather than accepting an NDA for filing.

The FDA must make a decision on accepting an NDA for filing within 60 days of receipt.

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

Under the 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 after it the application is submitted The FDA does not always meet its PDUFA goal dates for standard and priority NDAs, and the review process is often significantly extended by FDA requests for additional information or clarification.

After the NDA submission is accepted for filing, the FDA reviews the NDA to determine, among other things, whether the proposed product is safe and effective for its intended use and whether the product is being manufactured in accordance with cGMP to assure and preserve the product’s identity, strength, quality and purity.

The FDA may refer applications for novel drug products or drug products which present difficult questions of safety or efficacy to an advisory committee, typically a panel that includes clinicians and other experts, for review, evaluation and 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 and typically follows the advisory committee’s recommendations.

Before approving an NDA, the FDA will inspect the facilities at which the product is manufactured.

The FDA will not approve the product 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.

The FDA also may audit data from clinical trials to ensure compliance with GCP requirements and the integrity of the data supporting safety and efficacy.

Additionally, the FDA may refer applications for novel products or products that present difficult questions of safety or efficacy to an advisory committee, typically a panel that includes clinicians and other experts, for review, evaluation and a recommendation as to whether the application should be approved and under what conditions, if any.

The FDA is not bound by recommendations of an advisory committee, but it generally follows such recommendations when making decisions on approval.

The FDA likely will reanalyze the clinical trial data, which could result in extensive discussions between the FDA and the applicant during the review process.

After the FDA evaluates a BLA, it will issue either an approval letter or a Complete Response Letter.

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

Additionally, before approving an NDA, the FDA may inspect one or more clinical sites to assure compliance with GCP requirements.

After the FDA evaluates the application, manufacturing process and manufacturing facilities, it may issue an approval letter or a Complete Response Letter.

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

A Complete Response Letter indicates that the review cycle of the application is complete and the application will not be approved in its present form.

A Complete Response Letter generally outlines the deficiencies in the BLA and may require additional clinical data, additional pivotal clinical trial(s) and/or other significant and time-consuming requirements related to clinical trials, preclinical studies or manufacturing in order for FDA to reconsider the application.

If a Complete Response Letter is issued, the applicant may either resubmit the BLA, addressing all of the deficiencies identified in the letter, or withdraw the application or request an opportunity for a hearing.

The FDA has committed to reviewing such resubmissions in two or six months, depending on the type of information included.

Even if such data and information are submitted, the FDA may decide that the BLA does not satisfy the criteria for approval.

As a condition of BLA approval, the FDA may require a REMS to help ensure that the benefits of the biologic outweigh the potential risks to patients.

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

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

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

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

Orphan Drug Designation

Under the Orphan Drug Act, the FDA may grant orphan designation to a drug or biological product intended to treat a rare disease or condition, which is generally a disease or condition that affects fewer than 200,000 individuals in the United States, or more than 200,000 individuals in the United States but for which there is no reasonable expectation that the cost of developing and making the product for this type of disease or condition will be recovered from sales of the product in the United States.

Orphan drug designation must be requested before submitting a BLA.

After the FDA grants orphan drug designation, the identity of the therapeutic agent and its potential orphan use are disclosed publicly by the FDA.

Orphan drug designation on its own does not convey any advantage in or shorten the duration of the regulatory review and approval process.

If a product that has orphan designation subsequently receives the first FDA approval for the disease or condition for which it has such designation, the product is entitled to orphan drug exclusivity, which means that the FDA may not approve any other applications to market the same product for the same indication for seven years from the date of such approval, except in limited circumstances, such as a showing of clinical superiority to the product with orphan exclusivity by means of greater effectiveness, greater safety, or providing a major contribution to patient care, or in instances of drug supply issues.

Competitors, however, may receive approval of either a different product for the same indication or the same product for a different indication.

In the latter case, because healthcare professionals are free to prescribe products for off-label uses, the competitor’s product could be used for the orphan indication despite another product’s orphan exclusivity.

FDA’s determination of whether two ADCs are the same product for purposes of orphan drug exclusivity is based on a determination of sameness of the monoclonal antibody element and the functional element of the conjugated molecule.

Two ADCs are deemed to be the same product if the complementarity determining region sequences of the antibody and the functional element of the conjugated molecule are the same.

A difference in either of those two elements can result in a determination that the molecules are different.

Expedited Development and Review Programs

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.

Fast track designation may be granted for products that are intended to treat a serious or life-threatening disease or condition for which there is no effective treatment and preclinical or clinical data demonstrate the potential to address unmet medical needs for the condition.

Fast track designation applies to both the product and the specific indication for which it is being studied.

The sponsor of a new biologic candidate can request the FDA to designate the candidate for a specific indication for fast track status concurrent with, or after, the submission of the IND for the candidate.

The FDA must determine if the biologic candidate qualifies for fast track designation within 60 days of receipt of the sponsor’s request.

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 BLA before the application is complete.

This “rolling review”

is 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.

Any product submitted to the FDA for marketing, including under a fast track program, may be eligible for other types of FDA programs intended to expedite development and review, such as priority review and accelerated approval.

Breakthrough therapy designation may be granted for products that are intended, alone or in combination with one or more other products, to treat a serious or life-threatening condition and preliminary clinical evidence indicates that the product may demonstrate substantial improvement over currently approved therapies on one or more clinically significant endpoints.

Under the breakthrough therapy program, the sponsor of a new biologic candidate may request that the FDA designate the candidate for a specific indication as a breakthrough therapy concurrent with, or after, the submission of the IND for the biologic candidate.

The FDA must determine if the biological product qualifies for breakthrough therapy designation within 60 days of receipt of the sponsor’s request.

The FDA may take certain actions with respect to breakthrough therapies, including holding meetings with the sponsor throughout the development process, providing timely advice to the product sponsor regarding development and approval, involving more senior staff in the review process, assigning a cross-disciplinary project lead for the review team and taking other steps to design the clinical studies in an efficient manner.

Priority review may be granted for products that are intended to treat a serious or life-threatening condition and, if approved, would provide a significant improvement in safety and effectiveness compared to available therapies.

The FDA will attempt to direct additional resources to the evaluation of an application designated for priority review in an effort to facilitate the review.

Accelerated approval may be granted for products that are intended to treat a serious or life-threatening condition and that generally provide a meaningful therapeutic advantage to patients over existing treatments.

A product eligible for accelerated approval may be approved on the basis of either a surrogate endpoint that is reasonably likely to predict clinical benefit, or on a clinical endpoint that can be measured earlier than irreversible morbidity or mortality, that is reasonably likely to predict an effect on irreversible morbidity or mortality or other clinical benefit, taking into account the severity, rarity or prevalence of the condition and the availability or lack of alternative treatments.

In clinical trials, a surrogate endpoint is a measurement of laboratory or clinical signs of a disease or condition that substitutes for a direct measurement of how a patient feels, functions or survives.

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

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

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

These confirmatory trials must be completed with due diligence and, in some cases, the FDA may require that the trial be designed, initiated and/or fully enrolled prior to approval.

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

All promotional materials for product candidates approved under accelerated regulations are subject to prior review by the FDA.

Even if a product qualifies for one or more of these programs, the FDA may later decide that the product no longer meets the conditions for qualification or the time period for FDA review or approval may not be shortened.

Furthermore, fast track designation, breakthrough therapy designation, priority review and accelerated approval do not change the standards for approval, but may expedite the development or approval process.

Additional Controls for Biologics

To help reduce the increased risk of the introduction of adventitious agents, the PHSA emphasizes the importance of manufacturing controls for products whose attributes cannot be precisely defined.

The PHSA also provides authority to the FDA to immediately suspend licenses in situations where there exists a danger to public health, to prepare or procure products in the event of shortages and critical public health needs, and to authorize the creation and enforcement of regulations to prevent the introduction or spread of communicable diseases in the United States and between states.

After a BLA is approved, the product may also be subject to official lot release as a condition of approval.

As part of the manufacturing process, the manufacturer is required to perform certain tests on each lot of the product before it is released for distribution.

If the product is subject to official release by the FDA, the manufacturer submits samples of each lot of product to the FDA together with a release protocol showing a summary of the history of manufacture of the lot and the results of all of the manufacturer’s tests performed on the lot.

The FDA may also perform certain confirmatory tests on lots of some products, such as viral vaccines, before releasing the lots for distribution by the manufacturer.

In addition, the FDA conducts laboratory research related to the regulatory standards on the safety, purity, potency and effectiveness of biological products.

As with drugs, after approval of biologics, manufacturers must address any safety issues that arise, are subject to recalls or a halt in manufacturing, and are subject to periodic inspection after approval.

Pediatric Information

Under the Pediatric Research Equity Act (PREA), BLAs or supplements to BLAs must contain data to assess the safety and effectiveness of the biological product for the claimed indications in all relevant pediatric subpopulations and to support dosing and administration for each pediatric subpopulation for which the biological product is safe and effective.

The FDA may grant full or partial waivers, or deferrals, for submission of data.

PREA generally does not apply to any biological product for an indication for which orphan designation has been granted but does apply to BLAs for orphan-designated biologics if the biologic is a molecularly targeted cancer product intended for the treatment of an adult cancer and is directed at a molecular target that the FDA has determined is substantially relevant to the growth or progression of a pediatric cancer.

The Best Pharmaceuticals for Children Act (the BPCA) provides a six-month extension of any exclusivity—patent or non-patent—for a biologic if certain conditions are met.

Conditions for exclusivity include the FDA’s determination that information relating to the use of a new biologic in the pediatric population may produce health benefits in that population, the FDA making a written request for pediatric studies, and the applicant agreeing to perform, and reporting on, the requested studies within the statutory timeframe.

Applications under the BPCA are treated as priority applications, with all of the benefits that designation confers.

A Complete Response Letter usually describes all of the specific deficiencies in the NDA identified by the FDA.

The Complete Response Letter may require additional clinical data and/or (an) additional pivotal Phase 3 clinical trial(s), and/or other significant and time-consuming requirements related to clinical trials, preclinical studies or manufacturing.

If a Complete Response Letter is issued, the applicant may either resubmit the NDA, addressing all of the deficiencies identified in the letter, or withdraw the application.

Even if such data and information are submitted, the FDA may ultimately decide that the NDA does not satisfy the criteria for approval.

If a product receives regulatory approval, the approval may be significantly limited to specific diseases and dosages or the indications for use may otherwise be limited, which could restrict the commercial value of the product.

Further, the FDA may require that certain contraindications, warnings or precautions be included in the product labeling or may condition the approval of the NDA on other changes to the proposed labeling, development of adequate controls and specifications, or a commitment to conduct one or more post-market studies or clinical trials.

For example, the FDA may require Phase 4 testing, which involves clinical trials designed to further assess a drug safety and effectiveness, and may require testing and surveillance programs to monitor the safety of approved products that have been commercialized.

The FDA may also determine that a risk evaluation and mitigation strategy (“REMS”) is necessary to assure the safe use of the drug.

If the FDA concludes a REMS is needed, the sponsor of the NDA must submit a proposed REMS;

the FDA will not approve the NDA without an approved REMS, if required.

A REMS could include medication guides, physician communication plans, or elements to assure safe use, such as restricted distribution methods, patient registries and other risk minimization tools.

Fast Track Designation

The FDA has a number of programs intended to expedite the development or review of products that meet certain criteria.

For example, the FDA has a fast track designation program that is intended to expedite or facilitate the process for reviewing new drug products that meet certain criteria.

Specifically, new drugs are eligible for fast track designation if they are intended to treat a serious or life-threatening disease or condition and demonstrate the potential to address unmet medical needs for the disease or condition.

Fast track designation applies to the combination of the product and the specific indication for which it is being studied.

The sponsor of a fast track product has opportunities for more frequent interactions with the applicable FDA review team during product development and, once an NDA is submitted, the product candidate may be eligible for priority review.

With regard to a fast track product, the FDA may consider for review sections of the NDA on a rolling basis before the complete application is submitted, if the sponsor provides a schedule for the submission of the sections of the NDA, the FDA agrees to accept sections of the NDA and determines that the schedule is acceptable, and the sponsor pays any required user fees upon submission of the first section of the NDA.

Any product submitted to the FDA for approval, including a product with a fast track designation, may also be eligible for other types of FDA programs intended to expedite development and review, such as priority.

A product is eligible for priority review if it is designed to treat a serious condition, and if approved, would provide a significant improvement in the treatment, diagnosis or prevention of a serious condition compared to marketed products.

The FDA will attempt to direct additional resources to the evaluation of an application for a new drug designated for priority review in an effort to facilitate the review.

The FDA endeavors to review applications with priority review designations within six months of the filing date as compared to ten months for review of new molecular entity NDAs under its current PDUFA review goals.

Fast track designation and priority review do not change the standards for approval but may expedite the development or approval process.

Even if a product qualifies for one of these programs, the FDA may later decide that the product no longer meets the conditions for qualification or decide that the time period for FDA review or approval will not be shortened.

In addition, such designations or shortened review periods may not provide a material commercial advantage.

Post-Approval Requirements

Once a BLA is approved, a product will be subject to certain post-approval requirements.

For instance, the FDA closely regulates the post-approval marketing and promotion of biologics, including standards and regulations for direct-to-consumer advertising, off-label promotion, industry-sponsored scientific and educational activities and promotional activities involving the Internet.

Biologics may be marketed only for the approved indications and in a manner consistent with the provisions of the approved labeling.

Physicians, on the other hand, may prescribe products for off-label uses.

Although the FDA and other regulatory agencies do not regulate a physician’s choice of drug treatment made in the physician’s independent medical judgment, they do restrict promotional communications from companies or their sales force with respect to off-label uses of products for which marketing clearance has not been issued.

Companies may only share truthful and not misleading information that is otherwise consistent with a product’s FDA approved labeling.

Adverse event reporting and submission of periodic safety summary reports is required following FDA approval of a BLA.

The FDA also may require post-marketing testing, known as Phase 4 testing, REMS, and surveillance to monitor the effects of an approved product, or the FDA may place conditions on an approval that could restrict the distribution or use of the product.

In addition, quality control, biological product manufacture, packaging and labeling procedures must continue to conform to cGMPs after approval.

Biologic manufacturers and certain of their subcontractors are required to register their establishments with the FDA and certain state agencies.

Registration with the FDA subjects entities to periodic unannounced inspections by the FDA, during which the agency inspects a biologic product’s manufacturing facilities to assess compliance with cGMPs.

Accordingly, manufacturers must continue to expend time, money and effort in the areas of production and quality-control to maintain compliance with cGMPs.

Regulatory authorities may withdraw product approvals or request product recalls if a company fails to comply with required regulatory standards, if it encounters problems following initial marketing, or if previously unrecognized problems are subsequently discovered.

Once an approval 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 revisions to the approved labeling to add new safety information, imposition of post-market studies or clinical studies to assess new safety risks or imposition of distribution or other restrictions under a REMS program.

Any drug products manufactured or distributed pursuant to FDA approvals are subject to continuing regulation by the FDA, including, among other things, record-keeping requirements, reporting of adverse experiences with the product, providing the FDA with updated safety and efficacy information, product sampling and distribution requirements, and complying with FDA promotion and advertising requirements.

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 also are continuing, annual program fees for any marketed products.

In addition, quality control and manufacturing procedures must continue to conform to applicable manufacturing requirements after approval to ensure the long-term stability of the drug product.

cGMP regulations require among other things, quality control and quality assurance as well as the corresponding maintenance of records and documentation and the obligation to investigate and correct any deviations from cGMP.

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

Accordingly, manufacturers must continue to expend time, money, and effort in the area of production and quality control to maintain cGMP compliance.

In addition, changes to the manufacturing process are strictly regulated, and depending on the significance of the change, may require prior FDA approval before being implemented.

Other types of changes to the approved product, such as adding new indications and additional labeling claims, are also subject to further FDA review and approval.

The FDA may withdraw 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 revisions to the approved labeling to add new safety information, imposition of post-market studies or clinical studies to assess new safety risks, or imposition of distribution restrictions or other restrictions under a REMS program.

Other potential consequences include, among other things:

restrictions on the marketing or manufacturing of the product, suspension of the approval, complete withdrawal of the product from the market or product recalls;

fines, warning or other enforcement-related letters or holds on post-approval clinical studies;

refusal of the FDA to approve pending BLAs or supplements to approved BLAs, or suspension or revocation of product license approvals;

restrictions on the marketing or manufacturing of the product, complete withdrawal of the product from the market or product recalls;

fines, warning letters, or untitled letters;

clinical holds on clinical studies;

refusal of the FDA to approve pending applications or supplements to approved applications, or suspension or revocation of product approvals;

product seizure or detention, or refusal to permit the import or export of products;

consent decrees, corporate integrity agreements, debarment or exclusion from federal healthcare programs;

mandated modification of promotional materials and labeling and the issuance of corrective information;

the issuance of safety alerts, Dear Healthcare Provider letters, press releases and other communications containing warnings or other safety information about the product;

injunctions or the imposition of civil or criminal penalties.

Patent Term Restoration and Marketing Exclusivity

Depending upon the timing, duration and specifics of FDA approval of our product candidates, some of our U.S.

patents may be eligible for limited patent term extension under the Drug Price Competition and Patent Term Restoration Act, informally known as the Hatch-Waxman Act.

The Hatch Waxman Act permits a patent term extension of up to five years as compensation for patent term lost during the FDA regulatory review process.

Patent term extension (PTE), however, cannot extend the remaining term of a patent beyond a total of 14 years from the product’s approval date.

The PTE period is generally one half the time between the effective date of an IND and the submission date of a BLA, plus the time between the submission date of a BLA and the approval of that application, except that the review period is reduced by any time during which the applicant failed to exercise due diligence.

Only one patent applicable to an approved drug is eligible for such an extension, only those claims covering the approved drug, a method for using it, or a method for manufacturing it may be extended and the application for the extension must be submitted prior to the expiration of the patent.

The USPTO, in consultation with the FDA, reviews and approves the application for any PTE or restoration.

Similar provisions are available in Europe and other foreign jurisdictions to extend the term of a patent that covers an approved drug.

In the future, we or our licensors may apply for PTE for our owned or licensed patents to add patent life beyond their current expiration date, depending on the expected length of the clinical trials and other factors involved in the filing of the relevant BLA.

However, an extension might not be granted because of, for example, our or our licensors’

failure to exercise due diligence during the testing phase or regulatory review process, failure to apply within applicable deadlines, failure to apply prior to expiration of relevant patents or any other failure to satisfy applicable requirements.

Moreover, the applicable time period or the scope of patent protection afforded could be less than requested.

There is no guarantee that the applicable authorities, including the FDA in the United States, will agree with our assessment of whether any extensions should be granted, and if granted, the length of such extensions.

Biosimilars and Exclusivity

The Biologics Price Competition and Innovation Act of 2009 (the BPCIA) created an abbreviated approval pathway for biological products shown to be biosimilar to, or interchangeable with, an FDA-licensed reference biological product.

Biosimilarity, which requires that the biological product be highly similar to the reference product notwithstanding minor differences in clinically inactive components and that there be no clinically meaningful differences between the biological product and the reference product in terms of safety, purity and potency, can be shown through analytical studies, animal studies and a clinical trial or trials.

Interchangeability requires that a biological product be biosimilar to the reference product and that the product can be expected to produce the same clinical results as the reference product in any given patient and, for products administered multiple times to an individual, that the product and the reference product may be alternated or switched after one has been previously administered without increasing safety risks or risks of diminished efficacy relative to exclusive use of the reference biological product without such alternation or switch.

A reference biological product is granted 12 years of data exclusivity from the time of first licensure of the product and the FDA will not accept an application for a biosimilar or interchangeable product based on the reference biological product until four years after the date of first licensure of the reference product.

“First licensure”

typically means the initial date the particular product at issue was licensed in the United States.

Date of first licensure does not include the date of licensure of (and a new period of exclusivity is not available for) a biological product if the licensure is for a supplement for the biological product or for a subsequent application by the same sponsor or manufacturer of the biological product (or licensor, predecessor in interest or other related entity) for a change (not including a modification to the structure of the biological product) that results in a new indication, route of administration, dosing schedule, dosage form, delivery system, delivery device or strength, or for a modification to the structure of the biological product that does not result in a change in safety, purity or potency.

The BPCIA is complex and only recently implemented by the FDA.

Recent government proposals have sought to reduce the twelve-year reference product exclusivity period.

Other aspects of the BPCIA, some of which may impact the BPCIA exclusivity provisions, have also been the subject of recent litigation.

As a result, the ultimate impact, implementation and meaning of the BPCIA is subject to significant uncertainty.

International Regulation

In addition to regulations in the United States, a variety of foreign regulations govern clinical trials, commercial sales and distribution of product candidates.

The approval process varies from country to country and the time to approval may be longer or shorter than that required for FDA approval.

Other Healthcare Laws and Regulations and Legislative Reform

Healthcare and Privacy Laws and Regulations

Healthcare providers, including physicians, and third-party payors will play a primary role in the recommendation and prescription of any product candidates for which we obtain marketing approval.

Our operations, including any arrangements with healthcare providers, including physicians, third-party payors and customers may expose us to broadly applicable fraud and abuse and other healthcare laws that may affect the business or financial arrangements and relationships through which we would market, sell and distribute our products.

Our current and future operations are subject to regulation by various federal, state and local authorities in addition to the FDA, including but not limited to CMS, the U.S.

Department of Health and Human Services (HHS) (including the Office of Inspector General, Office for Civil Rights and the Health Resources and Service Administration), the U.S.

Department of Justice (DOJ) and individual U.S.

Attorney offices within the DOJ, and state and local governments.

The healthcare laws that may affect our ability to operate include, but are not limited to:

The federal Anti-Kickback Statute, which prohibits any person or entity from, among other things, knowingly and willfully soliciting, receiving, offering or paying any remuneration, directly or indirectly, overtly or covertly, in cash or in kind, to induce or reward either the referral of an individual for, or the purchase, order or recommendation of an item or service reimbursable, in whole or in part, under a federal healthcare program, such as the Medicare and Medicaid programs.

The FDA also may require post-marketing testing, known as Phase 4 testing, and surveillance to monitor the effects of an approved product.

Discovery of previously unknown problems with a product or the failure to comply with applicable FDA requirements can have negative consequences, including adverse publicity, judicial or administrative enforcement, warning letters from the FDA, mandated corrective advertising or communications with doctors, and civil or criminal penalties, among others.

Newly discovered or developed safety or effectiveness data may require changes to a product’s approved labeling, including the addition of new warnings and contraindications, and also may require the implementation of other risk management measures.

The FDA closely regulates the marketing, labeling, advertising and promotion of drug products.

A company can make only those claims relating to safety and efficacy, purity and potency that are approved by the FDA and in accordance with the provisions of the approved label.

The FDA and other agencies actively enforce the laws and regulations prohibiting the promotion of off label uses.

Failure to comply with these requirements can result in, among other things, adverse publicity, warning letters, corrective advertising and potential civil and criminal penalties.

Physicians may prescribe, in their independent professional medical judgment, legally available products for uses that are not described in the product’s labeling and that differ from those tested and approved by the FDA.

Physicians may believe that such off-label uses are the best treatment for many patients in varied circumstances.

The FDA does not regulate the behavior of physicians in their choice of treatments.

The FDA does, however, restrict manufacturer’s communications on the subject of off-label use of their products.

The federal government has levied large civil and criminal fines against companies for alleged improper promotion of off-label use and has enjoined companies from engaging in off-label promotion.

The FDA and other regulatory agencies have also required that companies enter into consent decrees or permanent injunctions under which specified promotional conduct is changed or curtailed.

However, companies may share truthful and not misleading information that is otherwise consistent with a product’s FDA-approved labelling.

Hatch-Waxman Act

Section 505 of the FDCA describes three types of marketing applications that may be submitted to the FDA to request marketing authorization for a new drug.

A Section 505(b)(1) NDA is an application that contains full reports of investigations of safety and efficacy.

A 505(b)(2) NDA is an application that contains full reports of investigations of safety and efficacy but where at least some of the information required for approval comes from investigations that were not conducted by or for the applicant and for which the applicant has not obtained a right of reference or use from the person by or for whom the investigations were conducted.

This regulatory pathway enables the applicant to rely, in part, on the FDA’s prior findings of safety and efficacy for an existing product, or published literature, in support of its application.

Section 505(j) establishes an abbreviated approval process for a generic version of approved drug products through the submission of an Abbreviated New Drug Application (“ANDA”).

An ANDA provides for marketing of a generic drug product that has the same active ingredients, dosage form, strength, route of administration, labeling, performance characteristics and intended use, among other things, to a previously approved product.

ANDAs are termed “abbreviated”

because they are generally not required to include preclinical (animal) and clinical (human) data to establish safety and efficacy.

Instead, generic applicants must scientifically demonstrate that their product is bioequivalent to, or performs in the same manner as, the innovator drug through in vitro, in vivo, or other testing.

The generic version must deliver the same amount of active ingredients into a subject’s bloodstream in the same amount of time as the innovator drug and can often be substituted by pharmacists under prescriptions written for the reference listed drug.

In seeking approval for a drug through an NDA, applicants are required to list with the FDA each patent with claims that cover the applicant’s drug or a method of using the drug.

Upon approval of a drug, each of the patents listed in the application for the drug is then published in the FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations, commonly known as the Orange Book.

Drugs listed in the Orange Book can, in turn, be cited by potential competitors in support of approval of an ANDA or 505(b)(2) NDA.

Upon submission of an ANDA or a 505(b)(2) NDA, an applicant must certify to the FDA that (1) no patent information on the drug product that is the subject of the application has been submitted to the FDA;

(2) such patent has expired;

(3) the date on which such patent expires;

or (4) such patent is invalid or will not be infringed upon by the manufacture, use or sale of the drug product for which the application is submitted.

Generally, the ANDA or 505(b)(2) NDA cannot be approved until all listed patents have expired, except where the ANDA or 505(b)(2) NDA applicant challenges a listed patent through the last type of certification, also known as a paragraph IV certification.

If the applicant does not challenge the listed patents or indicates that it is not seeking approval of a patented method of use, the ANDA or 505(b)(2) NDA application will not be approved until all of the listed patents claiming the referenced product have expired.

If the ANDA or 505(b)(2) NDA applicant has provided a Paragraph IV certification to the FDA, the applicant must send notice of the Paragraph IV certification to the NDA and patent holders once the application has been accepted for filing by the FDA.

The NDA and patent holders may then initiate a patent infringement lawsuit in response to the notice of the paragraph IV certification.

If the paragraph IV certification is challenged by an NDA holder or the patent owner(s) asserts a patent challenge to the paragraph IV certification, the FDA may not approve that application until the earlier of 30 months from the receipt of the notice of the paragraph IV certification, the expiration of the patent, when the infringement case concerning each such patent was favorably decided in the applicant’s favor or settled, or such shorter or longer period as may be ordered by a court.

This prohibition is generally referred to as the 30-month stay.

In instances where an ANDA or 505(b)(2) NDA applicant files a paragraph IV certification, the NDA holder or patent owner(s) regularly take action to trigger the 30-month stay, recognizing that the related patent litigation may take many months or years to resolve.

Thus, approval of an ANDA or 505(b)(2) NDA could be delayed for a significant period of time depending on the patent certification the applicant makes and the reference drug sponsor’s decision to initiate patent litigation.

The Hatch-Waxman Act establishes periods of regulatory exclusivity for certain approved drug products, during which the FDA cannot approve (or in some cases accept) an ANDA or 505(b)(2) application that relies on the branded reference drug.

For example, the holder of an NDA, including a 505(b)(2) NDA, may obtain five years of exclusivity upon approval of a new drug containing new chemical entities that have not been previously approved by the FDA.

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 therapeutic activity of the drug substance.

During the exclusivity period, the FDA may not accept for review an ANDA or a 505(b)(2) NDA submitted by another company that contains the previously approved active moiety.

However, an ANDA or 505(b)(2) NDA may be submitted after four years if it contains a certification of patent invalidity or non-infringement.

The Hatch-Waxman Act also provides three years of marketing exclusivity to the holder of an NDA (including a 505(b)(2) NDA) for a particular condition of approval, or change to a marketed product, such as a new formulation for a previously approved product, if one or more new clinical studies (other than bioavailability or bioequivalence studies) was essential to the approval of the application and was conducted/sponsored by the applicant.

This three-year exclusivity period protects against FDA approval of ANDAs and 505(b)(2) NDAs for the condition of the new drug’s approval.

As a general matter, the three year exclusivity does not prohibit the FDA from approving ANDAs or 505(b)(2) NDAs for generic versions of the original, unmodified drug product.

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 efficacy.

Pediatric exclusivity is another type of non-patent market exclusivity in the United States.

Pediatric exclusivity, if granted, adds six months to existing exclusivity periods and patent terms.

This six-month exclusivity, which runs from the end of other exclusivity protection or patent term, may be granted based on the voluntary completion of a pediatric trial in accordance with an FDA-issued “Written Request”

for such a trial.

Other Healthcare Laws

In the United States, we are subject to a number of federal and state healthcare regulatory laws that restrict business practices in the healthcare industry.

These laws include, but are not limited to, federal and state anti-kickback laws, false claims laws, data privacy and security laws, and other healthcare fraud and abuse laws, such as transparency laws regarding payments or other items of value provided to healthcare providers.

federal Anti-Kickback Statute prohibits, among other things, any person or entity from knowingly and willfully offering, paying, soliciting, receiving or providing any remuneration, directly or indirectly, overtly or covertly, to induce or in return for purchasing, leasing, ordering, or arranging for or recommending the purchase, lease, or order of any good, facility, item or service reimbursable, in whole or in part, under Medicare, Medicaid or other federal healthcare programs.

The term “remuneration”

has been broadly interpreted to include anything of value.

A person or entity does not need to have actual knowledge of the federal Anti-Kickback Statute or specific intent to violate it to have committed a violation.

The federal Anti-Kickback Statute has also been interpreted to apply to arrangements between pharmaceutical manufacturers on the one hand and prescribers, purchasers and formulary managers on the other hand.

There are a number of statutory exceptions and regulatory safe harbors protecting some common activities from prosecution, but the exceptions and safe harbors are drawn narrowly and require strict compliance in order to offer protection.

Federal civil and criminal false claims laws, such as the FCA, which can be enforced by private citizens through civil qui tam actions, and civil monetary penalty laws prohibit individuals or entities from, among other things, knowingly presenting, or causing to be presented, false, fictitious or fraudulent claims for payment of federal funds, and knowingly making, using or causing to be made or used a false record or statement material to a false or fraudulent claim to avoid, decrease or conceal an obligation to pay money to the federal government.

For example, pharmaceutical companies have been prosecuted under the FCA in connection with their alleged off-label promotion of drugs, purportedly concealing price concessions in the pricing information submitted to the government for government price reporting purposes, and allegedly providing free product to customers with the expectation that the customers would bill federal healthcare programs for the product.

In addition, 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 FCA.

As a result of a modification made by the Fraud Enforcement and Recovery Act of 2009, a claim includes “any request or demand”

This statute has been interpreted to apply to arrangements between pharmaceutical manufacturers on the one hand and prescribers, purchasers and formulary managers on the other hand.

Although there are a number of statutory exceptions and regulatory safe harbors protecting certain common activities from prosecution or other regulatory sanctions, the exceptions and safe harbors are drawn narrowly and practices that involve remuneration that are alleged to be intended to induce prescribing, purchases, or recommendations may be subject to scrutiny if they do not qualify for an exception or safe harbor.

Failure to meet all of the requirements of a particular applicable statutory exception or regulatory safe harbor does not make the conduct per se illegal under the federal healthcare program anti-kickback statute.

Instead, the legality of the arrangement will be evaluated on a case-by-case basis based on a cumulative review of all its facts and circumstances.

Several courts have interpreted the statute’s intent requirement to mean that if any one purpose of an arrangement involving remuneration is to induce referrals of federal healthcare covered business, the federal healthcare program anti-kickback statute has been violated.

Additionally, the intent standard under the federal anti-kickback statute was amended by the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act (collectively, the “ACA”) to a stricter standard such that a person or entity no longer needs to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation.

In addition, the ACA codified case law that a claim including items or services resulting from a violation of the federal healthcare program anti-kickback statute constitutes a false or fraudulent claim for purposes of the federal civil False Claims Act.

The federal false claims, including the civil False Claims Act, prohibit, among other things, any person or entity from knowingly presenting, or causing to be presented, a false, fictitious or fraudulent claim for payment to, or approval by, the federal government, knowingly making, using, or causing to be made or used a false record or statement material to a false or fraudulent claim to the federal government, or knowingly making a false statement to avoid, decrease or conceal an obligation to pay money to the U.S.

federal government.

A claim includes “any request or demand”

for money or property presented to the U.S.

In addition, manufacturers can be held liable under the FCA even when they do not submit claims directly to government payors if they are deemed to “cause”

the submission of false or fraudulent claims.

The federal Health Insurance Portability and Accountability Act of 1996, as amended (HIPAA), among other things, imposes criminal liability for executing or attempting to execute a scheme to defraud any healthcare benefit program, including private third-party payors, knowingly and willfully embezzling or stealing from a healthcare benefit program, willfully obstructing a criminal investigation of a healthcare offense, and creates federal criminal laws that prohibit knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement or representation, or making or using any false writing or document knowing the same to contain any materially false, fictitious or fraudulent statement or entry in connection with the delivery of or payment for healthcare benefits, items or services.

Similar to the federal Anti-Kickback Statute, 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.

HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act (HITECH), and their respective implementing regulations, impose requirements on certain covered healthcare providers, health plans, and healthcare clearinghouses as well as their respective business associates that perform services for them, and their covered subcontractors, that involve the use, or disclosure of, individually identifiable health information, relating to the privacy, security, and transmission of such individually identifiable health information.

Federal and state consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harm consumers.

The federal transparency requirements under the Physician Payments Sunshine Act, created under the Patient Protection and Affordable Care Act (the Affordable Care Act), which requires, among other things, certain manufacturers of drugs, devices, biologics and medical supplies reimbursed under Medicare, Medicaid, or the Children’s Health Insurance Program (with certain exceptions) to report annually to CMS information related to payments and other transfers of value provided to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), other healthcare professionals (such as physician assistants and nurse practitioners), and teaching hospitals and physician ownership and investment interests, including such ownership and investment interests held by a physician’s immediate family members.

Federal government price reporting laws, which require us to calculate and report complex pricing metrics in an accurate and timely manner to government programs.

Federal consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harm consumers.

State and foreign laws that are analogous to each of the above federal laws, such as anti-kickback and false claims laws, that may impose similar or more prohibitive restrictions, and may apply to items or services reimbursed by non-governmental third-party payors, including private insurers, and state laws that require manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures and pricing information.

State and foreign laws that require pharmaceutical companies to implement compliance programs, comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government, or to track and report gifts, compensation and other remuneration provided to physicians and other healthcare providers;

state laws that require the reporting of marketing expenditures or drug pricing, including information pertaining to and justifying price increases;

state and local laws that require the registration of pharmaceutical sales representatives;

and state laws that prohibit various marketing-related activities, such as the provision of certain kinds of gifts or meals;

state laws that require the posting of information relating to clinical trials and their outcomes.

If our operations are found to be in violation of any of these laws or any other governmental regulations that may apply to us, we may be subject to significant civil, criminal and administrative penalties, damages, fines, disgorgement, imprisonment, exclusion from government funded healthcare programs, such as Medicare and Medicaid, contractual damages, reputational harm, additional reporting requirements and oversight if we become subject to a corporate integrity agreement or similar agreement to resolve allegations of non-compliance with these laws, and the curtailment or restructuring of our operations.

Legislative Reform

We operate in a highly regulated industry, and new laws, regulations and judicial decisions, or new interpretations of existing laws, regulations and decisions, related to healthcare availability, the method of delivery and payment for healthcare products and services could negatively affect our business, financial condition and prospects.

There is significant interest in promoting healthcare reforms, and it is likely that federal and state legislatures within the United States and the governments of other countries will continue to consider changes to existing healthcare legislation.

For example, the United States and state governments continue to propose and pass legislation designed to reduce the cost of healthcare.

In 2010, the U.S.

Congress enacted the Affordable Care Act, which included changes to the coverage and reimbursement of drug products under government healthcare programs such as:

increased the minimum Medicaid rebates owed by manufacturers under the Medicaid Drug Rebate Program;

established a branded prescription drug fee that pharmaceutical manufacturers of certain branded prescription drugs must pay to the federal government;

expanded the list of covered entities eligible to participate in the 340B drug pricing program by adding new entities to the program;

established a new Medicare Part D coverage gap discount program, in which manufacturers must now agree to offer 70% point-of-sale discounts off negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period, as a condition for the manufacturer’s outpatient drugs to be covered under Medicare Part D;

extended manufacturers’

Medicaid rebate liability to covered drugs dispensed to individuals who are enrolled in Medicaid managed care organizations;

expanded eligibility criteria for Medicaid programs by, among other things, allowing states to offer Medicaid coverage to additional individuals and by adding new mandatory eligibility categories for individuals with income at or below 133% of the federal poverty level, thereby potentially increasing manufacturers’

Medicaid rebate liability;

created a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for certain drugs and biologics, including our product candidates, that are inhaled, infused, instilled, implanted or injected;

established a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research;

established a Center for Medicare and Medicaid Innovation at the CMS to test innovative payment and service delivery models to lower Medicare and Medicaid spending, potentially including prescription drug spending;

created a licensure framework for follow-on biologic products.

There have been executive, judicial and congressional challenges to certain aspects of the Affordable Care Act.

For example, in 2017, the U.S.

Congress enacted legislation informally titled the Tax Cuts and Jobs Act (the Tax Act), which eliminated the tax-based shared responsibility payment imposed by the Affordable Care Act on certain individuals who fail to maintain qualifying health coverage for all or part of a year that is commonly referred to as the “individual mandate.”

On June 17, 2021, the U.S.

Supreme Court dismissed a challenge on procedural grounds that argued the Affordable Care Act is unconstitutional in its entirety because the “individual mandate”

was repealed by Congress.

Thus, the Affordable Care Act will remain in effect in its current form.

Prior to the U.S.

Supreme Court ruling, on January 28, 2021, President Biden issued an executive order that initiated a special enrollment for purposes of obtaining health insurance coverage through the Affordable Care Act marketplace.

The executive order also instructed certain governmental agencies to review and reconsider their existing policies and rules that limit access to healthcare, including among others, reexamining Medicaid demonstration projects and waiver programs that include work requirements, and policies that create unnecessary barriers to obtaining access to health insurance coverage through Medicaid or the Affordable Care Act.

It is possible that the Patient Protection and Affordable Care Act (“PPACA”) will be subject to judicial or Congressional challenges in the future.

It is unclear how any such challenges, and the healthcare reform measures of the Biden administration will impact the Affordable Care Act.

It is difficult to predict the future legislative landscape in healthcare and the effect on our business, results of operations, financial condition and prospects.

In addition, there have been and continue to be a number of initiatives at the United States federal and state levels that seek to reduce healthcare costs.

In 2011, the U.S.

Congress enacted the Budget Control Act, which included provisions intended to reduce the federal deficit.

The Budget Control Act resulted in the imposition of 2% reductions in Medicare payments to providers beginning in 2013 and, due to subsequent legislative amendments to the statute, will remain in effect through 2031, with the exception of a temporary suspension from May 1, 2020 through March 31, 2022, absent additional Congressional action.

Additionally, on March 11, 2021, President Biden signed the American Rescue Plan Act of 2021 into law, which eliminates the statutory Medicaid drug rebate cap, currently set at 100% of a drug’s average manufacturer price, for single source and innovator multiple source drugs, beginning January 1, 2024.

In addition, in 2012, the U.S.

Congress enacted the American Taxpayer Relief Act, which, among other things, further reduced Medicare payments to several types of providers, including hospitals, imaging centers and cancer treatment centers, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years.

Moreover, any significant spending reductions affecting Medicare, Medicaid or other publicly funded or subsidized health programs that may be implemented, or any significant taxes or fees that may be imposed on us, as part of any broader deficit reduction effort or legislative replacement to the Budget Control Act, could have an adverse impact on our anticipated product revenues.

Furthermore, there has been heightened governmental scrutiny over the manner in which manufacturers set prices for their marketed products, which has resulted in several congressional inquiries and proposed legislation designed to, among other things, bring more transparency to product pricing, review the relationship between pricing and manufacturer patient programs and reform government program reimbursement methodologies for drug products.

At the federal level, the Trump administration used several means to propose or implement drug pricing reform, including through federal budget proposals, executive orders and policy initiatives.

For example, on July 24, 2020 and September 13, 2020, the Trump administration announced several executive orders related to prescription drug pricing that seek to implement several of the administration’s proposals.

As a result, the FDA released a final rule and guidance in September 2020 providing pathways for states to build and submit importation plans for drugs from Canada.

Further, on November 20, 2020, HHS finalized a regulation removing safe harbor protection for price reductions from pharmaceutical manufacturers to plan sponsors under Medicare Part D, either directly or through pharmacy benefit managers, unless the price reduction is required by law.

The implementation of the rule has been delayed by the Biden administration from January 1, 2022 to January 1, 2023 in response to ongoing litigation.

The rule also creates a new safe harbor for price reductions reflected at the point-of-sale, as well as a new safe harbor for certain fixed fee arrangements between pharmacy benefit managers and manufacturers, the implementation of which have also been delayed until January1, 2023.

On November 20, 2020, CMS issued an interim final rule implementing the Trump administration’s Most Favored Nation executive order, which would tie Medicare Part B payments for certain physician-administered drugs to the lowest price paid in other economically advanced countries, effective January 1, 2021.

On December 27, 2021, CMS issued a final rule that rescinded the Most Favored Nation interim final rule.

In July 2021, the Biden administration released an executive order, “Promoting Competition in the American Economy,”

with multiple provisions aimed at prescription drugs.

In response to Biden’s executive order, on September 9, 2021, HHS released a Comprehensive Plan for Addressing High Drug Prices that outlines principles for drug pricing reform and sets out a variety of potential legislative policies that Congress could pursue as well as potential administrative actions HHS can take to advance these principles.

No legislation or administrative actions have been finalized to implement these principles.

Congress is also considering additional health reform measures.

Individual states in the United States have also become increasingly active in passing legislation and implementing regulations designed to control pharmaceutical product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.

In addition, regional healthcare authorities and individual hospitals are increasingly using bidding procedures to determine what pharmaceutical products and which suppliers will be included in their prescription drug and other healthcare programs.

We expect that additional state and federal healthcare reform measures will be adopted in the future.

It is also possible that additional governmental action will be taken in response to the COVID-19 pandemic.

Environmental, Health and Safety Laws and Regulations

We and our third-party contractors are subject to numerous environmental, health and safety laws and regulations, including those governing laboratory procedures and the use, generation, manufacture, distribution, storage, handling, treatment, remediation and disposal of hazardous materials and wastes.

Hazardous chemicals, including flammable and biological materials, are involved in certain aspects of our business, and we cannot eliminate the risk of injury or contamination from the use, generation, manufacture, distribution, storage, handling, treatment or disposal of hazardous materials and wastes.

In the event of contamination or injury, or failure to comply with environmental, health and safety laws and regulations, we could be held liable for any resulting damages, fines and penalties associated with such liability could exceed our assets and resources.

Environmental, health and safety laws and regulations are becoming increasingly more stringent.

We may incur substantial costs in order to comply with current or future environmental, health and safety laws and regulations.

Pharmaceutical Coverage, Pricing and Reimbursement

The availability and extent of coverage and adequate reimbursement by governmental and private third-party payors are essential for most patients to be able to afford expensive medical treatments.

In both domestic and foreign markets, sales of our product candidates will depend substantially on the extent to which the costs of our product candidates will be covered by third-party payors, such as government health programs, commercial insurance, and managed healthcare organizations.

These third-party payors decide which products will be covered and establish reimbursement levels for those products.

Coverage and reimbursement by a third-party payor may depend upon a number of factors, including the third-party payor’s determination that use of a product is:

a covered benefit under its health plan;

safe, effective and medically necessary;

appropriate for the specific patient;

cost-effective;

neither experimental nor investigational.

Obtaining coverage approval and reimbursement for a product from a government or other third-party payor is a time-consuming and costly process that could require us to provide supporting scientific, clinical and cost- effectiveness data for the use of our products to the payor.

We may not be able to provide data sufficient to gain acceptance with respect to coverage and reimbursement at a satisfactory level.

If coverage and adequate reimbursement of our future products, if any, are unavailable or limited in scope or amount, such as may result where alternative or generic treatments are available, we may be unable to achieve or sustain profitability.

Adverse coverage and reimbursement limitations may hinder our ability to recoup our investment in our product candidates, even if such product candidates obtain regulatory approval.

For products administered under the supervision of a physician, obtaining coverage and adequate reimbursement may be particularly difficult because of the higher prices often associated with such products.

Additionally, separate reimbursement for the product itself or the treatment or procedure in which the product is used may not be available, which may impact physician utilization.

Actions under the civil False Claims Act may be brought by the Attorney General or as a qui tam action by a private individual in the name of the government.

Moreover, a claim including items or services resulting from a violation of the U.S.

federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the federal civil False Claims Act.

In addition, the federal civil monetary penalties law, subject to certain exceptions, prohibits, among other things, the offer or transfer of remuneration, including waivers of copayments and deductible amounts (or any part thereof), to a Medicare or state healthcare program beneficiary if the person knows or should know it is likely to influence the beneficiary’s selection of a particular provider, practitioner or supplier of services reimbursable by Medicare or a state healthcare program.

Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) created additional federal criminal statutes that prohibit, among other actions, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, including private third party payors, knowingly and willfully embezzling or stealing from a healthcare benefit program, willfully obstructing a criminal investigation of a healthcare offense, and knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services.

Similar to the U.S.

federal Anti-Kickback Statute, 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, HIPAA, as amended by Health Information Technology for Economic and Clinical Health Act of 2009 (“HITECH”), imposes certain requirements on covered entities, which include certain healthcare providers, health plans and healthcare clearinghouses, and their business associates and covered subcontractors that receive or obtain protected health information in connection with providing a service on behalf of a covered entity relating to the privacy, security and transmission of individually identifiable health information.

The federal Physician Payments Sunshine Act requires certain manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program, with specific exceptions, to report annually to CMS information related to payments or other transfers of value made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), other health care professionals (such as physicians assistants and nurse practitioners), and teaching hospitals, as well as information regarding ownership and investment interests held by physicians and their immediate family members.

Similar state and local laws and regulations may also restrict business practices in the pharmaceutical industry, such as state anti-kickback and false claims laws, which may apply to business practices, including but not limited to, research, distribution, sales and marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers, or by patients themselves;

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, or otherwise restrict payments that may be made to healthcare providers and other potential referral sources;

state laws and regulations that require drug manufacturers to file reports relating to pricing information and marketing expenditures or which require tracking gifts and other remuneration and items of value provided to physicians, other healthcare providers and entities;

and state and local laws that require the registration of pharmaceutical sales representatives.

Violations of any of these laws and other applicable healthcare fraud and abuse laws may be punishable by criminal and civil sanctions, including significant fines and civil monetary penalties, the possibility of exclusion from federal healthcare programs (including Medicare and Medicaid), disgorgement and corporate integrity agreements, which impose, among other things, rigorous operational and monitoring requirements on companies.

Similar sanctions and penalties, as well as imprisonment, also can be imposed upon executive officers and employees of such companies.

Coverage and Reimbursement

Sales of any pharmaceutical product depend, in part, on the extent to which such product will be covered by third-party payors, such as federal, state and foreign government healthcare programs, commercial insurance and managed healthcare organizations, and the level of reimbursement for such product by third-party payors.

In the United States, no uniform policy exists for coverage and reimbursement for pharmaceutical products among third-party payors.

Therefore, decisions regarding the extent of coverage and amount of reimbursement to be provided are made on a plan-by-plan basis.

The process for determining whether a third-party payor will provide coverage for a product typically is separate from the process for setting the price of such product or for establishing the reimbursement rate that the payor will pay for the product once coverage is approved.

There is significant uncertainty related to the insurance coverage and reimbursement of newly approved products.

There is no uniform policy for coverage and reimbursement in the United States and, as a result, coverage and reimbursement can differ significantly from payor to payor.

In the United States, private payors often, but not always, follow Medicare coverage and reimbursement policies with respect to newly approved products.

It is difficult to predict what third- party payors will decide with respect to coverage and reimbursement for fundamentally novel products such as ours, as there is no body of established practices and precedents for these new products.

Further, one payor’s determination to provide coverage and adequate reimbursement for a product does not assure that other payors will also provide coverage and adequate reimbursement for that product.

We may need to conduct expensive pharmaco-economic studies in order to demonstrate the medical necessity and cost-effectiveness of our product candidates.

Some third-party payors require pre-approval of coverage for new drugs before they will reimburse healthcare providers who use such therapies.

Generally, third-party payors limit coverage and reimbursement for new medication prior to a formal review by the payors’

pharmacy and therapeutics committees.

As such, several third-party payors have indicated that our products may be subject to denial or limited coverage prior to formal review.

There may be significant delays in obtaining reimbursement for newly-approved drugs, and coverage may be more limited than the purposes for which the drug or therapeutic biologic is approved by the FDA or similar foreign regulatory authorities.

Additionally, we may need to conduct expensive pharmaco-economic studies to demonstrate the medical necessity and cost-effectiveness of our product candidates.

There can be no assurance that our product candidates will be considered medically necessary or cost-effective.

In addition to third-party payors, professional organizations and patient advocacy groups can influence decisions about reimbursement for new medicines by determining standards for care.

Therefore, it is possible that any of our product candidates, even if approved, may not be covered by third-party payors or the reimbursement limit may be so restrictive that we cannot commercialize the product candidates profitably.

In addition, companion diagnostic tests require coverage and reimbursement separate and apart from the coverage and reimbursement for their companion pharmaceutical or biological products.

Similar challenges to obtaining coverage and reimbursement, applicable to pharmaceutical or biological products, will apply to companion diagnostics.

Additionally, if any companion diagnostic provider is unable to obtain reimbursement or is inadequately reimbursed, that may limit the availability of such companion diagnostic, which would negatively impact prescriptions for our product candidates, if approved.

Reimbursement agencies in Europe may be more restrictive than payors in the United States.

In Europe, pricing and reimbursement schemes vary widely from country to country.

For example, some countries provide that products may be marketed only after an agreement on reimbursement price has been reached.

Such pricing negotiations with governmental authorities can take considerable time after receipt of marketing approval for a product.

Political, economic and regulatory developments may further complicate pricing negotiations, and pricing negotiations may continue after reimbursement has been obtained.

Other countries require the completion of additional health technology assessments that compare the cost-effectiveness of a particular product candidate to currently available therapies.

Within the European Union legislation relating to and regulation of the reimbursement of medicinal products, and to control the prices of such products, is a matter for individual member states.

European Union member states may approve a specific price for a product, may adopt a system of direct or indirect controls on the profitability of the company placing the product on the market or monitor and control prescription volumes and issue guidance to physicians to limit prescriptions.

Reference pricing used by various European Union member states and parallel distribution, or arbitrage between low-priced and high-priced member states, can further reduce prices.

Furthermore, many countries in the European Union have increased the amount of discounts required on pharmaceutical products, and these efforts could continue as countries attempt to manage healthcare expenditures, especially in light of the severe fiscal and debt crises experienced by many countries in the European Union.

The downward pressure on healthcare costs in general, and prescription products in particular, has become increasingly intense.

As a result, there are increasingly higher barriers to entry for new products.

There can be no assurance that any country that has reimbursement limitations for pharmaceutical products will allow favorable reimbursement and pricing arrangements for any of our products, if approved in those countries.

Accordingly, the reimbursement for any products in Europe may be reduced compared with the United States and may be insufficient to generate commercially reasonable revenues and profits.

Furthermore, the containment of healthcare costs has become a priority of foreign and domestic governments as well as private third-party payors.

The prices of drugs have been a focus in this effort.

Governments and private third-party payors have attempted to control costs by limiting coverage and the amount of reimbursement for particular medications, which could affect our ability to sell our product candidates profitably.

We also expect to experience pricing pressures due to the trend towards managed healthcare, the increasing influence of health maintenance organizations and additional legislative changes.

These and other cost-control initiatives could cause us to decrease the price we might establish for products, which could result in lower-than-anticipated product revenues.

In addition, the publication of discounts by third-party payors or authorities may lead to further pressure on the prices or reimbursement levels within the country of publication and other countries.

If pricing is set at unsatisfactory levels or if coverage and adequate reimbursement of our products is unavailable or limited in scope or amount, our revenues and the potential profitability of our product candidates in those countries would be negatively affected.

Third-party payors may limit coverage to specific products on an approved list, also known as a formulary, which might not include all of the FDA-approved products for a particular indication, or place products at certain formulary levels that result in lower reimbursement levels and higher cost-sharing obligation imposed on patients.

One third-party payor’s decision to cover a particular medical product or service does not ensure that other payors will also provide coverage for the medical product or service and the level of coverage and reimbursement can differ significantly from payor to payor.

As a result, the coverage determination process will often require us to provide scientific and clinical support for the use of our products to each payor separately and can be a time-consuming process, with no assurance that coverage and adequate reimbursement will be applied consistently or obtained in the first instance.

Additionally, a third-party payor’s decision to provide coverage for a product does not imply that an adequate reimbursement rate will be approved.

Further, coverage policies and third-party reimbursement rates may change at any time.

Even if favorable coverage and reimbursement status is attained, less favorable coverage policies and reimbursement rates may be implemented in the future.

Moreover, as a condition of participating in, and having products covered under, certain federal healthcare programs, such as Medicare and Medicaid, we are subject to federal laws and regulations that require pharmaceutical manufacturers to calculate and report certain price reporting metrics to the government, such as Medicaid Average Manufacturer Price (“AMP”), and Best Price, Medicare Average Sales Price, the 340B Ceiling Price, and Non-Federal AMP reported to the Department of Veteran Affairs, and with respect to Medicaid, pay statutory rebates on utilization of manufacturers’

products by Medicaid beneficiaries.

In international markets, reimbursement and healthcare payment systems vary significantly by country, and many countries have instituted price ceilings on specific products and therapies.

For example, the European Union provides options for its member states to restrict the range of medicinal products for which their national health insurance systems provide reimbursement and to control the prices of medicinal products for human use.

A member state may approve a specific price for the medicinal product or it may instead adopt a system of direct or indirect controls on the profitability of the company placing the medicinal product on the market.

Pharmaceutical products may face competition from lower-priced products in foreign countries that have placed price controls on pharmaceutical products.

Furthermore, there can be no assurance that a product will be considered medically reasonable and necessary for a specific indication, that a product will be considered cost-effective by third-party payors, that an adequate level of reimbursement will be established even if coverage is available or that the third-party payors’

reimbursement policies will not adversely affect the ability to sell a product profitably.

Healthcare Reform

In the United States and certain foreign jurisdictions, there have been, and we expect there will continue to be, a number of legislative and regulatory changes to the healthcare system.

For example, implementation of the ACA substantially changed the way healthcare is financed by both governmental and private insurers in the United States and significantly affected the pharmaceutical industry.

The ACA, among other things, increased the minimum level of Medicaid rebates payable by manufacturers of brand name drugs;

required collection of rebates for drugs paid by Medicaid managed care organizations;

required manufacturers to participate in a coverage gap discount program, under which they must agree to offer point-of-sale discounts (increased to 70 percent, effective as of January 1, 2019) off negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period, as a condition for the manufacturer’s outpatient drugs to be covered under Medicare Part D;

imposed a non-deductible annual fee on pharmaceutical manufacturers or importers who sell certain “branded prescription drugs”

to specified federal government programs, implemented 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 expanded the types of entities eligible for the 340B drug discount program;

expanded eligibility criteria for Medicaid programs;

created a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research;

and established a Center for Medicare Innovation at CMS to test innovative payment and service delivery models to lower Medicare and Medicaid spending, potentially including prescription drug spending.

Since its enactment, there have been judicial, administrative, executive, and Congressional legislative challenges to certain aspects of the ACA.

For example, on June 17, 2021, the U.S.

Supreme Court dismissed a challenge on procedural grounds that argued the ACA is unconstitutional in its entirety because the “individual mandate”

was repealed by Congress.

Further, prior to the U.S.

Supreme Court ruling, on January 28, 2021, President Biden issued an executive order to initiate a special enrollment period for purposes of obtaining health insurance coverage through the ACA marketplace.

In addition, on August 16, 2022, President Biden signed the Inflation Reduction Act of 2022 (“IRA”) into law, which among other things, extends enhanced subsidies for individuals purchasing health insurance coverage in ACA marketplaces through plan year 2025.

The IRA also eliminates the “donut hole”

under the Medicare Part D program beginning in 2025 by significantly lowering the beneficiary maximum out-of-pocket cost and creating a new manufacturer discount program.

It is unclear how such challenges and the healthcare reform measures of the Biden administration will impact the ACA.

Other legislative changes have been proposed and adopted since the ACA was enacted, including aggregate reductions of Medicare payments to providers of 2% per fiscal year pursuant to the Budget Control Act of 2011which went into effect on April 1, 2013, and due to subsequent legislative amendments, will remain in effect until 2031, unless additional Congressional action is taken.

Under current legislation, the actual reduction in Medicare payments will vary from 1% in 2022 to up to 4% in the final fiscal year of this sequester.

In addition, on January 2, 2013, the American Taxpayer Relief Act of 2012 was signed into law which, among other things, further reduced Medicare payments to several types of providers, including hospitals, imaging centers and cancer treatment centers, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years.

Congress is considering additional health reform measures.

Moreover, there has been heightened governmental scrutiny over the manner in which manufacturers set prices for their marketed products, which has resulted in several U.S.

Presidential executive orders, congressional inquiries, and proposed and enacted legislation designed, among other things, to bring more transparency to product pricing, review the relationship between pricing and manufacturer patient programs and reform government program reimbursement methodologies for pharmaceutical products.

For example, at the federal level, in July 2021, the Biden administration released an executive order, “Promoting Competition in the American Economy,”

with multiple provisions aimed at prescription drugs.

In response to Biden’s executive order, on September 9, 2021, the U.S.

Department of Health and Human Services (“HHS”) released a Comprehensive Plan for Addressing High Drug Prices that outlines principles for drug pricing reform and sets out a variety of potential legislative policies that Congress could pursue as well as potential administrative actions HHS can take to advance these principles.

In addition, the IRA, among other things, (i) directs HHS to negotiate the price of certain high-expenditure, single-source drugs and biologics covered under Medicare, and subject drug manufacturers to civil monetary penalties and a potential excise tax by offering a price that is not equal to or less than the negotiated “maximum fair price”

for such drugs and biologics under the law, and (ii) imposes rebates with respect to certain drugs and biologics covered under Medicare Part B or Medicare Part D to penalize price increases that outpace inflation.

The IRA permits HHS to implement many of these provisions through guidance, as opposed to regulation, for the initial years.

These provisions will take effect progressively starting in fiscal year 2023, although they may be subject to legal challenges.

It is currently unclear how the IRA will be implemented but is likely to have a significant impact on the pharmaceutical industry.

Further, the Biden administration released an additional executive order on October 14, 2022, directing HHS to submit a report on how the Center for Medicare and Medicaid Innovation can be further leveraged to test new models for lowering drug costs for Medicare and Medicaid beneficiaries.

It is unclear whether this executive order or similar policy initiatives will be implemented in the future.

In addition, the American Taxpayer Relief Act of 2021, effective January 1, 2024, would eliminate the statutory cap on rebate amounts owed by drug manufacturers under the Medicaid Drug Rebate Program (“MDRP”), which is currently capped at 100% of the AMP for a covered outpatient drug.

Individual states in the United States have also become increasingly active in implementing regulations designed to control pharmaceutical product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures and, in some cases, mechanisms to encourage importation from other countries and bulk purchasing.

In addition, regional healthcare authorities and individual hospitals are increasingly using bidding procedures to determine which drugs and suppliers will be included in their healthcare programs.

Furthermore, there has been increased interest by third-party payors and governmental authorities in reference pricing systems and publication of discounts and list prices.

We expect additional state and federal healthcare reform measures to be adopted in the future, any of which could limit the amounts that federal and state governments will pay for healthcare products and services.

Data Privacy and Security Laws

Numerous state, local, federal and foreign laws, including consumer protection laws and regulations related to data privacy, security, and protection, govern the collection, dissemination, use, access to, confidentiality, and security of personal information, including health-related information.

Such obligations may include, without limitation, HIPAA, the Federal Trade Commission Act, the California Consumer Privacy Act of 2018 (“CCPA”), the Canadian Personal Information Protection and Electronic Documents Act, Canada’s Anti-Spam Legislation, the European Union’s General Data Protection Regulation 2016/679 (“EU GDPR”), and the EU GDPR as it forms part of United Kingdom (“UK”) law by virtue of section 3 of the European Union (Withdrawal) Act 2018 (“UK GDPR”).HIPAA, as amended by HITECH, imposes obligations, including mandatory contractual terms, on certain covered healthcare providers, health plans, and healthcare clearinghouses and their respective business associates and covered subcontractors that perform services for them that involve the use, or disclosure of, individually identifiable health information with respect to safeguarding the privacy, security and transmission of individually identifiable health information.

In addition, certain state and non-U.S.

laws, such as the CCPA, the CPRA and the GDPR, govern the privacy and security of personal information, including health-related information in certain circumstances, some of which are more stringent than HIPAA and many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts.

Failure to comply with these laws, where applicable, can result in the imposition of significant civil and/or criminal penalties and private litigation.

Privacy and security laws, regulations, and other obligations are constantly evolving, may conflict with each other to make compliance efforts more challenging, and can result in investigations, proceedings, or actions that lead to significant penalties and restrictions on data processing.

In addition, Congress and various other states have enacted or are considering new laws and regulations regarding the privacy and security of heath and other personal information to which we may become subject.

Further, all 50 states have passed laws regulating the actions that a business must take if it experiences a data breach, such as prompt disclosure to affected customers.

In addition to data breach notification laws, some states have enacted statutes and rules requiring businesses to reasonably protect certain types of personal information they hold or to otherwise comply with certain specified data security requirements for personal information.

We intend to continue to protect all personal information in our control and to comply with all applicable laws regarding the protection of such information.

The CCPA and EU GDPR are examples of the increasingly stringent and evolving regulatory frameworks related to personal data processing that may increase our compliance obligations and exposure for any noncompliance.

For example, the CCPA regulates the processing of personal information of California residents and increases the privacy and security obligations of covered companies handling such personal information, including requiring covered companies to provide new disclosures to California residents, and affords such residents new abilities to opt-out of certain sales of personal information.

The CCPA provides for civil penalties for violations, as well as a private right of action for certain data breaches that result in the loss of personal information that may increase the likelihood of, and risks associated with, data breach litigation.

Moreover, the California Privacy Rights Act, or the CPRA, –

a consumer privacy ballot initiative that amends and expands the CCPA became effective on January 1, 2023, and expands the CCPA.

The CPRA affords California residents significantly more control over their personal information, imposes heightened compliance obligations on covered companies, and establishes a new enforcement agency dedicated to consumer privacy.

While aspects of the CCPA and CPRA and its interpretation remain to be determined in practice, they create further uncertainty and may result in additional costs and expenses in an effort to comply.

Foreign data privacy and security laws (including but not limited to the EU GDPR and UK GDPR) impose significant and complex compliance obligations on entities that are subject to those laws.

As one example, the EU GDPR applies to any company established in the EEA and to companies established outside the EEA that process personal data in connection with the offering of goods or services to data subjects in the EEA or the monitoring of the behavior of data subjects in the EEA.

These obligations may include limiting personal data processing to only what is necessary for specified, explicit, and legitimate purposes;

requiring a legal basis for personal data processing;

requiring the appointment of a data protection officer in certain circumstances;

increasing transparency obligations to data subjects;

requiring data protection impact assessments in certain circumstances;

limiting the collection and retention of personal data;

increasing rights for data subjects;

formalizing a heightened and codified standard of data subject consents;

requiring the implementation and maintenance of technical and organizational safeguards for personal data;

mandating notice of certain personal data breaches to the relevant supervisory authority(ies) and affected individuals;

and mandating the appointment of representatives in the UK and/or the EU in certain circumstances.

Foreign Corrupt Practices Act

Foreign Corrupt Practices Act of 1977 (“FCPA”) prohibits any U.S.

individual or business from paying, offering, or authorizing payment or offering of anything of value, directly or indirectly, to any foreign official, political party or candidate for the purpose of influencing any act or decision of the foreign entity in order to assist the individual or business in obtaining or retaining business.

The FCPA also obligates companies whose securities are listed in the United States to comply with accounting provisions requiring the company to maintain books and records that accurately and fairly reflect all transactions of the corporation, including international subsidiaries, and to devise and maintain an adequate system of internal accounting controls for international operations.

Europe / Rest of World Government Regulation

In addition to regulations in the United States, we will be subject to a variety of regulations in other jurisdictions governing, among other things, clinical trials and any commercial sales and distribution of our products.

Whether or not we or our potential collaborators obtain FDA approval for a product, we must obtain the requisite approvals from regulatory authorities in foreign countries prior to the commencement of clinical trials or marketing of the product in those countries.

Certain countries outside of the United States have a similar process that requires the submission of an application for a clinical trial authorization (“CTA”) much like the IND prior to the commencement of human clinical trials.

In the EU, for example, a CTA must be submitted to each country’s national health authority and an application made to an independent ethics committee, much like the FDA and IRB, respectively.

Once the CTA is approved in accordance with a country’s requirements and a favorable ethics committee opinion has been issued, clinical trial development may proceed.

The requirements and process governing the conduct of clinical trials are to a significant extent harmonized at the EU level, but could vary from country to country.

In all cases, the clinical trials must be conducted in accordance with GCP and the applicable regulatory requirements and the ethical principles that have their origin in the Declaration of Helsinki.

To obtain regulatory approval of an investigational drug or biological product under EU regulatory systems, we must submit a marketing authorization application either under the so-called centralized or national authorization procedures.

The application used to file an NDA in the United States is similar to that required in the EU, but the exact requirements for authorization may vary.

Centralized Procedure.

The centralized procedure provides for the grant of a single marketing authorization by the European Commission following a favorable opinion by the EMA that is valid in all EU member states, as well as Iceland, Liechtenstein and Norway.

The centralized procedure is compulsory for medicines produced by specified biotechnological processes, products designated as orphan medicinal products, and products with a new active substance indicated for the treatment of specified diseases, such as HIV/AIDS, cancer, diabetes, neurodegenerative disorders or autoimmune diseases, other immune dysfunctions and viral diseases.

The centralized procedure is optional for other products that represent a significant therapeutic, scientific or technical innovation, or whose authorization would be in the interest of public health or which contain a new active substance for indications other than those specified to be compulsory.

National Authorization Procedures .

There are also two other possible routes to authorize medicinal products in several EU countries, which are available for investigational medicinal products that fall outside the scope of the centralized procedure:

Decentralized procedure.

Using the decentralized procedure, an applicant may apply for simultaneous authorizations in more than one EU Member State of medicinal products that have not yet been authorized in any EU Member State and that do not fall within the mandatory scope of the centralized procedure.

Mutual recognition procedure.

In the mutual recognition procedure, a medicine is first authorized in one EU Member State, in accordance with the national procedures of that country.

Following this, further marketing authorizations can be sought from other EU countries in a procedure whereby the countries concerned agree to recognize the validity of the original, national marketing authorization.

The EU also provides opportunities for market exclusivity.

For example, upon receiving marketing authorization, new chemical entities generally receive eight years of data exclusivity and an additional two years of market exclusivity.

If granted, data exclusivity prevents regulatory authorities in the EU from referencing the innovator’s data to assess a generic or biosimilar application.

During the additional two-year period of market exclusivity, a generic or biosimilar marketing authorization can be submitted, and the innovator’s data may be referenced, but no generic or biosimilar product can be marketed until the expiration of the market exclusivity.

However, there is no guarantee that a product will be considered by the EU’s regulatory authorities to be a new chemical entity, and products may not qualify for data exclusivity.

The EMA grants orphan drug designation to promote the development of products for the treatment, prevention or diagnosis of life-threatening or chronically debilitating conditions affecting not more than five in 10,000 people in the EU.

In addition, orphan drug designation can be granted if the drug is intended for a life threatening or chronically debilitating condition in the EU and without incentives it is unlikely that sales of the drug in the EU would be sufficient to justify the investment required to develop the drug.

Orphan drug designation is only available if there is no other satisfactory method approved in the EU of diagnosing, preventing or treating the condition, or if such a method exists, the proposed orphan drug will be of significant benefit to patients.

Orphan drug designation provides opportunities for free or reduced-fee protocol assistance, fee reductions for marketing authorization applications and other post-authorization activities and ten years of market exclusivity following drug approval, which can be extended to 12 years if trials are conducted in accordance with an agreed-upon pediatric investigational plan.

The exclusivity period may be reduced to six years if the designation criteria are no longer met, including where it is shown that the product is sufficiently profitable not to justify maintenance of market exclusivity.

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

In the EU, early access mechanisms for innovative medicines (such as compassionate use programs and named patient supplies), pricing and reimbursement, and promotion and advertising, amongst other things, are subject to national regulations and oversight by national competent authorities and therefore significantly vary from country to country.

Sanctions for non-compliance with the aforementioned requirements, which may include administrative and criminal penalties, are generally determined and enforced at national level.

However, under the EU financial penalties regime, the EMA can investigate and report on alleged breaches of the EU pharmaceutical rules by holders of a marketing authorization for centrally authorized medicinal products and the European Commission could adopt decisions imposing significant financial penalties on infringing marketing authorization holders.

The United Kingdom left the EU on January 31, 2020.

Following the transition period which ended on December 31, 2020, Brexit could materially impact the regulatory regime with respect to the development, manufacture, importation, approval and commercialization of our product candidates in the United Kingdom in the coming years.

For other countries outside of the EU, such as countries in Eastern Europe, Latin America or Asia, the requirements governing the conduct of clinical trials, product licensing, pricing and reimbursement vary from country to country.

In all cases, again, the clinical trials are conducted in accordance with GCP and the applicable regulatory requirements and the ethical principles that have their origin in the Declaration of Helsinki.

If we or our potential collaborators 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.

Corporate Information

We were incorporated under the laws of the State of Delaware on January 4, 2016.

Our principal executive offices are located at 500 Fairview Ave N, Suite 600, Seattle, Washington 98109, and our telephone number is (206) 456-2900.

Our corporate website address is www.silverbacktx.com.

Our corporate headquarters are located at 11682 El Camino Real, Suite 120, San Diego, California 92130, and our telephone number is (858) 771-9307.

Our corporate website address is www.ars-pharma.com.

Information contained on, or accessible through, our website shall not be deemed incorporated into and is not a part of this Annual Report on Form 10-K.

1 unchanged sentence

We have included our website in this Annual Report on Form 10-K solely as an inactive textual reference.

“Silverback Therapeutics,”

“Silverback,”

the Silverback logo, “ImmunoTAC,”

“Seeking Victory for Patients,”

and other trademarks, trade names or service marks of Silverback Therapeutics, Inc.

appearing in this Annual Report on Form 10-K are the property of Silverback Therapeutics, Inc.

All other trademarks, trade names and service marks appearing in this Annual Report on Form 10-K are the property of their respective owners.

Employees and Human Capital Resources

As of December 31, 2021, we had 90 full-time employees.

Of these employees, 31 held Ph.D., Pharm.D.

degrees, and 65 were engaged in research, development and technical operations.

As of such date, we had 77 employees based at our headquarters and satellite office in Seattle, Washington.

On March 28, 2022, our board of directors approved a corporate restructuring plan pursuant to which, among other things, our workforce will be reduced by 27%, with substantially all of the reduction in personnel expected to be completed by July 15, 2022.

For further information, see Part II, Item 9B, “Other Information”

in this Annual Report.

Our employees are not represented by labor unions or covered by collective bargaining agreements.

On November 8, 2022 (the “Closing Date”), Silverback Therapeutics, Inc., a Delaware corporation (“Silverback”), now known as ARS Pharmaceuticals, Inc., completed its reverse merger (the “Merger”) with privately-held ARS Pharmaceuticals, Inc.

(“ARS Pharma”), in accordance with the terms of the agreement and plan of merger and reorganization, dated July 21, 2022, as amended on August 11, 2022 and October 25, 2022 (the “Merger Agreement”), whereby Sabre Merger Sub, Inc.

(“Merger Sub”), a Delaware corporation and wholly-owned subsidiary of Silverback, merged into ARS Pharma, with ARS Pharma surviving as Silverback’s wholly-owned subsidiary.

Pursuant to the Merger Agreement, Silverback changed its name to ARS Pharmaceuticals, Inc.

See Item 7- Management’s Discussion and Analysis of Financial Condition and Results of Operations of this Annual Report and Note 3- Merger and Related Transactions of our financial statements for the year ended December 31, 2022 included in Item 8 of this Annual Report for more information regarding the Merger.

As of December 31, 2022, we had seventeen full-time employees and three part-time employees.

Of these employees, two held Ph.D.

None of our employees are represented by labor unions or covered by collective bargaining agreements.

We consider our relationship with our employees to be good.

Our human capital resources objectives include, as applicable, identifying, recruiting, retaining, incentivizing , and integrating our existing and additional employees.

We believe that we have been successful in attracting and retaining talented personnel to support our expanding business, though competition for personnel in our industry is intense.

We monitor recruiting efforts using a variety of metrics, including cycle times, cost per hire, information on the retention of business-critical hires (such as medical directors and executives), and the percentage of budgeted openings filled on time and on budget.

We also track voluntary and involuntary turnover rates for business-critical talent, time in role, and job level.

We offer competitive pay and benefits designed to attract and retain exceptional talent and drive company performance.

In setting appropriate compensation levels, we look at the average base pay rate for each position based on market data.

We also offer an annual cash incentive program and long-term equity incentive plans designed to assist in attracting, retaining, and motivating employees and promoting the creation of long-term value for stockholders.

Our standard employee benefits include paid and unpaid leaves, medical, dental and vision insurance coverage, a 401(k) plan, short- and long-term disability, life insurance, flexible spending accounts, and an employee stock purchase plan.

We also offer a variety of voluntary benefits that allow employees to select options that meet their needs, including a long-term care plan, telehealth, an employee assistance program, and wellness programs.

We benchmark our benefits program against others in our industry on an annual basis.

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

What changed 10-K

Item 1. Business