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Each of these risk factors, as well as additional risks not presently known to us or that we currently deem immaterial, could adversely affect our business, operating results, growth prospects or financial condition, as well as the trading price of our common stock, in which case you may lose all or part of your investment.
−Removed: Summary Risk Factors
−Removed: The risk factors described below are a summary of the principal risk factors associated with an investment in us.
−Removed: Risks Relating to Our Capital Requirements and Financial Condition
−Removed: We have incurred significant losses since inception and expect that we will continue to incur losses for the foreseeable future, which makes it difficult to assess our future viability.
−Removed: We will require additional financing to obtain regulatory approval for molgramostim and a failure to obtain this necessary capital could force us to delay, limit, reduce, or terminate our product development efforts or other operations.
−Removed: Our loan agreement contains covenants which may adversely impact our business;
−Removed: the failure to comply with such covenants could cause our outstanding debt to become immediately payable or accelerate principal payments.
−Removed: Any future acquisitions that we make could disrupt our business and harm our financial condition.
−Removed: We have significant IPR&D and future impairment of IPR&D may have a significant adverse impact on our future financial condition and results of operations.
−Removed: Our goodwill was fully impaired during the year ended December 31, 2019.
−Removed: Risks Related to Our Business Strategy and Operations
−Removed: We are substantially dependent upon the clinical, regulatory, and commercial success of our product candidate, molgramostim.
−Removed: If we fail to attract and retain senior management and key scientific personnel, we may be unable to successfully develop and commercialize our product candidate.
−Removed: We do not have, and do not have plans to establish commercial manufacturing facilities.
−Removed: We completely rely on third parties for the manufacture and supply of our clinical trial drug and delivery device supplies and, if approved, commercial product materials.
−Removed: We rely significantly on third parties to conduct our nonclinical testing and clinical trials and other aspects of our molgramostim development program.
−Removed: Our molgramostim product candidate may cause undesirable side effects or adverse events or have other properties that could delay or prevent our clinical development, regulatory approval, or commercialization.
−Removed: We may not achieve our projected development goals in the time frames we have announced.
−Removed: We are substantially dependent upon our primary CRO, Parexel, for conducting our IMPALA 2 clinical trial.
−Removed: Our employees, independent contractors and consultants, principal investigators, CROs, CMOs and other vendors, and any future commercial partners may engage in misconduct or other improper activities.
−Removed: Our business and operations would suffer in the event of third-party computer system failures, cyber-attacks on third-party systems, or deficiency in our cyber-security.
−Removed: If we or our vendors fail to comply with data protection laws and regulations, we could be subject to government enforcement actions, private litigation and/or adverse publicity.
−Removed: Our operations might be interrupted and financial results could be adversely impacted by the occurrence of a natural disaster, war, system malfunction, terrorism, telecommunication and electrical failures or other catastrophic event.
−Removed: We currently have limited marketing capabilities and no sales organization.
−Removed: To establish a sales and marketing infrastructure and expand our manufacturing capabilities, we will need to increase the size of our organization, and we may experience difficulties in managing this growth.
−Removed: Risks Related to Drug Development and Commercialization
−Removed: We depend on the successful completion of clinical trials of our molgramostim product candidate, and any positive results in prior clinical trials do not ensure that ongoing or future clinical trials will be successful.
−Removed: Molgramostim has received Orphan Drug Designation by the FDA and in Europe.
−Removed: While orphan designation provides certain benefits, there are also associated risks.
−Removed: Delays in commencement and completion of clinical trials are common and have many causes.
−Removed: Clinical trials are very expensive, difficult to design and implement, often take many years to complete, and the outcome is inherently uncertain.
−Removed: There is significant uncertainty regarding the regulatory approval process for any investigational new drug, substantial further testing and validation of our primary product candidate and related manufacturing processes may be required.
−Removed: Even if we receive regulatory approval for our primary product candidate, we may face regulatory difficulties that could materially and adversely affect our business, financial condition, and results of operations.
−Removed: If our primary product candidate receives regulatory approval but fails to achieve significant market acceptance among the medical community, patients, or third-party payers, the revenue we generate from its sales will be limited.
−Removed: Even if we receive regulatory approval to market our primary product candidate in the U.S., we may never receive approval or commercialize our product outside of the U.S., which would limit our ability to realize our full commercial potential.
−Removed: We must comply with the U.S.
−Removed: Foreign Corrupt Practices Act and similar foreign anti-corruption laws.
−Removed: Risks Related to Our Intellectual Property
−Removed: Our success will depend on obtaining and maintaining effective patent and other intellectual property protection for our primary product candidate and proprietary technology.
−Removed: Our success depends on our ability to prevent competitors from duplicating or developing and commercializing equivalent versions of our primary product candidate, but patent protection may be difficult to obtain and any issued claims may be limited.
−Removed: Obtaining and maintaining patent protection depends on compliance with various procedural, document submission, fee payment, and other requirements imposed by governmental patent agencies.
−Removed: Third parties may claim that our product, if approved, infringe on their proprietary rights and may challenge the approved use or uses of a product or its patent rights through litigation or administrative proceedings.
−Removed: Risks Related to Our Industry
−Removed: We expect competition in the marketplace for our molgramostim product candidate.
−Removed: We are subject to uncertainty relating to healthcare reform measures and reimbursement policies.
−Removed: We face potential product liability exposure and, if successful claims are brought against us, we may incur substantial liability for a product or product candidate and may have to limit its commercialization.
−Removed: Risks Related to our Common Stock
−Removed: Our stock price is expected to continue to be volatile.
−Removed: If we fail to satisfy all applicable Nasdaq continued listing requirements, including the $1.00 minimum closing bid price requirement, our common stock may be delisted from Nasdaq.
−Removed: We will continue to incur costs and demands upon management as a result of complying with the laws and regulations affecting public companies.
−Removed: We do not expect to pay any cash dividends in the foreseeable future.
−Removed: We have completed certain transactions that likely have resulted in an ownership change under Section 382 of the Internal Revenue Code limiting the use of our net operating loss carryforwards and certain other tax attributes.
Risks Related to Our Capital Requirements and Financial Condition
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Drug development is a highly speculative undertaking and involves a substantial degree of risk.
−Removed: To date, we have not obtained any regulatory approvals for any of our product candidates, commercialized any of our product candidates, or generated any product revenue.
+Added: To date, we have not obtained any regulatory approvals for a product candidate, commercialized a product candidate, or generated any product revenue.
We have devoted significant resources to research and development and other expenses related to our ongoing clinical trials and operations, in addition to acquiring product candidates.
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We expect to continue to incur substantial operating losses for the next several years as we seek to advance our molgramostim product candidate through clinical development (IMPALA-2 trial), global regulatory approvals, and commercialization.
−Removed: No revenue from operations will likely be available until, and unless, our current product candidate, molgramostim, is approved by the FDA or another regulatory agency and successfully marketed, or we enter into an arrangement that provides for licensing revenue or other partnering-
−Removed: related funding, outcomes which we may not achieve.
−Removed: We are also continuously and critically reviewing our liquidity and anticipated capital requirements in light of the significant uncertainty created by the COVID-19 global pandemic.
−Removed: We will require additional financing to obtain regulatory approval for molgramostim and a failure to obtain this necessary capital when needed on acceptable terms, or at all, could force us to delay, limit, reduce, or terminate our product development efforts or other operations.
−Removed: Since our Aravas subsidiary was formed in 2007, most of our resources have been dedicated to the development and acquisition of our product candidates, molgramostim, vancomycin hydrochloride inhalation powder (“vancomycin”) and Apulmiq.
+Added: No revenue from operations will likely be available until, and unless, our current product candidate, molgramostim, is approved by the FDA or another regulatory agency and successfully marketed, or we enter into an arrangement that provides for licensing revenue or other partnering-related funding, outcomes which we may not achieve.
+Added: We are also continuously and critically reviewing our liquidity and anticipated capital requirements in light of the uncertainty created by the COVID-19 global pandemic.
+Added: We may require additional financing to obtain regulatory approval for molgramostim and a failure to obtain this necessary capital when needed on acceptable terms, or at all, could force us to delay, limit, reduce, or terminate our product development efforts or other operations.
+Added: Since our Aravas subsidiary was formed in 2007, most of our resources have been dedicated to the development and acquisition of our product candidates, molgramostim, vancomycin hydrochloride inhalation powder (“vancomycin”), and Apulmiq.
On December 10, 2020, based upon our analysis of the clinical data from the Phase 3 trial of vancomycin, we concluded and announced that the trial missed its primary endpoint, ceasing further development of vancomycin.
−Removed: Our priority remains the continued development of molgramostim for the treatment of aPAP and preparation for an additional Phase 3 trial.
+Added: Additionally, as part of our December 2020 pipeline simplification strategy, we discontinued the Apulmiq clinical development program.
+Added: Our priority remains the continued development of molgramostim for the treatment of aPAP and continued progress in our Phase 3 trial.
We cannot estimate with reasonable certainty the actual amounts necessary to successfully complete the development and commercialization of our product candidate and there is no certainty that we will be able to raise the necessary capital on reasonable terms or at all.
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the extent to which we increase our workforce and the costs involved in recruiting, training, and incentivizing new employees;
−Removed: the costs related to developing, acquiring, and/or contracting for sales, marketing, and distribution capabilities, supply chain management capabilities, and regulatory compliance capabilities, if we obtain regulatory approval for our primary product candidate and commercialize it without a partner;
+Added: the costs related to developing, acquiring, and/or contracting for sales, marketing, and distribution capabilities, supply chain management capabilities, and regulatory compliance capabilities, if we obtain regulatory approval for our product candidate and commercialize it without a partner;
the costs involved in evaluating competing technologies and market developments or the loss in sales in case of such competition;
the costs involved in establishing, enforcing, or defending patent claims and other proprietary rights;
−Removed: negative impacts from the scope and spread of COVID-19.
+Added: the continuing negative impacts of the COVID-19 pandemic and emerging variants.
Additional capital may not be available when we need it, on terms that are acceptable to us or at all.
If adequate funds are not available to us on a timely basis, we will be required to delay, limit, reduce, or terminate our establishment of sales and marketing, manufacturing or distribution capabilities, development activities, other activities that may be necessary to commercialize our product candidate, or conduct preclinical or clinical trials.
−Removed: If we raise additional capital through marketing and distribution arrangements or other collaborations, strategic alliances, or licensing arrangements with third parties, we may have to relinquish certain valuable rights to our product candidate s , technologies, future revenue streams, or research programs or grant licenses on terms that may not be favorable to us.
+Added: If we raise additional capital through marketing and distribution arrangements or other collaborations, strategic alliances, or licensing arrangements with third parties, we may have to relinquish certain valuable rights to our product candidate, technologies, future revenue streams, or research programs or grant licenses on terms that may not be favorable to us.
If we raise additional capital through public or private equity offerings, the ownership interest of our stockholders will be diluted, and the terms of any new equity securities may have preferential rights over our common stock.
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the failure to comply with such covenants could cause our outstanding debt to become immediately payable or accelerate principal payments.
−Removed: On April 28, 2017, we entered into a Loan and Security Agreement, as subsequently amended on October 31, 2017, December 4, 2018, and January 31, 2020 between us and Aravas, as co-borrowers, and Silicon Valley Bank (the “Amended Loan Agreement”).
+Added: We are a party to a Loan and Security Agreement with Silicon Valley Bank (as amended, the “Amended Loan Agreement”), pursuant to which we have pledged substantially all of our assets, other than our intellectual property (which is subject to a negative pledge).
The Amended Loan Agreement includes a number of restrictive covenants, including restrictions on incurring additional debt, making investments, granting liens, disposing of assets, paying dividends, and redeeming or repurchasing capital stock, subject to certain exceptions.
−Removed: Collectively, these covenants could constrain our ability to grow our business through acquisitions or engage in other transactions.
−Removed: In addition, the Amended Loan Agreement includes covenants requiring, among other things, that we provide financial statements, comply with all laws, pay all taxes, maintain insurance, and satisfy an equity-based milestone.
−Removed: If we are not able to comply with these covenants, the outstanding loans under the Amended Loan Agreement could become immediately due and payable and would have a material adverse effect on our liquidity, financial condition, operating results, business, and prospects and cause the price of our common stock to decline.
−Removed: The Amended Loan Agreement requires us to have an ongoing Phase 3 or Phase 4 clinical trial evaluating our molgramostim product for the treatment of aPAP in which the first patient has been dosed by the end of the first quarter of 2021.
−Removed: This milestone, if not met, will cease the interest only period and principal plus interest payments will be due in equal monthly installments over 24 months beginning April 1, 2021.
−Removed: In February 2021, Silicon Valley Bank agreed to extend the requirement for the date of the first patient dosed in our Phase 3 IMPALA 2 trial to the end of the second quarter of 2021.
+Added: Collectively, these restrictive covenants could constrain our ability to grow our business through acquisitions or engage in other transactions.
+Added: In addition, the Amended Loan Agreement includes covenants requiring, among other things, that we provide financial statements, comply with all laws, pay all taxes, and maintain insurance.
+Added: The Amended Loan Agreement includes customary events of default, such as our failure to pay amounts due, our failure to comply with covenants, or the occurrence of an event that would reasonably be expected to have a material adverse event on our business.
+Added: Upon the occurrence and during the continuation of an event of default, Silicon Valley Bank could declare all outstanding loans under the Amended Loan Agreement immediately due and payable and exercise remedies against us and the collateral.
+Added: Such an event would have a material adverse effect on our liquidity, financial condition, operating results, business, and prospects and cause the price of our common stock to decline.
Any future acquisitions that we make could disrupt our business and harm our financial condition.
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We may not be able to identify appropriate acquisition candidates or strategic partners, or successfully negotiate, finance, or integrate acquisitions of any businesses, products, or technologies.
−Removed: Furthermore, the integration of any acquisition and management of any collaborative project may divert our management’s time and resources from our core business and disrupt our operations.
+Added: Furthermore, the integration of any acquisition and management of any collaborative project may divert our management’s time and resources from our core business and disrupt our operations.
Any cash acquisition we pursue would diminish the funds otherwise available to us for other uses.
−Removed: Any acquisition using our stock would dilute our stockholders’ ownership interests.
+Added: Any acquisition using our stock would dilute our stockholders’
+Added: ownership interests.
If we engage in acquisitions of companies, products, or technologies in order to execute our business strategy, we may need to raise additional capital.
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If we raise additional capital through a public offering of securities or equity, a substantial number of additional shares may be issued, which may negatively affect our stock price and these additional shares will dilute the ownership interest of our current investors.
−Removed: We have significant IPR&D and future impairment of IPR&D may have a significant adverse impact on our future financial condition and results of operations.
+Added: We have IPR&D and future impairment of IPR&D may have an adverse impact on our future financial condition and results of operations.
Our goodwill was fully impaired during the year ended December 31, 2019.
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We test our goodwill, if any, and IPR&D for impairment annually, or more frequently if an event or change in circumstances indicates that the asset may be impaired.
−Removed: If an impairment is identified, we would be required to record an impairment charge with respect to the impaired asset to our condensed consolidated statements of operations and comprehensive loss.
+Added: If an impairment is identified, we would be required to record an impairment charge with respect to the impaired asset to our consolidated statements of operations and comprehensive loss.
A significant impairment charge could have a material negative impact on our financial condition and results of operations.
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Events giving rise to impairment are difficult to predict and are an inherent risk in the pharmaceutical industry.
−Removed: Some of the potential risks that could result in impairment of our goodwill and IPR&D include negative clinical trial results, adverse regulatory developments, delay or failure to obtain regulatory approval, additional development costs, changes in the manner of our use or development of our product candidate, competition, earlier than expected loss of exclusivity, pricing pressures, higher operating costs, changes in tax laws, prices that third parties are willing to pay for our IPR&D or similar assets in an arm’s-length transaction being
−Removed: less than the carrying value of our IPR&D, and other market and economic environment changes or trends, such as the ultimate scope and scale of the COVID-19 global pandemic and the impact of COVID-19 on patient enrollment in our IMPALA 2 trial .
−Removed: Events or changes in circumstances may lead to significant impairment charges on our IPR&D in the future, which could materially adversely affect our financial condition and results of operations.
+Added: Some of the potential risks that could result in impairment of our IPR&D include negative clinical trial results, adverse regulatory developments, delay or failure to obtain regulatory approval, additional development costs, changes in the manner of our use or development of our product candidate, competition, earlier than expected loss of exclusivity, pricing pressures, higher operating costs, changes in tax laws, prices that third parties are willing to pay for our IPR&D or similar assets in an arm’s-length transaction being less than the carrying value of our IPR&D, and other market and economic environment changes or trends, such as the ultimate scope and scale of the COVID-19 global pandemic and the impact of COVID-19 on patient enrollment in our IMPALA-2 trial.
+Added: Events or changes in circumstances may lead to significant impairment
+Added: charges on our IPR&D in the future, which could materially adversely affect our financial condition and results of operations.
Risks Related to Our Business Strategy and Operations
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The success of our business is dependent on our ability to advance the clinical development of molgramostim for the treatment of patients with aPAP.
−Removed: The topline results of the molgramostim Phase 3 clinical trial for the treatment of aPAP, designated as IMPALA, were announced on June 12, 2019.
−Removed: The trial did not meet its primary endpoint of change in alveolar-arterial oxygen gradient (“A-aDO2”) compared to placebo.
−Removed: The continuous treatment arm (molgramostim 300 µg administered once daily continuously over 24 weeks) did show a 12.1 mmHG improvement which is similar to what has been observed in previously published trials, but a larger-than-expected placebo effect was also seen (8.8 mmHg improvement).
−Removed: However, results from IMPALA did show statistically significant improvement in two secondary endpoints:
−Removed: George’s Respiratory Questionnaire (“SGRQ”) and diffusing capacity of the lungs for carbon monoxide (“DLCO”).
−Removed: Two other secondary endpoints were numerically in favor of the continuous dosing arm of molgramostim but were not statistically significant (six-minute walk distance and time to WLL), while adverse event frequencies were similar between the treatment arms and placebo.
−Removed: On October 1, 2019, we received a written response from the FDA in connection with a Type C meeting regarding the molgramostim development program for aPAP and results from the IMPALA trial in which the FDA indicated that the data provided in the briefing package for the Type C meeting did not provide sufficient evidence of efficacy and safety.
−Removed: On December 23, 2019, the FDA granted us Breakthrough Therapy designation for molgramostim for the treatment of aPAP, a process designed to expedite the development and review of drugs that are intended to treat a serious condition and for which preliminary clinical evidence indicates that the drug may demonstrate substantial improvement over available therapy on a clinically significant endpoint(s).
−Removed: During the year ended December 31, 2020, we worked with the FDA and EMA regarding the protocol and design of an additional Phase 3 trial of molgramostim for the treatment of aPAP, or the IMPALA 2 trial.
−Removed: IMPALA 2 will be a 48-week, double-blind, placebo-controlled trial, with efficacy endpoints assessed at week 24 for the primary analyses and a sample size of 160 patients.
−Removed: However, the placebo-controlled period will be 48 weeks to better support the durability of treatment effect, as well as long-term safety of the drug, which is intended to be administered chronically.
−Removed: At the end of the placebo-controlled period, both the placebo and non-placebo treatment arms will rollover into a 48-week open-label follow-on period in which all patients will receive molgramostim 300 micrograms administered once-daily and provide useful information on the long-term safety of the drug.
−Removed: The primary endpoint of the IMPALA 2 trial will be the gas exchange measure of DLCO.
−Removed: Three secondary endpoints designed to measure direct patient benefit will be evaluated which include the SGRQ Total Score, SGRQ Activity Component score, and exercise capacity using a treadmill test.
−Removed: Additionally, as we work to initiate the IMPALA 2 trial, there remains a general uncertainty regarding the impact of COVID-19 on the aPAP patient population and physicians.
−Removed: Patients suffering from aPAP lung disease are prone to underlying lung conditions and are often treated by infectious disease specialists and pulmonologists.
−Removed: These treating physicians are on the front lines in addressing this global pandemic and must now, understandably, focus their attention on COVID-19.
−Removed: Clinical testing is expensive, can take many years to complete, and its outcome is inherently uncertain.
−Removed: A failure of one or more of our clinical trials can occur at any time during the clinical trial process as demonstrated by our IMPALA trial results in June 2019.
+Added: Clinical development is expensive, can take many years to complete, and its outcome is inherently uncertain.
+Added: A failure of one or more of our clinical trials can occur at any time during the clinical trial process as demonstrated by the results of our IMPALA trial 2019 and AVAIL trial in 2020.
The results of preclinical and early clinical trials of our product candidate may not be predictive of the results of later-stage clinical trials.
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If we cannot do so, or are significantly delayed in doing so, our business will be materially harmed.
+Added: Additionally, as we continue to advance the IMPALA-2 trial, there remains a general uncertainty regarding the impact of COVID-19 and emerging variants on the aPAP patient population and physicians.
+Added: Patients suffering from aPAP are prone to underlying lung conditions and are often treated by infectious disease specialists and pulmonologists.
+Added: These treating physicians are on the front lines in addressing this global pandemic and must now, understandably, focus their attention on COVID-19.
+Added: Further, if an aPAP patient enrolled in the trial were to contract COVID-19, they may need to discontinue their participation.
If we fail to attract and retain senior management and key scientific personnel, we may be unable to successfully develop and commercialize our product candidate.
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The success of our business will depend on our ability to develop and maintain relationships with respected service providers and industry-leading consultants and advisers.
−Removed: If we cannot develop and maintain such relationships as needed, the rate and success at which we can develop and commercialize product candidates may be limited.
+Added: If we cannot develop and maintain such relationships as needed, the rate and success at which we can develop and commercialize our product candidate may be limited.
In addition, our outsourcing strategy, which has included engaging consultants that spend considerable time to manage key functional areas, may subject us to scrutiny under labor laws and regulations, which may divert management time and attention and have an adverse effect on our business and financial condition.
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We completely rely on third parties for the manufacture and supply of our clinical trial drug and delivery device supplies and, if approved, commercial product materials.
−Removed: The loss of any of these vendors or a vendor’s failure to provide us with an adequate supply of clinical trial or commercial product material in a timely manner and on commercially acceptable terms, or at all, could harm our business.
+Added: The loss of any of these vendors or a vendor’s failure to provide us with an adequate supply of clinical trial or commercial product material in a timely manner and on commercially acceptable terms, or at all, could harm our business.
We outsource the manufacture of our molgramostim product candidate and do not plan to establish our own manufacturing facilities.
−Removed: To manufacture our product candidate, we have made numerous custom modifications at contract manufacturing organizations (“CMOs”), making us highly dependent on these CMOs.
−Removed: For clinical and commercial supplies, if approved, we have supply agreements with third party CMOs for drug substance, finished drug product, drug delivery devices and other necessary components of our molgramostim product candidate.
+Added: To manufacture our product candidate, we have made numerous custom modifications at CMOs, making us highly dependent on these CMOs.
+Added: For clinical and commercial supplies, if approved, we have supply agreements with third party CMOs for drug substance, finished drug product, drug delivery devices and other necessary
+Added: components of our molgramostim product candidate.
While we have secured long-term commercial supply agreements with many of the third party CMOs, we would need to negotiate agreements for commercial supply with several important CMOs, and we may not be able to reach agreement on acceptable terms.
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If these third parties are unable to perform their tasks successfully in a timely manner, whether for technical, financial, or other reasons, we may be unable to secure clinical trial material, or commercial supply material if approved, which likely would delay the initiation, conduct, or completion of our clinical trials or prevent us from having enough commercial supply material for sale, which would have a material and adverse effect on our business.
−Removed: For example, the impacts of the current COVID-19 global pandemic are rapidly evolving.
−Removed: The extent to which the pandemic impacts our ability to procure sufficient supplies for the development and commercialization of our product candidate will depend on the severity and duration of the spread of COVID-19, and the actions undertaken to contain the pandemic or treat its effects.
−Removed: All manufacturers of our clinical trial material and, if approved, commercial product, including drug substance manufacturers, must comply with current Good Manufacturing Practices (“cGMP”) requirements enforced by the FDA through its facilities inspection program and applicable requirements of foreign regulatory authorities.
+Added: For example, the impacts of the current COVID-19 global pandemic are evolving.
+Added: There have been and could be additional delays in the manufacturing supply chain for our product candidate, including delays in procurement of materials for certain of our clinical trials due to the outbreak, delays in clinical trials and recruitment.
+Added: Further, we have experienced an increase in costs associated with the supply chain disruption.
+Added: The extent to which the pandemic impacts our ability to procure sufficient supplies for the development and commercialization of our product candidate going forward will depend on the severity and duration of the spread of COVID-19 and emerging variants and the actions undertaken to contain the pandemic or treat its effects.
+Added: All manufacturers of our clinical trial material and, if approved, commercial product, including drug substance manufacturers, must comply with cGMP requirements enforced by the FDA through its facilities inspection program and applicable requirements of foreign regulatory authorities.
These requirements include quality control, quality assurance, and the maintenance of records and documentation.
Manufacturers of our clinical trial material may be unable to comply with these cGMP requirements and with other FDA, state, and foreign regulatory requirements.
−Removed: While we and our representatives generally monitor and audit our manufacturers ’ systems, we do not have full control over their ongoing compliance with these regulations.
+Added: While we and our representatives generally monitor and audit our manufacturers’
+Added: systems, we do not have full control over their ongoing compliance with these regulations.
Although the responsibility to maintain cGMP compliance is shared between us and the third-party manufacturer, we bear ultimate responsibility for our supply chain and compliance with regulatory standards.
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Any new manufacturer or supplier of finished drug product or its component materials, including drug substance and delivery devices, would be required to qualify under applicable regulatory requirements and would need to have sufficient rights under applicable intellectual property laws to the method of manufacturing of such product or ingredients required by us.
−Removed: The FDA or foreign
−Removed: regulatory agency may require us to conduct additional clinical trials , collect stability data, and provide additional information concerning any new supplier, or change in a validated manufacturing process, including scaling-up production, before we could distribute products from that manufacturer or supplier or revised process.
−Removed: For example, if we were to engage a third party other than our current CMOs to supply the drug substance or drug product for future clinical trial s or commercial sale , the FDA or regulatory authorities outside of the U.S.
+Added: The FDA or foreign regulatory agency may require us to conduct additional clinical trials, collect stability data, and provide additional information concerning any new supplier, or change in a validated manufacturing process, including scaling-up production, before we could distribute products from that manufacturer or supplier or revised process.
+Added: For example, if we were to engage a third party other than our current CMOs to supply the drug substance or drug product for future clinical trials or commercial sale, the FDA or regulatory authorities outside of the U.S.
may require us to conduct additional clinical and nonclinical studies to ensure comparability of the drug substance or drug product manufactured by our current CMOs to that manufactured by the new supplier.
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These problems include difficulties with production costs and yields, quality control, including stability of the product candidate and quality assurance testing, and shortages of qualified personnel.
−Removed: Our product candidate has not been manufactured at the scale we believe will be necessary to maximize their commercial value and, accordingly, we may encounter difficulties in attempting to scale-up production and may not succeed in that effort on a timely basis or at all.
+Added: Our product candidate has not been manufactured at the scale we believe will be necessary to maximize its commercial value and, accordingly, we may encounter difficulties in attempting to scale-up production and may not succeed in that effort on a timely basis or at all.
In addition, the FDA or other regulatory authorities may impose additional requirements as we scale up initial production capabilities, which may delay our scale-up activities and/or add expense.
−Removed: If our manufacturers encounter any of the aforementioned difficulties or otherwise fail to comply with their contractual obligations or there are delays entering commercial supply agreements due to capital constraints, we may have insufficient quantities of material to support ongoing and/or planned clinical trials or to meet commercial demand, if approved.
+Added: If our manufacturers encounter any of the aforementioned difficulties or otherwise fail to comply with their contractual obligations or there are delays entering commercial supply agreements due to capital constraints, we may have
+Added: insufficient quantities of material to support ongoing and/or planned clinical trials or to meet commercial demand, if approved.
In addition, any delay or interruption in the supply of materials necessary or useful to manufacture our product candidate could delay the completion of our clinical trials, increase the costs associated with our development programs, and depending upon the period of delay, require us to commence new clinical trials at significant additional expense or terminate the trials completely.
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We do not employ personnel or possess the facilities necessary to conduct many of the activities associated with our programs.
−Removed: We engage consultants, advisors, contract research organizations (“CROs”) and others to assist in the design and conduct of nonclinical and clinical trials of our product candidate, with interpretation of the results of those trials and with regulatory activities, and we expect to continue to outsource all or a significant amount of such activities.
+Added: We engage consultants, advisors, CROs, and others to assist in the design and conduct of nonclinical and clinical trials of our product candidate, with interpretation of the results of those trials and with regulatory activities, and we expect to continue to outsource all or a significant amount of such activities.
Specifically, in early 2021, we engaged Parexel to support our IMPALA-2 clinical trial development activities.
−Removed: As a result, many important aspects of our development programs are and will continue to be outside our direct control, and our third-party service providers may not perform their activities as required or expected, including the maintenance of good clinical practice (“GCP”), good laboratories practice (“GLP”), and cGMP compliance, which are ultimately our responsibility to ensure.
+Added: As a result, many important aspects of our development programs are and will continue to be outside our direct control, and our third-party service providers may not perform their activities as required or expected, including the maintenance of good clinical practice (“GCP”), good laboratories practice (“GLP”), and cGMP compliance, which are ultimately our responsibility to ensure.
Further, such third parties may not be as committed to the success of our programs as our own employees and, therefore, may not devote the same time, thoughtfulness, or creativity to completing projects or problem-solving as our own employees would.
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Individuals working at the CROs with which we contract, as well as investigators at the sites at which our trials are conducted, are not our employees, and we have limited control over the amount or timing of resources that they devote to their programs.
−Removed: In addition, our CROs may be affected by business or workforce interruptions for many reasons, including as a result of an outbreak of COVID-19 or another infectious disease, over which they and we have limited control.
−Removed: If our CROs, trial investigators, and/or third-party sponsors fail to devote sufficient time and resources to trials of our product candidate, if we and/or our CROs do not comply with all GLP and GCP regulatory and contractual requirements, or if their performance is substandard, we may delay commencement and/or completion
−Removed: of these trials , submission of applications for regulatory approval, regulatory approval, and commercialization of our product candidate.
+Added: In addition, our CROs may be affected by business or workforce interruptions for many reasons, including as a result of an outbreak of COVID-19, emerging variants, or another infectious disease, over which they and we have limited control.
+Added: If our CROs, trial investigators, and/or third-party sponsors fail to devote sufficient time and resources to trials of our product candidate, if we and/or our CROs do not comply with all GLP and GCP regulatory and contractual requirements, or if their performance is substandard, we may delay commencement and/or completion of these trials, submission of applications for regulatory approval, regulatory approval, and commercialization of our product candidate.
Failure of CROs to meet their obligations to us could adversely affect development of our product candidate.
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These challenges could result in delays in the commencement or completion of our clinical trials, which could materially impact our ability to meet our desired and/or announced development timelines and have a material adverse impact on our business and financial condition.
−Removed: Additionally, the COVID-19 global pandemic may pose significant risks to our development and commercialization of our product candidate as our third-party service providers, manufacturers, and suppliers are experiencing restrictions and challenges which could negatively impact our supply-chain and progress of our development pipeline.
Our molgramostim product candidate may cause undesirable side effects or adverse events or have other properties that could delay or prevent our clinical development, regulatory approval, or commercialization.
−Removed: Undesirable side effects or adverse events caused by our molgramostim product candidate could interrupt, delay, or halt clinical trials and could result in the denial of regulatory approval by the FDA or other regulatory authorities for any or all indications, and in turn prevent us from commercializing our product candidate.
+Added: Undesirable side effects or adverse events caused by our molgramostim product candidate could interrupt, delay, or halt clinical trials and could result in the denial of regulatory approval by the FDA or other regulatory authorities for any or all
+Added: indications, and in turn prevent us from commercializing our product candidate.
A significant challenge in clinical development is that the patient population in early trials, where small numbers of patients are required, is different from the patient population observed in later stage trials, where larger groups of patients are required.
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If our product candidate receives marketing approval and we or others later identify undesirable side effects caused by the product:
−Removed: regulatory authorities may require the addition of labeling statements, such as a “ black box ” warning or a contraindication;
+Added: regulatory authorities may require the addition of labeling statements, such as a “black box”
+Added: warning or a contraindication;
regulatory authorities may withdraw their approval of the product;
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However, predicting the rate of enrollment or the time from completion of enrollment to announcement of data for any clinical trial requires us to make significant assumptions that may prove to be incorrect.
−Removed: As an example, due to the COVID-19 pandemic, we ceased enrollment in our discontinued AVAIL and ENCORE trials.
Our estimated enrollment rates and the actual rates may differ materially, and the time required to complete enrollment of any clinical trial may be considerably longer than we estimate.
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To the extent we are unable to successfully manage the performance of Parexel, our business may be adversely affected.
−Removed: Our employees, independent contractors and consultants, principal investigators, CROs, CMOs and other vendors, and any future commercial partners may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements, which could cause significant liability for us and harm our reputation.
−Removed: We are exposed to the risk that our employees, independent contractors and consultants, principal investigators, CROs, CMOs and other vendors, and any future commercial partners may engage in fraudulent conduct or other misconduct, including intentional failures to comply with FDA regulations or similar regulations of comparable foreign regulatory authorities, to provide accurate information to the FDA or comparable foreign regulatory authorities, to comply with manufacturing standards required by cGMP or our standards, to comply with federal and state healthcare fraud and abuse laws and regulations and similar laws and regulations established and enforced by comparable foreign regulatory authorities, and to report financial information or data accurately or disclose unauthorized activities to them.
+Added: Our employees, independent contractors and consultants, principal investigators, CROs, CMOs, other vendors, and any future commercial partners may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements, which could cause significant liability for us and harm our reputation.
+Added: We are exposed to the risk that our employees, independent contractors and consultants, principal investigators, CROs, CMOs, other vendors, and any future commercial partners may engage in fraudulent conduct or other misconduct, including intentional failures to comply with FDA regulations or similar regulations of comparable foreign regulatory authorities, to provide accurate information to the FDA or comparable foreign regulatory authorities, to comply with manufacturing standards required by cGMP or our standards, to comply with federal and state healthcare fraud and abuse laws and regulations and similar laws and regulations established and enforced by comparable foreign regulatory authorities, and to report financial information or data accurately or disclose unauthorized activities to them.
The misconduct of our employees and other service providers could involve the improper use of information obtained in the course of clinical trials, which could result in regulatory sanctions and serious harm to our reputation.
Although we have adopted a code of business conduct and ethics, it is not always possible to identify and deter such misconduct, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations.
−Removed: If any such actions are instituted against them, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business and results of operations, including the imposition of significant fines or other sanctions.
+Added: If any such actions are instituted against us or our service providers, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business and results of operations, including the imposition of significant fines or other sanctions.
For example, if one of our manufacturing partners were placed under a consent decree, we may be hampered in our ability to manufacture clinical or commercial supplies.
+Added: Our operations might be interrupted and financial results could be adversely impacted by the occurrence of a natural disaster, acts of war or terrorism, system malfunction, telecommunication and electrical failures or other catastrophic event, or public health crises, such as a pandemic (e.g.
+Added: Our corporate headquarters is located in a commercial facility in Austin, Texas, USA.
+Added: Important documents and records, including copies of our regulatory documents and other records for our product candidate, are located both at a secure offsite document storage facility as well as at our own facilities, and we depend on our facilities for the continued operation of our business.
+Added: Natural disasters and other catastrophic events, such as wildfires and other fires, earthquakes and extended power interruptions, public health crises, severe weather conditions, or acts of war or terrorism, such as the conflict between Russia and Ukraine, could significantly disrupt our operations and result in additional, unplanned expense.
+Added: Any natural disaster or catastrophic event could disrupt our business operations and result in setbacks to our development programs.
+Added: Even though we believe we carry commercially reasonable insurance, we might suffer losses that are not covered by or exceed the coverage available under these insurance policies.
+Added: In addition, our operations may be adversely impacted by international conflict.
+Added: For example, tensions between Ukraine and Russia have escalated in recent months, culminating in Russia’s recent invasion of Ukraine.
+Added: The political and physical conditions in Ukraine and Russia, as well as in neighboring countries, may disrupt our supply chain and increase our costs, which may adversely affect our ability to conduct ongoing clinical trials and impact patients’
+Added: ability to partake in our clinical trials.
+Added: While we do not believe this conflict will have a material impact on our current operations, given the rapidly evolving situation and the potential to expand beyond Ukraine and Russia, the full impact of the conflict remains uncertain.
+Added: During the first quarter of 2020, COVID-19 was declared a pandemic by the World Health Organization, resulting in significant disruptions to U.S.
+Added: and international manufacturing and supply chains or operations as well as travel restrictions in the U.S.
+Added: and many other countries.
+Added: Global supply chain disruptions have resulted in delays and increased costs associated with the goods.
+Added: While the continued impact of the current COVID-19 pandemic and emerging variants on our business and financial results is uncertain, the COVID-19 pandemic has had a negative impact on our business, financial condition, and operating results.
+Added: There have been and could be additional delays in the manufacturing supply chain for our product candidate, including delays in procurement of materials for certain of our clinical trials due to the outbreak, delays in clinical trials and recruitment.
+Added: Further, we have experienced an increase in costs associated with the supply chain disruption.
+Added: In a more severe scenario, our business, financial condition, and operating results could be more significantly affected.
+Added: Given the dynamic nature of these circumstances, the impact of potential future disruptions of the manufacturing and supply chain associated with the COVID-19 pandemic and emerging variants is difficult to predict.
+Added: We currently have limited marketing capabilities and no sales organization.
+Added: If we are unable to establish sales and marketing capabilities on our own or through third parties, we will be unable to successfully commercialize our product candidate, if approved, or generate product revenue.
+Added: To commercialize our molgramostim product candidate, if approved, in the U.S.
+Added: and other jurisdictions we seek to enter, we must build our marketing, sales, managerial, and other non-technical capabilities, or make arrangements with third parties to perform these services, and we may not be successful in doing so.
+Added: If our product receives regulatory approval,
+Added: we expect to market such product in the U.S.
+Added: through a focused, specialized sales force, which will be costly and time consuming.
+Added: Institutionally, we have no prior experience in the marketing and sale of pharmaceutical products and there are significant risks involved in building and managing a sales organization, including our ability to hire, retain, and incentivize qualified individuals, generate sufficient sales leads, provide adequate training to sales and marketing personnel, and effectively manage a geographically dispersed sales and marketing team.
+Added: Outside of the U.S., we may consider collaboration arrangements.
+Added: If we are unable to enter into such arrangements on acceptable terms or at all, we may not be able to successfully commercialize our product in certain markets.
+Added: Any failure or delay in the development of our internal sales, marketing, and distribution capabilities would adversely impact the commercialization of our product.
+Added: If we are not successful in commercializing our molgramostim product, either on our own or through collaborations with one or more third parties, our future product revenue will suffer, and we would incur significant additional losses.
+Added: To establish a sales and marketing infrastructure and expand our manufacturing capabilities, we will need to increase the size of our organization, and we may experience difficulties in managing this growth.
+Added: As of March 30, 2022, we had 22 employees including 14 employees engaged in research and development.
+Added: As we advance our molgramostim product candidate through the development process and to commercialization, we will need to continue to expand our development, regulatory, quality, managerial, sales and marketing, operational, finance, and other resources to manage our operations and clinical trials, continue our development activities, and commercialize our product candidate, if approved.
+Added: As our operations expand, we expect that we will need to manage additional relationships with various manufacturers and collaborative partners, suppliers, and other organizations.
+Added: Due to our limited financial resources and our limited experience in managing a company with such anticipated growth, we may not be able to effectively maintain or manage the expansion of our operations or recruit and train additional qualified personnel.
+Added: In addition, the physical expansion of our operations may lead to significant costs and may divert our management attention and resources.
+Added: Any inability to manage growth could delay the execution of our development and strategic objectives, or disrupt our operations, which could materially impact our business, revenue, and operating results.
+Added: Risks Related to Information Technology and Data Privacy
Our business and operations would suffer in the event of third-party computer system failures, cyber-attacks on third-party systems, or deficiency in our cyber-security.
−Removed: We rely on information technology (“IT”) systems, including third-party “ cloud based ” service providers, to keep financial records, maintain laboratory data, clinical data and corporate records, communicate with staff and external parties, and operate other critical functions.
+Added: We rely on information technology (“IT”) systems, including third-party “cloud based”
+Added: service providers, to keep financial records, maintain laboratory data, clinical data and corporate records, communicate with staff and external parties, and operate other critical functions.
This includes critical systems such as email, other communication tools, electronic document repositories, and archives.
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In addition, we rely on those third parties to safeguard important confidential personal data regarding our employees and patients enrolled in our clinical trials.
−Removed: If a disruption event were to occur and cause interruptions in a third-party IT provider ’ s operations, it could result in a disruption of our drug development programs.
+Added: If a disruption event were to occur and cause interruptions in a third-party IT provider’s operations, it could result in a disruption of our drug development programs.
For example, the loss of clinical trial data from completed, ongoing, or planned clinical trials could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data.
To the extent that any disruption or security breach results in loss or damage to our data or applications or inappropriate disclosure of confidential or proprietary information, we could incur liability and development of our product candidate could be delayed or could fail.
−Removed: In response to COVID-19, we have modified our business practices with a majority of our employees working remotely from their homes to have our operations uninterrupted as much as possible.
−Removed: T echnology in employees’ homes may not be as robust as in our offices and could cause the networks, information systems, applications, and other tools available to employees to be more limited or less reliable than in our offices.
−Removed: The continuation of these work-from-home measures also introduces additional operational risk, including increased cybersecurity risk.
−Removed: These cyber risks include greater phishing, malware, and other cybersecurity attacks, vulnerability to disruptions of our information technology infrastructure and telecommunication systems for remote operations, increased risk of unauthorized dissemination of confidential information, limited ability to restore the systems in the event of a systems failure or interruption, greater risk of a security breach resulting in destruction or misuse of valuable information, and potential impairment of our ability to perform critical functions, including wiring funds, all of which could expose us to risks of data or financial loss, litigation and liability and could seriously disrupt our operations and the operations of any impacted customers.
We have experienced and may continue to experience attempts to breach our security and attempts to introduce malicious software into our IT systems;
however, to date and to our knowledge, such attacks have not resulted in any material damage to us.
+Added: Because of the frequently changing attack techniques, along with the increased volume and sophistication of the attacks, there is the potential for the Company to be adversely impacted.
+Added: Moreover, because the techniques used to gain access to or sabotage systems often are not recognized until launched against a target, we may be unable to anticipate the methods necessary to defend against these types of attacks, and we cannot predict the extent, frequency or impact these attacks may have on us.
+Added: To the extent our business is interrupted, this impact could result in reputational, competitive, operational, or other business harm as well as financial costs and regulatory action, and the theft or unauthorized use or publication of our trade secrets and other confidential business information as a result of such an incident could adversely affect our competitive position.
We are continually working to maintain reliable systems to improve our operations.
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No assurance can be given that our efforts to continue to enhance our systems will be successful.
−Removed: If we fail to comply with data protection laws and regulations, we could be subject to government enforcement actions (which could include civil or criminal penalties), private litigation and/or adverse publicity, which could negatively affect our operating results and business, or if we or our vendors fail to comply with applicable data privacy laws, including the GDPR or the CCPA, we could be subject to government enforcement actions and significant penalties against us, and our business could be adversely impacted.
+Added: The Company’s remote working arrangements could significantly increase the Company’s digital and cybersecurity risks.
+Added: A majority of our employees work remotely from their homes.
+Added: With the shift to remote working and the use of virtual board and executive management meetings, cybersecurity risks are exponentially greater.
+Added: Additionally, the Company’s adoption of remote work arrangements may introduce additional threats to our information technology networks and infrastructure.
+Added: Technology in employees’
+Added: homes may not be as robust and could cause the networks, information systems, applications, and other tools available to employees to be more limited or less reliable than in our offices.
+Added: These cyber risks include greater phishing, malware, and other cybersecurity attacks, vulnerability to disruptions of our information technology infrastructure and telecommunication systems for remote operations, increased risk of unauthorized dissemination of confidential information, limited ability to restore the systems in the event of a systems failure or interruption, greater risk of a security breach resulting in destruction or misuse of valuable information, and potential impairment of our ability to perform critical functions, including wiring funds, all of which could expose us to risks of data or financial loss, litigation and liability and could seriously disrupt our operations.
+Added: If we or our vendors fail to comply with data protection laws and regulations, we could be subject to government enforcement actions (which could include civil or criminal penalties), private litigation, and/or adverse publicity, which could negatively affect our operating results and business.
A number of state, national, and foreign laws and regulations apply to the collection, use, retention, protection, disclosure, transfer, and other processing of personal data.
−Removed: Due to our Danish subsidiary, Savara ApS, our clinical trial activities, and operations in Europe, we are subject to data protection laws in the EU, including the General Data Protection Regulation (“GDPR”).
−Removed: The GDPR, which became effective on May 25, 2018, has caused the EU requirements for the protection of personal data to become more stringent and increased the penalties for noncompliance.
−Removed: Penalties can consist of fines up to €20 million or 4% of global annual revenues, whichever is higher.
+Added: Due to our Danish subsidiary, Savara ApS, our clinical trial activities, and operations in Europe, we are subject to data protection laws in the EU, including the General Data Protection Regulation (“GDPR”).
+Added: The GDPR, which became effective on May 25, 2018, has caused the EU requirements for the protection of personal data to become more stringent and increased the penalties for non-compliance.
+Added: Penalties can consist of fines up to €20 million or 4% of global annual revenues, whichever is higher.
As a result, we have been required to implement additional mechanisms to ensure compliance with the new EU data protection rules, which may cause us to incur additional costs.
−Removed: Similarly, in June 2018, California enacted the California Consumer Privacy Act of 2018 (the “CCPA”), which became effective in January 2020.
+Added: Similarly, in June 2018, California enacted the California Consumer Privacy Act of 2018 (the “CCPA”), which became effective in January 2020.
The CCPA, among other things, requires covered companies to provide new disclosures to California consumers and afford such consumers new rights to opt-out of certain sales of personal information.
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Other states have enacted or proposed legislation that regulates the collection, use, and sale of personal information, and such regimes might not be compatible with either the GDPR or the CCPA.
−Removed: We may be required to implement additional mechanisms to comply with the CCPA or such other state laws, which may be difficult to implement and may require us to incur additional costs.
+Added: In Canada, both the federal government and certain provinces have also proposed new legislation imposing significant and unprecedented obligations, fines, and liabilities regarding data handling.
+Added: We may be required to implement additional mechanisms to comply with the CCPA or such other state laws, or the proposed Canadian legislation, which may be difficult to implement and may require us to incur additional costs.
If we or our vendors fail to comply with applicable data privacy laws, including the GDPR, we could be subject to government enforcement actions and significant penalties against us, and our business could be adversely impacted.
−Removed: Our operations might be interrupted and financial results could be adversely impacted by the occurrence of a natural disaster, war, system malfunction, terrorism, telecommunication and electrical failures or other catastrophic event, or public health crises, such as the COVID-19 pandemic.
−Removed: Our corporate headquarters is located in a single commercial facility in Austin, Texas, USA.
−Removed: We maintain a second office in a single commercial facility in Denmark where many of our product development staff are located.
−Removed: Important documents and records, including copies of our regulatory documents and other records for our product candidate, are located both at a secure offsite document storage facility as well as at our own facilities, and we depend on our facilities for the continued operation of our business.
−Removed: Natural disasters and other catastrophic events, such as wildfires and other fires, earthquakes and extended power interruptions, terrorist attacks, public health crises, or severe weather conditions could significantly disrupt our operations and result in additional, unplanned expense.
−Removed: We are currently preparing a formal business continuity/disaster recovery plan;
−Removed: however, any natural disaster or catastrophic event could disrupt our business operations and result in setbacks to our development programs.
−Removed: Even though we believe we carry commercially reasonable insurance, we might suffer losses that are not covered by or exceed the coverage available under these insurance policies.
−Removed: During the first quarter of 2020, COVID-19 was declared a pandemic by the World Health Organization, resulting in significant disruptions to U.S.
−Removed: and international manufacturing and supply chains or operations as well as travel restrictions in the U.S., Denmark, and many other countries.
−Removed: While the continued impact of the current COVID-19 pandemic on our business and financial results is
−Removed: uncertain, a continued and prolonged public health crisis such as the COVID-19 pandemic could have a negative impact on our business, financial condition, and operating results.
−Removed: As a result of the COVID-19 pandemic, there could be delays in the manufacturing supply chain for our product candidate, including delays in procurement of materials for certain of our clinical trials due to the outbreak, delays in clinical trials or recruitment, or in a more severe scenario, our business, financial condition, and operating results could be more severely affected.
−Removed: Given the dynamic nature of these circumstances, the duration of any business disruption or potential impact to our business of the COVID-19 pandemic is difficult to predict.
−Removed: We currently have limited marketing capabilities and no sales organization.
−Removed: If we are unable to establish sales and marketing capabilities on our own or through third parties, we will be unable to successfully commercialize our primary product candidate, if approved, or generate product revenue.
−Removed: To commercialize our molgramostim product candidate, if approved, in the U.S.
−Removed: and other jurisdictions we seek to enter, we must build our marketing, sales, managerial, and other non-technical capabilities, or make arrangements with third parties to perform these services, and we may not be successful in doing so.
−Removed: If our product receives regulatory approval, we expect to market such product in the U.S.
−Removed: through a focused, specialized sales force, which will be costly and time consuming.
−Removed: Institutionally, we have no prior experience in the marketing and sale of pharmaceutical products and there are significant risks involved in building and managing a sales organization, including our ability to hire, retain, and incentivize qualified individuals, generate sufficient sales leads, provide adequate training to sales and marketing personnel, and effectively manage a geographically dispersed sales and marketing team.
−Removed: Outside of the U.S., we may consider collaboration arrangements.
−Removed: If we are unable to enter into such arrangements on acceptable terms or at all, we may not be able to successfully commercialize our product in certain markets.
−Removed: Any failure or delay in the development of our internal sales, marketing, and distribution capabilities would adversely impact the commercialization of our product.
−Removed: If we are not successful in commercializing our molgramostim product, either on our own or through collaborations with one or more third parties, our future product revenue will suffer, and we would incur significant additional losses.
−Removed: To establish a sales and marketing infrastructure and expand our manufacturing capabilities, we will need to increase the size of our organization, and we may experience difficulties in managing this growth.
−Removed: As of March 8, 2021, we had 27 employees including 17 employees engaged in research and development.
−Removed: As we advance our molgramostim product candidate through the development process and to commercialization, we will need to continue to expand our development, regulatory, quality, managerial, sales and marketing, operational, finance, and other resources to manage our operations and clinical trials, continue our development activities, and commercialize our product candidate, if approved.
−Removed: As our operations expand, we expect that we will need to manage additional relationships with various manufacturers and collaborative partners, suppliers, and other organizations.
−Removed: Due to our limited financial resources and our limited experience in managing a company with such anticipated growth, we may not be able to effectively maintain or manage the expansion of our operations or recruit and train additional qualified personnel.
−Removed: In addition, the physical expansion of our operations may lead to significant costs and may divert our management attention and resources.
−Removed: Any inability to manage growth could delay the execution of our development and strategic objectives, or disrupt our operations, which could materially impact our business, revenue, and operating results.
+Added: A data security breach or change in applicable privacy or security laws or regulations could require us to devote significant management resources to address the problems created by the breach or such change in laws or regulations, and, further, to expend significant additional resources to upgrade the security measures that we employ to guard against such breaches or comply with such change in laws or regulations, each of which could disrupt our business, operations, and financial condition.
+Added: Because many of these laws are new, there is little clarity as to their interpretation, as well as a lack of precedent for the scope of enforcement.
+Added: Consequently, we may incur significant costs related to preventing breaches and ensuring compliance with applicable laws regarding the protection and unauthorized disclosure of personal information.
+Added: The potential costs of non-compliance with these laws and regulations may include significant penalties.
Risks Related to Drug Development and Commercialization
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Additionally, the possible lack of standardization across multiple investigative sites may induce variability in the results which can interfere with the evaluation of treatment effects.
−Removed: If we license rights to develop our product candidate to independent third parties or otherwise permit third parties to evaluate our product candidate in clinical trials, such as an investigator-sponsored clinical trial, we may have limited control over those clinical
+Added: If we license rights to develop our product candidate to independent third parties or otherwise permit third parties to evaluate our product candidate in clinical trials, such as an investigator-sponsored clinical trial, we may have limited control over those clinical trials.
For example, we have provided molgramostim and placebo for an investigator-sponsored clinical trial by the University of Giessen in Germany that will assess the potential efficacy of molgramostim in preventing progression of COVID-19 pneumonia to acute respiratory distress syndrome.
−Removed: Any safety or efficacy concern identified in a third-party sponsored trial could adversely affect our or another licensee’s development of our product candidate and prospects for its regulatory approval, even if the data from that trial are subject to varying interpretations and analyses.
+Added: Any safety or efficacy concern identified in a third-party sponsored trial could adversely affect our or another licensee’s development of our product candidate and prospects for its regulatory approval, even if the data from that trial are subject to varying interpretations and analyses.
If serious adverse events are observed in such third-party sponsored trials, it could delay or cause the discontinuation of the development of the product candidate and have a material adverse effect on our business.
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Negative or inconclusive results could cause the FDA and other regulatory authorities to require us to repeat or conduct additional clinical trials, which could significantly increase the time and expense associated with development of that product candidate or cause us to elect to discontinue one or more clinical programs.
−Removed: For example, as a result of our IMPALA trial results and related correspondence from the FDA, we are planning an additional Phase 3 trial of molgramostim for the treatment of aPAP.
−Removed: Failure to complete a clinical trial of a product candidate or an unsuccessful result of a clinical trial could have a material adverse effect on our business.
Molgramostim has received Orphan Drug Designation by the FDA and in Europe.
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Also, the Orphan Drug status will not prevent a competitor with a different active ingredient from competing with our product candidate.
−Removed: If we are prevented from marketing one or more product candidate due to a competitor ’ s Orphan Drug exclusivity, this would have a material adverse effect on our business.
+Added: If we are prevented from marketing one or more product candidate due to a competitor’s Orphan Drug exclusivity, this would have a material adverse effect on our business.
Delays in commencement and completion of clinical trials are common and have many causes.
Delays in clinical trials of our molgramostim product candidate would likely increase overall development costs and jeopardize our ability to obtain regulatory approval and successfully commercialize any approved product.
−Removed: Clinical testing typically is expensive, can take many years to complete, and its outcome is inherently uncertain.
+Added: Clinical development typically is expensive, can take many years to complete, and its outcome is inherently uncertain.
Clinical trials may not commence on time or be completed on schedule, if at all.
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delays in recruiting and enrolling individuals to participate in a clinical trial, which historically can be challenging in orphan diseases;
−Removed: delays caused by patients dropping out of a clinical trial due to side effects, concurrent disorders, difficulties in adhering to the trial protocol, unknown issues related to different patient profiles than in previous trials, or otherwise;
+Added: delays caused by patients dropping out of a clinical trial due to side effects, concurrent disorders, difficulties in adhering to the trial protocol, unknown issues related to different patient profiles than in previous trials, contracting COVID-19 or an emerging variant, or otherwise;
delays in having patients complete participation in a clinical trial, including returning for post-treatment follow-up;
−Removed: delays resulting from clinical trial sites dropping out of a trial, providing inadequate staff support for the trial, problems with shipment of trial supplies to clinical sites, or focusing its staff ’ s efforts on enrolling trials that compete for the same patient population;
+Added: delays resulting from clinical trial sites dropping out of a trial, providing inadequate staff support for the trial, problems with shipment of trial supplies to clinical sites, or focusing its staff’s efforts on enrolling trials that compete for the same patient population;
suspension of enrollment at a trial site or the imposition of a clinical hold by the FDA or other regulatory authority following an inspection of clinical trial operations at trial sites or finding of a drug-related serious adverse event;
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delays, inconsistencies, or negative results in statistical analyses of clinical trial data;
−Removed: delays in enrollment and the treatment of patients caused by COVID-19.
−Removed: Patient enrollment, a critical component to successful completion of a clinical trial, is affected by many factors, including the size and nature of the trial population, the proximity of patients to clinical sites, the eligibility criteria for the trial, the design of the clinical trial, ongoing trial competing for the same patient population and clinicians, and patients ’ perceptions as to the potential advantages of the drug being studied in relation to available alternatives, including therapies being investigated by other companies which may be viewed as more beneficial or important to study, fear of being randomized to the placebo arm, and changes in standard of care.
+Added: delays in enrollment and the treatment of patients caused by COVID-19 and emerging variants;
+Added: delays due to supply chain disruptions as a result of COVID-19 and emerging variants, international conflict, or other unexpected event.
+Added: Patient enrollment, a critical component to successful completion of a clinical trial, is affected by many factors, including the size and nature of the trial population, the proximity of patients to clinical sites, the eligibility criteria for the trial, the design of the clinical trial, ongoing trial competing for the same patient population and clinicians, and patients’
+Added: perceptions as to the potential advantages of the drug being studied in relation to available alternatives, including therapies being investigated by other companies which may be viewed as more beneficial or important to study, fear of being randomized to the placebo arm, and changes in standard of care.
Challenges to complete enrollment can be exacerbated in orphan indications, like those being pursued by us, with a limited number of qualifying patients and the lack of clinical sites with the necessary expertise and experience to conduct our trials.
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However, the current off-label administration of Leukine ® could adversely affect the enrollment of patients in our IMPALA-2 trial.
−Removed: Additionally, as we work to initiate the IMPALA 2 trial, there remains a general uncertainty regarding the impact of COVID-19 on the aPAP patient population and physicians.
−Removed: Patients suffering from aPAP lung disease are prone to underlying lung conditions and are often treated by infectious disease specialists and pulmonologists.
+Added: Additionally, as we continue to advance the IMPALA-2 trial, there remains a general uncertainty regarding the impact of COVID-19 and emerging variants on the aPAP patient population and physicians.
+Added: Patients suffering from aPAP are prone to underlying lung conditions and are often treated by infectious disease specialists and pulmonologists.
These treating physicians are on the front lines in addressing this global pandemic and must now, understandably, focus their attention on COVID-19.
−Removed: Additionally, on March 30, 2020, due to the COVID-19 pandemic and out of an abundance of caution for people living with CF and clinical trial staff, we announced the close-out of enrollment in our discontinued Phase 3 AVAIL and Phase 2a ENCORE trials.
−Removed: With patient safety at the forefront of the decision and in accordance with guidelines established by the FDA, efforts have been made to allow enrolled patients to continue with trial treatments and site visit protocols, where possible.
−Removed: However, the COVID-19 pandemic may cause further delays in our clinical trials and have a negative impact on our business, financial condition, and operating results.
+Added: Further, if an aPAP patient enrolled in the trial were to contract COVID-19, they may need to discontinue their participation.
Clinical trials may not begin on time or be completed in the time frames we anticipate and may be costlier than we anticipate for a variety of reasons, including one or more of those described above.
−Removed: The length of time necessary to successfully complete clinical
−Removed: trials vary significantly and is difficult to predict accurately.
+Added: The length of time necessary to successfully complete clinical trials vary significantly and is difficult to predict accurately.
We may make statements regarding anticipated timing for completion of enrollment in and/or availability of results from our clinical trials, but such predictions are subject to a number of significant assumptions and actual timing may differ materially for a variety of reasons, including patient enrollment rates, length of time needed to prepare raw trial data for analysis and then to review and analyze it, and other factors described above.
−Removed: If we experience delays in the completion of a clinical trial , if a clinical trial is terminated, or if failure to conduct a trial in accordance with regulatory requirements or the trial ’ s protocol leads to deficient safety and/or efficacy data, the regulatory approval and/or commercial prospects for our product candidate may be harmed, and our ability to generate product revenue will be delayed.
+Added: If we experience delays in the completion of a clinical trial, if a clinical trial is terminated, or if failure to conduct a trial in accordance with regulatory requirements or the trial’s protocol leads to deficient safety and/or efficacy data, the regulatory approval and/or commercial prospects for our product candidate may be harmed, and our ability to generate product revenue will be delayed.
In addition, any delays in completing our clinical trials likely will increase our development costs.
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Failure at any stage of clinical testing is not uncommon and we may encounter problems that would require additional, unplanned trials or cause us to abandon a clinical development program.
−Removed: In addition, a clinical trial may be suspended or terminated by us, an Independent Review Board (“IRB”), a data safety monitoring board, the FDA, or other regulatory authorities due to a number of factors, including:
+Added: In addition, a clinical trial may be suspended or terminated by us, an Independent Review Board (“IRB”), a data safety monitoring board, the FDA, or other regulatory authorities due to a number of factors, including:
lack of adequate funding to continue the trial;
−Removed: failure to conduct the trial in accordance with regulatory requirements or the trial ’ s protocol;
+Added: failure to conduct the trial in accordance with regulatory requirements or the trial’s protocol;
inspection of clinical trial operations or sites by the FDA or other regulatory authorities resulting in the imposition of a clinical hold;
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Amendments may require us to resubmit protocols to IRBs for re-examination and approval or renegotiate terms with CROs, clinical trial sites, and investigators, all of which may adversely impact the costs or timing of or our ability to successfully complete a trial.
−Removed: There is significant uncertainty regarding the regulatory approval process for any investigational new drug, substantial further testing and validation of our primary product candidate and related manufacturing processes may be required, and regulatory approval may be conditioned, delayed, or denied, any of which could delay or prevent us from successfully marketing our primary product candidate and substantially harm our business.
+Added: There is significant uncertainty regarding the regulatory approval process for any investigational new drug, substantial further testing and validation of our product candidate and related manufacturing processes may be required, and regulatory approval may be conditioned, delayed, or denied, any of which could delay or prevent us from successfully marketing our product candidate and substantially harm our business.
Pharmaceutical products generally are subject to rigorous nonclinical testing and clinical trials and other approval procedures mandated by the FDA and foreign regulatory authorities.
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The top line results from our first Phase 3 clinical trial, IMPALA, were released by us on June 12, 2019 and did not meet all of the statistical goals and protocol end points.
−Removed: On October 1, 2019, we received a written response from the FDA in connection with a Type C meeting regarding the molgramostim development program for aPAP and results from the IMPALA Phase 3 trial in which the FDA indicated that the data provided in the briefing package for the Type C meeting did not provide sufficient evidence of efficacy and safety for the treatment of aPAP.
+Added: On October 1, 2019, we received a written response from the FDA in connection with a Type C meeting regarding the molgramostim development program for aPAP and results from IMPALA in which the FDA indicated that the data provided in the briefing package for the Type C meeting did not provide sufficient evidence of efficacy and safety for the treatment of aPAP.
On December 23, 2019, the FDA provided communication to us regarding the granting of Breakthrough Therapy designation, a process designed to expedite the development and review of drugs that are intended to treat a serious condition and preliminary clinical evidence indicates that the drug may demonstrate substantial improvement over available therapy on clinically significant endpoint(s), for molgramostim for the treatment of aPAP.
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Significant uncertainty exists with respect to the regulatory approval process for any investigational new drug, including molgramostim.
−Removed: Regardless of any guidance the FDA or foreign regulatory agencies may provide a drug’s sponsor during its development, the FDA or foreign regulatory agencies retain complete discretion in deciding whether to accept a BLA, or the equivalent foreign regulatory approval submission for filing or, if accepted, whether to approve a BLA.
+Added: Regardless of any guidance the FDA or foreign regulatory agencies may provide a drug’s sponsor during its development, the FDA or foreign regulatory agencies retain complete discretion in deciding whether to accept a BLA, or the equivalent foreign regulatory approval submission for filing or, if accepted, whether to approve a BLA.
There are many components to a BLA or marketing authorization application submission in addition to clinical trial data.
−Removed: For example, the FDA or foreign regulatory agencies will review the sponsor’s internal systems and processes, as well as those of its CROs, CMOs, and other vendors, related to development of its product candidates, including those pertaining to its clinical studies and manufacturing processes.
+Added: For example, the FDA or foreign regulatory agencies will review the sponsor’s internal systems and processes, as well as those of its CROs, CMOs, and other vendors, related to development of its product candidates, including those pertaining to its clinical studies and manufacturing processes.
Before accepting a BLA or the equivalent foreign regulatory approval submission for review or before approving the BLA or its equivalent, the FDA or foreign regulatory agencies may request that we provide additional information that may require significant resources and time to generate and there is no guarantee that our product candidate will be approved for any indication for which we may apply.
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Even if one or more Phase 3 clinical trials are successful in providing statistically significant evidence of the efficacy and safety of the investigational drug, the FDA or foreign regulatory agencies may not consider efficacy and safety data from the submitted trials adequate scientific support for a conclusion of effectiveness and/or safety and may require one or more additional Phase 3 or other trials prior to granting marketing approval.
−Removed: If this were to occur, the overall development cost for the product candidate would be substantially greater and competitors may bring products to market before us, which could impair our ability to generate revenues from the product candidate, or even seek approval, if blocked by a competitor’s Orphan Drug exclusivity, which would have a material adverse effect on our business, financial condition, and results of operations.
+Added: If this were to occur, the overall development cost for the product candidate would be substantially
+Added: greater and competitors may bring products to market before us, which could impair our ability to generate revenues from the product candidate, or even seek approval, if blocked by a competitor’s Orphan Drug exclusivity, which would have a material adverse effect on our business, financial condition, and results of operations.
Further, development of our product candidate and/or regulatory approval may be delayed for reasons beyond our control.
For example, U.S.
−Removed: federal government shut-downs or budget sequestrations, such as ones that occurred during January 2018 and December 2018 through January 2019, may result in significant reductions to the FDA’s budget, employees, and operations, which may lead to slower response times and longer review periods, potentially affecting our ability to progress development of our product candidate or obtain regulatory approval for our product candidate.
−Removed: Further, regulatory oversight and actions may be disrupted or delayed in regions particularly impacted by COVID-19 if regulators and industry professionals are expending significant and unexpected resources addressing the outbreak.
+Added: federal government shut-downs or budget sequestrations, such as ones that occurred during January 2018 and December 2018 through January 2019, may result in significant reductions to the FDA’s budget, employees, and operations, which may lead to slower response times and longer review periods, potentially affecting our ability to progress development of our product candidate or obtain regulatory approval for our product candidate.
+Added: Further, regulatory oversight and actions may be disrupted or delayed in regions particularly impacted by COVID-19 and emerging variants if regulators and industry professionals are expending significant and unexpected resources addressing the outbreak.
Even if the FDA or foreign regulatory agencies grant approvals for a product candidate, the conditions or scope of the approval(s) may limit successful commercialization of the product candidate and impair our ability to generate substantial sales revenue.
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Even if we receive regulatory approval for our primary product candidate, we may face regulatory difficulties that could materially and adversely affect our business, financial condition, and results of operations.
−Removed: Even if initial regulatory approval is obtained, as a condition to the initial approval, the FDA or a foreign regulatory agency may impose significant restrictions on a product ’ s indicated uses or marketing or impose ongoing requirements for potentially costly post-approval studies or marketing surveillance programs, any of which would limit the commercial potential of the product.
+Added: Even if initial regulatory approval is obtained, as a condition to the initial approval, the FDA or a foreign regulatory agency may impose significant restrictions on a product’s indicated uses or marketing or impose ongoing requirements for potentially costly post-approval studies or marketing surveillance programs, any of which would limit the commercial potential of the product.
Our molgramostim product candidate also will be subject to ongoing FDA requirements related to the manufacturing processes, labeling, packaging, storage, distribution, advertising, promotion, record-keeping, and submission of safety and other post-market information regarding the product.
For instance, the FDA may require changes to approved drug labels, require post-approval clinical studies, and impose distribution and use restrictions on certain drug products.
−Removed: In addition, approved products, manufacturers and manufacturers ’ facilities are subject to continuing regulatory review and periodic inspections.
+Added: In addition, approved products, manufacturers, and manufacturers’
+Added: facilities are subject to continuing regulatory review and periodic inspections.
If previously unknown problems with a product are discovered, such as adverse events of unanticipated severity or frequency, or problems with the facility where the product is manufactured, the FDA may impose restrictions on that product or us, including requiring withdrawal of the product from the market.
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exclude our product from reimbursement under government healthcare programs, including Medicaid or Medicare;
−Removed: impose restrictions or affirmative obligations on our or our CMO ’ s operations, including costly new manufacturing requirements;
+Added: impose restrictions or affirmative obligations on our or our CMO’s operations, including costly new manufacturing requirements;
close the facilities of a CMO;
seize or detain products or require a product recall.
−Removed: If our primary product candidate receives regulatory approval but fails to achieve significant market acceptance among the medical community, patients, or third-party payers, the revenue we generate from its sales will be limited and our business may never achieve profitability.
+Added: If our product candidate receives regulatory approval but fails to achieve significant market acceptance among the medical community, patients, or third-party payers, the revenue we generate from its sales will be limited and our business may never achieve profitability.
Our success will depend in substantial part on the extent to which our product candidate, if approved, is accepted by the medical community and patients and reimbursed by third-party payers, including government payers.
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acceptance in the medical and patient communities of our product as a safe and effective treatment;
−Removed: the product ’ s taste, ease of use, or features associated with the delivery device;
+Added: the product’s taste, ease of use, or features associated with the delivery device;
the perceived advantages of our product over alternative treatments, including with respect to the incidence and severity of any adverse side effects and the cost of treatment;
the indications for which our product is approved;
−Removed: claims or other information (including limitations or warnings) in a product ’ s approved labeling;
+Added: claims or other information (including limitations or warnings) in a product’s approved labeling;
reimbursement and coverage policies of government and other third-party payers;
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If we determine that a product candidate may not achieve adequate market acceptance or that the potential market size does not justify additional expenditures on the program, we may reduce our expenditures on the development and/or the process of seeking regulatory approval of the product candidate while we evaluate whether and on what timeline to move the program forward.
−Removed: Even if we receive regulatory approval to market our primary product candidate in the U.S., we may never receive approval or commercialize our product outside of the U.S., which would limit our ability to realize the full commercial potential of our primary product candidate.
+Added: Even if we receive regulatory approval to market our product candidate in the U.S., we may never receive approval or commercialize our product outside of the U.S., which would limit our ability to realize the full commercial potential of our product candidate.
In order to market products outside of the U.S., we must establish and comply with the numerous and varying regulatory requirements of other countries regarding safety and efficacy.
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The regulatory approval process in other countries may include all of the risks detailed above regarding FDA approval in the U.S., as well as other risks.
−Removed: Regulatory approval in one country does not ensure regulatory approval in another, but a failure or delay in obtaining regulatory approval in one country may have a negative effect on the regulatory process in others.
+Added: approval in one country does not ensure regulatory approval in another, but a failure or delay in obtaining regulatory approval in one country may have a negative effect on the regulatory process in others.
Failure to obtain regulatory approval in other countries or any delay or setback in obtaining such approval could have the same adverse effects detailed above regarding FDA approval in the U.S.
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Foreign Corrupt Practices Act and similar foreign anti-corruption laws.
−Removed: Foreign Corrupt Practices Act, to which we are subject, prohibits corporations and individuals from engaging in certain activities to obtain or retain business or to influence a person working in an official capacity.
+Added: The FCPA, to which we are subject, prohibits corporations and individuals from engaging in certain activities to obtain or retain business or to influence a person working in an official capacity.
It is illegal to pay, offer to pay, or authorize the payment of anything of value to any foreign government official, government staff member, political party, or political candidate in an attempt to obtain or retain business or to otherwise influence a person working in an official capacity.
−Removed: Other countries, such as the U.K., have similar laws with which we must comply.
We face the risk that an employee or agent could be accused of violating one or more of these laws, particularly in geographies where significant overlap exists between local government and healthcare industries.
+Added: In many countries, hospitals are operated by the government and doctors and other hospital employees are considered foreign officials.
+Added: Certain payments to hospitals in connection with clinical trials and other work have been deemed to be improper payments to government officials and have led to FCPA enforcement actions.
Such an accusation, even if unwarranted, could prove disruptive to our developmental and commercialization efforts.
+Added: The FCPA also obligates companies whose securities are listed in the U.S.
+Added: to comply with certain accounting provisions requiring the company to maintain books and records that accurately and fairly reflect all transactions of the company, including international subsidiaries, and to devise and maintain an adequate system of internal accounting controls for international operations.
+Added: The SEC may suspend or bar issuers from trading securities on U.S.
+Added: exchanges for violations of the FCPA’s accounting provisions.
+Added: Other countries have similar laws with which we must comply.
+Added: The provision of benefits or advantages to physicians to induce or encourage the prescription, recommendation, endorsement, purchase, supply, order, or use of medicinal products is prohibited in the E.U.
+Added: The provision of benefits or advantages to physicians is also governed by the national anti-bribery laws, such as the U.K.
+Added: Bribery Act 2010.
+Added: Infringement of these laws could result in substantial fines and imprisonment.
+Added: Payments made to physicians in certain E.U.
+Added: member states must be publicly disclosed.
+Added: Moreover, agreements with physicians often must be the subject of prior notification and approval by the physician’s employer, his or her competent professional organization and/or the regulatory authorities of the individual country.
+Added: These requirements are provided in the national laws, industry codes, or professional codes of conduct.
+Added: Failure to comply with these requirements could result in reputational risk, public reprimands, administrative penalties, fines, or imprisonment.
Risks Related to Our Intellectual Property
−Removed: Our success will depend on obtaining and maintaining effective intellectual property protection for our primary product candidate and proprietary technology.
+Added: Our success will depend on obtaining and maintaining effective intellectual property protection for our product candidate and proprietary technology.
We have no patent protection for molgramostim for the treatment of aPAP, and primarily rely on the Orphan Drug exclusivity as our primary barrier to competition.
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and foreign countries may affect our patent rights and limit the number of patents we can obtain, which could permit others to use our discoveries or to develop and commercialize our technology and products without any compensation to us.
−Removed: While we are no longer pursuing the development of our vancomycin program, we hold a patent specific to the formulation of the vancomycin powder.
−Removed: While this may prevent identical products from entering the market, it may not preclude someone skilled in the art from inventing an alternate formulation approach with comparable or improved characteristics.
We also rely on unpatented know-how and trade secrets and continuing technological innovation to develop and maintain our competitive position, which we seek to protect, in part, through confidentiality agreements with employees, consultants, collaborators, and others.
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We may rely on trademarks, trade names, and brand names to distinguish our molgramostim product, if approved for commercial sale, from the products of our competitors.
−Removed: We intend to seek approval for a new name for molgramostim that meets the FDA ’ s and foreign regulatory requirements.
+Added: We intend to seek approval for a new name for molgramostim that meets the FDA’s and foreign regulatory requirements.
However, our trademark applications may not be approved.
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In the event that our trademarks are successfully challenged, we could be forced to rebrand our product, which could result in loss of brand recognition and could require us to devote significant resources to advertising and marketing these new brands.
−Removed: For example, we filed a trademark for the name “ Savara ” and were challenged.
+Added: For example, we filed a trademark for the name “Savara”
+Added: and were challenged.
We decided to terminate the application, but we may revisit such filings at a future date.
Further, our competitors may infringe our trademarks or we may not have adequate resources to enforce our trademarks.
−Removed: Our success depends on our ability to prevent competitors from duplicating or developing and commercializing equivalent versions of our primary product candidate, but patent protection may be difficult to obtain and any issued claims may be limited.
−Removed: Patents may not provide us with significant competitive advantages, because the validity or enforceability of the patents may be challenged and, if instituted, one or more of the challenges may be successful.
+Added: Our success depends on our ability to prevent competitors from duplicating or developing and commercializing equivalent versions of our product candidate, but patent protection may be difficult to obtain and any issued claims may be limited.
+Added: If we are issued a patent, it may not provide us with significant competitive advantages because the validity or enforceability of the patents may be challenged and, if instituted, one or more of the challenges may be successful.
Patents may be challenged in the U.S.
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The patent prosecution process is expensive and time-consuming.
−Removed: We and any future licensors and licensees may not apply for or prosecute patents on certain aspects of our product candidate at a reasonable cost, in a timely fashion, or at all.
−Removed: We may not have the
−Removed: right to control the preparation, filing, and prosecution of some patent applications related to our product candidate or technolog y .
+Added: We and any future licensors and licensees may not apply for or prosecute patents on certain aspects of our product candidate at a reasonable cost, in a timely fashion, or at
+Added: We may not have the right to control the preparation, filing, and prosecution of some patent applications related to our product candidate or technology.
As a result, these patents and patent applications may not be prosecuted and enforced in a manner consistent with our best interests.
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Any of these circumstances could impair our ability to protect our products, if approved, in ways which may have an adverse impact on our business, financial condition, and operating results.
−Removed: Furthermore, the issuance of a patent is not conclusive as to its inventorship, scope, validity, or enforceability, and our owned and licensed patents may be challenged in the courts or patent offices in and outside of the U.S.
+Added: Furthermore, the issuance of a patent is not conclusive as to its inventorship, scope, validity, or enforceability, and future patents we may own or license may be challenged in the courts or patent offices in and outside of the U.S.
Such challenges may result in loss of exclusivity or freedom to operate or in patent claims being narrowed, invalidated, or held unenforceable, in whole or in part, which could limit our ability to use our patents to stop others from using or commercializing similar or identical products or technology, or limit the duration of the patent protection of our technology and drugs.
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Obtaining and maintaining patent protection depends on compliance with various procedural, document submission, fee payment, and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements.
−Removed: Periodic maintenance fees, renewal fees, annuity fees, and various other governmental fees on patents and applications are required to be paid to the United States Patent and Trademark Office (“USPTO”), and various governmental patent agencies outside of the U.S.
+Added: Periodic maintenance fees, renewal fees, annuity fees, and various other governmental fees on patents and applications are required to be paid to the United States Patent and Trademark Office (“USPTO”), and various governmental patent agencies outside of the U.S.
in several stages over the lifetime of the patents and applications.
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Third parties may claim that our product, if approved, infringes on their proprietary rights and may challenge the approved use or uses of a product or its patent rights through litigation or administrative proceedings, and defending such actions may be costly and time consuming, divert management attention away from our business, and result in an unfavorable outcome that could have an adverse effect on our business.
−Removed: Our commercial success depends on our ability and the ability of our CMOs and component suppliers to develop, manufacture, market, and sell our products and product candidates and use our proprietary technology without infringing the proprietary rights of third parties.
+Added: Our commercial success depends on our ability and the ability of our CMOs and component suppliers to develop, manufacture, market, and sell our product and product candidate and use our proprietary technology without infringing the proprietary rights of third parties.
Numerous U.S.
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There generally is a substantial amount of litigation involving patent and other intellectual property rights in the industries in which we operate, and the cost of such litigation may be considerable.
−Removed: We can provide no assurance that our product candidate or technology
−Removed: will not infringe patents or rights owned by others, licenses to which might not be available to us in a timely manner or on acceptable terms, or at all.
+Added: We can provide no assurance that our product candidate or technology will not infringe patents or rights owned by others, licenses to which might not be available to us in a timely manner or on acceptable terms, or at all.
If a third party claims that we or our CMOs or component material suppliers infringe its intellectual property rights, we may face a number of issues, including, but not limited to:
−Removed: infringement and other intellectual property claims which, with or without merit, may be expensive and time consuming to litigate and may divert management ’ s time and attention from our business;
−Removed: substantial damages for infringement, including the potential for treble damages and attorneys ’ fees, which we may have to pay if it is determined that the product and/or its use at issue infringes or violates the third party ’ s rights;
+Added: infringement and other intellectual property claims which, with or without merit, may be expensive and time consuming to litigate and may divert management’s time and attention from our business;
+Added: substantial damages for infringement, including the potential for treble damages and attorneys’
+Added: fees, which we may have to pay if it is determined that the product and/or its use at issue infringes or violates the third party’s rights;
a court prohibiting us from selling or licensing the product unless the third party licenses its intellectual property rights to us, which it may not be required to do;
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Because of the large number of patents issued and patent applications filed in the industries in which we operate, there is a risk that third parties may allege they have patent rights encompassing our product, product candidate, or technology, or those of our CMOs or component material suppliers, or uses of our product, product candidate, or technology.
−Removed: In the future, it may be necessary for us to enforce our proprietary rights, or to determine the scope, validity, and unenforceability of other parties ’ proprietary rights, through litigation or other dispute proceedings, which may be costly, and to the extent we are unsuccessful, adversely affect our rights.
+Added: In the future, it may be necessary for us to enforce our proprietary rights, or to determine the scope, validity, and unenforceability of other parties’
+Added: proprietary rights, through litigation or other dispute proceedings, which may be costly, and to the extent we are unsuccessful, adversely affect our rights.
In these proceedings, a court or administrative body could determine that our claims, including those related to enforcing patent rights, are not valid or that an alleged infringer has not infringed our rights.
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Smaller companies may also prove to be significant competitors, particularly through collaborative arrangements with large pharmaceutical and biotechnology companies.
−Removed: Furthermore, heightened awareness on the part of academic institutions, government agencies, and other public and private research organizations of the potential commercial value of their inventions have led them to actively seek to commercialize the technologies they develop, which increases competition for investment in our programs.
+Added: Furthermore, heightened awareness on the part of academic institutions, government agencies, and other public and private research organizations of the potential commercial value of their inventions have led them to actively
+Added: seek to commercialize the technologies they develop, which increases competition for investment in our programs.
Competitive products may be more effective, easier to dose, or more effectively marketed and sold than ours, which would have a material adverse effect on our ability to generate revenue.
−Removed: We are subject to uncertainty relating to healthcare reform measures and reimbursement policies that, if not favorable to our product, could hinder or prevent our product ’ s commercial success, if our primary product candidate is approved.
+Added: We are subject to uncertainty relating to healthcare reform measures and reimbursement policies that, if not favorable to our product, could hinder or prevent our product’s commercial success, if our product candidate is approved.
The unavailability or inadequacy of third-party payer coverage and reimbursement could negatively affect the market acceptance of our product candidate and the future revenues we may expect to receive from those products.
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These challenges to prices may be problematic to us since our products are targeted for a small number of patients (those suffering from orphan diseases), thus requiring us to charge very high prices in order to recover development costs and achieve a profit on our revenue.
−Removed: If these third-party payers do not consider our products to be cost-effective compared to other therapies, we may not obtain coverage for our products after approval as a benefit under the third-party payers ’ plans or, even if we do, the level of coverage or payment may not be sufficient to allow us to sell our products on a profitable basis.
+Added: If these third-party payers do not consider our products to be cost-effective compared to other therapies, we may not obtain coverage for our products after approval as a benefit under the third-party payers’
+Added: plans or, even if we do, the level of coverage or payment may not be sufficient to allow us to sell our products on a profitable basis.
Significant uncertainty exists as to the reimbursement status for newly approved drug products, including coding, coverage, and payment.
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It is uncertain whether and how future legislation, whether domestic or abroad, could affect prospects for our product candidate or what actions federal, state, or private payers for healthcare treatment and services may take in response to any such healthcare reform proposals or legislation.
−Removed: Adoption of price controls and cost-containment measures, and adoption of more restrictive policies in jurisdictions with existing controls and measures may prevent or limit our ability to generate revenue, attain profitability, or commercialize our product candidate, especially in light of our plans to price our product candidate at a high level.
+Added: Adoption of price controls and cost-containment measures, and adoption of more restrictive policies in jurisdictions with existing controls and measures may
+Added: prevent or limit our ability to generate revenue, attain profitability, or commercialize our product candidate, especially in light of our plans to price our product candidate at a high level.
Furthermore, we expect that healthcare reform measures that may be adopted in the future are unpredictable, and the potential impact on our operations and financial position is uncertain, but may result in more rigorous coverage criteria, lower reimbursement, and additional downward pressure on the price we may receive for approved products.
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In the future, we anticipate that we will need to obtain additional or increased product liability insurance coverage and it is uncertain whether such increased or additional insurance coverage can be obtained on commercially reasonable terms, if at all.
−Removed: Our business (in particular, the use of our primary product candidate in clinical trials and the sale of any products for which we obtain marketing approval) will expose us to product liability risks.
+Added: Our business (in particular, the use of our product candidate in clinical trials and the sale of any products for which we obtain marketing approval) will expose us to product liability risks.
Product liability claims might be brought against us by patients, healthcare providers, pharmaceutical companies, or others selling or involved in the use of our products.
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withdrawal of clinical trial participants;
−Removed: a “ clinical hold, ” suspension or termination of a clinical trial or amendments to a trial design;
+Added: a “clinical hold,”
+Added: suspension or termination of a clinical trial or amendments to a trial design;
significant costs of related litigation;
substantial monetary awards to patients or other claimants;
−Removed: the inability to commercialize our primary product candidate.
+Added: the inability to commercialize our product candidate.
We maintain limited product liability insurance for our clinical studies, but our insurance coverage may not reimburse us or may not be sufficient to reimburse us for all expenses or losses we may suffer.
Moreover, insurance coverage is becoming increasingly expensive and, in the future, we may not be able to maintain insurance coverage at a reasonable cost or in sufficient amounts to protect us against losses.
−Removed: We expect that we will expand our insurance coverage to include the sale of commercial products if we obtain marketing approval for our primary product candidate, but we may be unable to obtain product liability insurance on commercially acceptable terms or may not be able to maintain such insurance at a reasonable cost or in sufficient amounts to protect us against potential losses.
+Added: We expect that we will expand our insurance coverage to include the sale of commercial products if we obtain marketing approval for our product candidate, but we may be unable to obtain product liability insurance on commercially acceptable terms or may not be able to maintain such insurance at a reasonable cost or in sufficient amounts to protect us against potential losses.
Large judgments have been awarded in class action lawsuits based on drug products that had unanticipated side effects.
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Some of the factors that may cause the market price of our common stock to fluctuate include:
−Removed: impact of the COVID-19 pandemic on the global economy, financial markets, and liquidity and availability of capital;
failed or inconclusive data results from our clinical trials;
−Removed: our ability to obtain regulatory approvals for our primary product candidate, and delays or failures to obtain such approvals;
+Added: our ability to obtain regulatory approvals for our product candidate, and delays or failures to obtain such approvals;
failure to meet or exceed any financial and development projections that we may provide to the public;
failure to meet or exceed the financial and development projections of the investment community;
−Removed: failure of our primary product candidate, if approved, to achieve commercial success;
+Added: failure of our product candidate, if approved, to achieve commercial success;
failure to maintain our existing third-party license and supply agreements;
failure by us or our licensors to prosecute, maintain, or enforce our intellectual property rights;
−Removed: changes in laws or regulations applicable to our primary product candidate;
−Removed: any inability to obtain adequate supply of our primary product candidate or the inability to do so at acceptable prices;
+Added: changes in laws or regulations applicable to our product candidate;
+Added: any inability to obtain adequate supply of our product candidate or the inability to do so at acceptable prices;
adverse regulatory authority decisions;
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Moreover, the stock markets in general have experienced substantial volatility that has often been unrelated to the operating performance of individual companies.
+Added: Additionally, financial markets and the global economy may be adversely affected by the current or anticipated impact of the military conflict between Russia and Ukraine or other related geopolitical events.
These broad market fluctuations may also adversely affect the trading price of our common stock.
−Removed: In the past, following periods of volatility in the market price of a company’s securities, such as the decline in our stock price, stockholders have often instituted class action securities litigation against those companies.
+Added: In the past, following periods of volatility in the market price of a company’s securities, such as the decline in our stock price, stockholders have often instituted class action securities litigation against those companies.
Such litigation, if instituted, could result in substantial costs and diversion of management attention and resources, which could significantly harm our profitability and reputation.
If we fail to satisfy all applicable Nasdaq continued listing requirements, including the $1.00 minimum closing bid price requirement, our common stock may be delisted from Nasdaq, which could have an adverse impact on the liquidity and market price of our common stock.
−Removed: Our common stock is currently listed on the Nasdaq Global Select Market, which has qualitative and quantitative continued listing requirements, including corporate governance requirements, public float requirements, and a $1.00 minimum closing bid price requirement.
+Added: Our common stock is currently listed on the Nasdaq Global Select Market, which has qualitative and quantitative continued listing requirements, including corporate governance requirements, public float requirements, and a $1.00
+Added: minimum closing bid price requirement.
If our common stock trades at closing bid prices below $1.00 for 30 consecutive business days, or if we are unable to satisfy any of the other continued listing requirements, Nasdaq may take steps to delist our common stock.
−Removed: Such a delisting would likely have an adverse effect on the market liquidity of our common stock, decrease the market price of our common stock, result in the potential loss of confidence by investors, suppliers, customers and employees and fewer business development opportunities, and adversely affect our ability to obtain financing for the continuation of our operations.
+Added: Such a delisting would likely have an adverse effect on the market liquidity of our common stock, decrease the market price of our common stock, result in the potential loss of confidence by investors, suppliers, customers, and employees, fewer business development opportunities, and adversely affect our ability to obtain financing for the continuation of our operations.
For example, on November 15, 2019, we received written notice from The Nasdaq Stock Market LLC indicating that, for the last 30 consecutive business days, the bid price for our common stock had closed below the minimum $1.00 per share requirement for continued listing on the Nasdaq Global Select Market under Nasdaq Listing Rule 5550(a)(2).
3 unchanged sentences
We will also continue to incur costs associated with corporate governance requirements, including requirements under the Sarbanes-Oxley Act, as well as rules implemented by the U.S.
−Removed: Securities and Exchange Commission (“SEC”) and Nasdaq.
−Removed: These rules and regulations may also make it difficult and expensive for us to obtain directors ’ and officers ’ liability insurance.
+Added: Securities and Exchange Commission (“SEC”) and Nasdaq.
+Added: These rules and regulations may also make it difficult and expensive for us to obtain directors’
+Added: and officers’
+Added: liability insurance.
As a result, it may be more difficult for us to attract and retain qualified individuals to serve on our board of directors or as executive officers, which may adversely affect investor confidence in us and cause our business or stock price to suffer.
In March 2020, the SEC amended the definitions of accelerated filer and large accelerated filer to exclude smaller reporting companies that have not yet begun to generate significant revenue.
−Removed: Accordingly, we are changing our status from a smaller reporting company, accelerated filer, to a smaller reporting company, non-accelerated filer, effective for this annual report on Form 10-K.
+Added: Accordingly, we changed our status from a smaller reporting company, accelerated filer, to a smaller reporting company, non-accelerated filer, effective for the 2020 annual report on Form 10-K.
In accordance with the SEC amendments, we no longer require an integrated independent audit of our internal controls under Sarbanes-Oxley 404(b) but will continue to comply with Sarbanes-Oxley 404(a) and (c).
1 unchanged sentence
We expect to retain any future earnings to fund the development and growth of our business and do not expect to pay any cash dividends.
−Removed: As a result, capital appreciation, if any, of our common stock will be stockholders ’ sole source of gain, if any, for the foreseeable future.
−Removed: We have completed certain transactions that likely have resulted in an ownership change under Section 382 of the Internal Revenue Code limiting the use of our net operating loss carryforwards and certain other tax attributes.
−Removed: If a corporation undergoes an “ ownership change ” within the meaning of Sections 381, 382, and 383 of the Internal Revenue Code, the corporation ’ s net operating loss carryforwards and certain other tax attributes arising from before the ownership change are subject to limitations on use after the ownership change.
−Removed: In general, an ownership change occurs if there is a cumulative change in the corporation ’ s equity ownership by certain stockholders that exceeds fifty percentage points over a rolling three-year period.
−Removed: Similar rules may apply under state tax laws.
−Removed: Our net operating loss carryforwards and certain other tax attributes will be subject to limitations on use.
−Removed: Additional ownership changes in the future could result in additional limitations on our net operating loss carryforwards.
−Removed: Consequently, even if we achieve profitability, we may not be able to utilize a material portion of our net operating loss carryforwards and other tax attributes, which could have a material adverse effect on cash flow and results of operations.
+Added: As a result, capital appreciation, if any, of our common stock will be stockholders’
+Added: sole source of gain, if any, for the foreseeable future.
+Added: We may be unable to use certain of our net operating losses and other tax assets.
+Added: We have substantial tax loss carry forwards for US federal income tax and state income tax purposes.
+Added: In general, our net operating losses and tax credits have been fully offset by a valuation allowance due to uncertainties surrounding our ability to realize these tax benefits.
+Added: In particular, our ability to fully use certain US tax loss carry forwards and general business tax credit carry forwards generated up to and including December 2019 to offset future income or tax liability is limited under section 382 of the Internal Revenue Code of 1986, as amended.
+Added: Changes in the ownership of our stock, including those resulting from the issuance of shares of our common stock offerings or upon exercise of outstanding options, may limit or eliminate our ability to use certain net operating losses and tax credit carry forwards in the future.
Unresolved Staff Comments .
1 unchanged sentence
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.