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Item 1. Business

2022-03-08 compared with 2021-03-18 · 166 added, 150 removed, 461 unchanged (41% of the section changed)

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Grounded by our enzyme expertise, we purposefully select programs to advance into clinical development based on strong biological rationale and robust preclinical evidence where potential therapy can transform patient outcomes.

Implementing patient identification strategies to increase the probability of clinical success.

An integral part of our product development approach is to identify patient populations with the greatest potential to benefit from our metabolism focused approaches.

This strategy is focused on identifying misdiagnosed and undiagnosed patients.

For example, in the United States, we are actively pursuing avenues to improve disease state awareness and diagnosis of Arginase 1 Deficiency.

Leveraging patient identification capabilities to maximize the value of our product candidates.

An integral part of our overall strategy is to identify patient populations with the greatest potential to benefit from our metabolism focused approach.

This approach is designed to increase the probability of clinical success, accelerate development timelines, and improve our ability to identify the appropriate patients and healthcare professionals, and represents a key element of our launch planning efforts.

Progressing our most advanced product candidates, pegzilarginase and AGLE-177, through clinical development and into commercialization.

We believe pegzilarginase is the only therapeutic in clinical development that addresses the underlying drivers of disease progression for the treatment of Arginase 1 Deficiency.

Pegzilarginase is currently being evaluated in two ongoing clinical trials for Arginase 1 Deficiency, consisting of the global pivotal Phase 3 PEACE ( P egzilarginase E ffect on A rginase 1 Deficiency C linical E ndpoints) trial and our open label extension study.

The PEACE trial is a single, global pivotal trial with a primary endpoint of plasma arginine reduction and secondary endpoints including clinical outcome assessments focused primarily on mobility, in addition to safety and pharmacokinetics.

As of mid-March 2021, 24 patients have been enrolled and randomized in the PEACE trial, with an additional nine patients in active screening or scheduled to begin screening in the next two weeks.

Trial enrollment is expected to close in March 2021 , with completion of screening and all patients randomized by the end of April 2021 .

T opline data is expected from the trial in the fourth quarter of 2021 .

We reported topline data for pegzilarginase for our global pivotal PEACE ( P egzilarginase E ffect on A rginase 1 Deficiency C linical E ndpoints) Phase 3 trial in December 2021 and are continuing to evaluate pegzilarginase in two long term extension studies in the PEACE Phase 3 trial and Phase 1/2 open-label extension study for the treatment of Arginase 1 Deficiency.

PEACE achieved the primary endpoint of a statistically significant 80% reduction in plasma arginine from baseline after 24 weeks of treatment with pegzilarginase (p value <0.0001) and normal plasma arginine levels (40-115µM) were achieved in 90.5% of pegzilarginase treated patients.

In addition, plasma arginine reduction was accompanied by a positive trend in Gross Motor Function Measure Part E (GMFM-E) (p value =0.1087),

one of two key clinical assessment s of patient mobility that were evaluated equally in the statistical analysis .

Based on these results and the entirety of data from the pegzilarginase program, we plan to submit a Biologics License Application, or BLA, to the U.S.

Food and Drug Administration, or FDA, in the second quarter of 2022 and our commercial partner in Europe and certain countries in the Middle East, Immedica Pharma AB, Immedica , plans to submit an EMA application during 2022 .

We believe AGLE-177 has the potential to be the first approved therapy that addresses the underlying drivers of disease progression for the treatment of Homocystinuria due to cystathionine β-synthase (CBS) deficiency , also known as Classical Homocystinuria.

In the second quarter of 2020, we initiated a Phase 1/2 clinical trial to assess the safety and efficacy of AGLE-177 in patients with CBS deficiency.

Dosing of the first patient is still pending given current COVID-19 restrictions at planned clinical trial sites.

We are evaluating AGLE-177 in a Phase 1/2 clinical trial to assess safety and efficacy in patients with Homocystinuria.

We expect to report initial clinical data from the Phase 1/2 clinical trial in the second half of 2022.

Concurrently developing multiple product candidates with the goal of approval and commercialization in the US and internationally.

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In developing programs for diseases with substantial unmet medical need, we seek opportunities with meaningful commercial potential and with limited or no current competition.

We retain worldwide intellectual property rights to all our product candidates and intend to pursue clinical and regulatory programs for approval in the United States and internationally.

Over time, we intend to establish a multi-country commercial organization in rare genetic diseases with commercial partnerships in select regions.

We intend to maximize the commercial opportunity and value for each of our product candidates by pursuing regulatory approval in the United States and other select regions on our own or with commercial partners.

In the United States, we are building the commercial capabilities and infrastructure to successfully launch pegzilarginase, if approved.

Additionally, we licensed the pegzilarginase product rights to Immedica for commercialization in the European Economic Area, United Kingdom, Switzerland, Andorra, Monaco, San Marino, Vatican City, Turkey, Saudi Arabia, United Arab Emirates, Qatar, Kuwait, Bahrain, and Oman.

We retain all other intellectual property rights for pegzilarginase in the United States and other regions.

We retain worldwide intellectual property rights for all other product candidates in our portfolio.

Our Focus—Enzyme-based Therapeutic Opportunities

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By leveraging engineered human enzymes to reduce harmful levels of metabolites, including amino acids, we believe we can deliver transformative therapeutics for multiple diseases where enzyme approaches have not previously been considered.

Understanding Rare Metabolic Disease and Arginase 1 Deficiency

Rare Metabolic Disease and Arginase 1 Deficiency Overview

The incidence of a single metabolic abnormality typically occurs in fewer than one per 100,000 live births.

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Arginase 1 Deficiency is a serious progressive disease with significant morbidity and early mortality.

This disease is caused by deficiency of a key arginine metabolizing enzyme.

This disease is caused by deficiency of a key arginine metabolizing enzyme, Arginase 1.

This leads to two important harmful metabolic effects:

(1) the accumulation of high levels of arginine and other arginine derived metabolites, and (2) an impairment of the urea cycle which leads to elevation of ammonia levels, especially at times of stress.

The high plasma arginine level is believed to be the key driver of the spasticity, developmental delays, and seizures that develop in early childhood and progress over time.

The high plasma arginine level is believed to be the key driver

of the spasticity, developmental delays, and seizures that develop in early childhood and progress over time.

The impairment of the urea cycle also means that these patients are at risk of episodic and sometimes persistent hyperammonemia, which causes irritability, nausea, and vomiting with potential to progress to brain swelling, encephalopathy, reduced life expectancy, and death.

There are currently no effective treatment options or approved therapeutic agents specifically indicated for Arginase 1 Deficiency that treat the underlying cause of this disease.

There are currently no effective treatment options or approved therapeutic agents specifically indicated for Arginase 1 Deficiency that treat the underlying driver of this disease.

Current disease management practice includes a medical diet with protein restriction, ammonia scavengers, and adjustments to essential amino acids.

Medical literature suggests that

disease progression can be slowed with strict adherence to dietary protein restriction, which often includes the use of specially formulated supplements.

Medical literature suggests that disease progression can be slowed with strict adherence to dietary protein restriction, which often includes the use of specially formulated supplements.

Such dietary modification has been shown to partially reduce plasma arginine levels, but generally does not consistently reach the range stipulated by medical guidelines.

Therefore, this disease management approach is generally inadequate to treat the majority of patients, unpalatable, and difficult to manage.

Ammonia - scaveng ing drugs such as RAVICTI (glycerol phenylbutyrate) and BUPHENYL (sodium phenylbutyrate) are used to manage elevated ammonia levels.

Ammonia-scavenging drugs such as RAVICTI (glycerol phenylbutyrate) and BUPHENYL (sodium phenylbutyrate) are used to manage elevated ammonia levels.

In some cases, liver transplantation has been utilized to treat Arginase 1 Deficiency;

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Arginase 1 Deficiency is a rare disorder, and disease prevalence has not been well established in the medical literature.

Based on a genetic prevalence analysis commissioned by us, we estimate that the Arginase 1 Deficiency population is greater than 2,500 patients in the global addressable markets.

Based on a genetic prevalence analysis commissioned by us, we estimate that the Arginase 1 Deficiency population is greater than 2,500 patients in the global addressable markets and greater than 1,150 patients in the territories with regulatory and launch plans underway.

The genetic prevalence-based methodology has the ability to account for misdiagnosis of the disease and to address limitations in newborn screening methodology, including naturally low arginine levels in newborns and lack of geographic availability or standardization of testing.

Presently, only 34 U.S.

states and jurisdictions screen for Arginase 1 Deficiency, and screening in Europe is not universal.

states screen for Arginase 1 Deficiency, and screening in Europe is not universal.

Because the manifestations of Arginase 1 Deficiency may overlap with other disorders such as hereditary spastic paraplegia, cerebral palsy or epilepsy, the prevalence of Arginase 1 Deficiency may be underestimated in regions that do not mandate newborn screening for this disease.

As of January 2021, we have identified over 300 patients in addressable markets, primarily in the U.S.

we have identified approximately 160 patients, representing approximately 65% of the estimated genetic prevalence population in the U.S.

Understanding Homocystinuria

Homocystinuria is an inherited disorder of methionine metabolism that results in elevated homocysteine and homocystine, or tHcy, in plasma and urine.

We continue to make progress in patient identification, and insights from these efforts serve as a foundation for our commercialization strategy and execution.

Homocystinuria Overview

Homocystinuria is an inherited disorder of methionine metabolism that results in elevated homocysteine and its dimer, homocystine, or tHcy, in plasma and urine.

This leads to a broad range of serious consequences with irreversible morbidity due to lens dislocation, skeletal abnormality, vascular complication and intellectual dysfunction, as well as reduced life expectancy.

CBS deficiency is the most common form of the disease with over 160 genetic mutations identified.

Classical Homocystinuria is the most common form of the disease with over 160 genetic mutations identified.

These mutations adversely impact CBS enzyme activity to a variable degree impacting the level of tHcy and the response to some treatments.

The goal of treatment for Homocystinuria due to CBS deficiency is to maintain consistent plasma tHcy levels below the currently defined biochemical targets.

The goal of treatment for Homocystinuria is to maintain consistent plasma tHcy levels below the currently defined biochemical targets.

Current disease management is lifelong and includes dietary protein (methionine) restriction with amino acid replacement either alone or with pyridoxine (vitamin B6), and betaine supplementation, which is generally insufficient to effectively control all but the mildest form of the disease.

As is the case with other medical diets, adherence is challenging and nutrient supplementation is often necessary to prevent deficiencies that arise from a lack of normal natural dietary protein intake.

Some CBS deficient patients respond to very high doses of pyridoxine (vitamin B6) resulting in decreases of methionine and homocysteine and are considered B6 responsive.

Some Classical Homocystinuria patients respond to very high doses of pyridoxine (vitamin B6) resulting in decreases of methionine and homocysteine and are considered B6-responsive.

However, many patients are unable to achieve target levels of tHcy through diet and/or pyridoxine alone and thus betaine is recommended as an adjunctive treatment.

Although considered to be generally well tolerated, some subjects dislike the taste and/or fishy odor, and often large doses are required, both of which may lead to poor compliance.

Additionally, there is a risk of hypermethioninemia and cerebral edema has been reported.

The natural history of CBS deficiency is understood and documented in the medical literature.

Due to the variability of effect of different mutations and response to treatment, some subjects have severe childhood-onset multisystem disease, while others may be asymptomatic into adulthood, likewise the spectrum and severity of disease is also variable.

Additionally, a risk of hypermethioninemia and cerebral edema has been reported.

The natural history of Classical Homocystinuria is understood and documented in the medical literature.

Due to the variability of effect of different mutations and response to treatment, some subjects have severe childhood-onset multisystem disease, while others may be asymptomatic into adulthood ;

likewise the spectrum and severity of disease is also variable.

Patients can present with Homocystinuria in childhood with a significant event, such as thrombosis, ocular lens dislocation, severe myopia, skeletal fracture, and/or other manifestations such as developmental delay or cognitive impairment.

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Medical literature has reported that outcomes are better in patients with lower tHcy with fewer complications and improved intellectual function.

long-term prospective data exists, recent guidelines based on expert review recommend a target tHcy of less than 1 0 0 micro molar , or µM , for those that are unresponsive to pyridoxine , although some physicians aim for even lower targets with a combination approach.

While no long-term prospective data exists, recent guidelines based on expert review recommend a target tHcy of less than 1 0 0 micro molar , or µM , for those that are unresponsive to pyridoxine, although some physicians aim for even lower targets with a combination approach.

There is a significant unmet need for patients in whom tHcy levels remain high, increasing the risk of complications.

In addition, many patients find compliance with diet to be restrictive and cannot maintain tHcy levels within the target range.

The lack of effective interventions to directly address the consequences of CBS deficiency support the need for a therapy to reduce the harmful effects of persistently raised tHcy.

The lack of effective interventions to directly address the consequences of Classical Homocystinuria support the need for a therapy to reduce the harmful effects of persistently raised tHcy.

The introduction of a tHcy reducing therapeutic could ultimately prevent major thrombotic, ocular and skeletal complications, offering the potential to reduce morbidity and mortality in these patients.

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(and widely available elsewhere), for technical reasons it only detects a proportion of cases.

We conducted an analysis of published literature and other data sources to assess the estimated prevalence of Homocystinuria and determined the population may exceed 30,000 patients, including B6 responsive and B6-non-responsive patients, with approximately 15,000 to 18,000 estimated B6-non-responsive patients in the global addressable markets and approximately 6,000 to 6,600 estimated B6-non-responsive patients in the key commercial markets of the United States, France, Germany, Italy, Spain, and the United Kingdom.

We conducted an analysis of published literature and other data sources to assess the estimated prevalence of Classical Homocystinuria and determined the population in global addressable markets may exceed 30,000 patients, including B6-responsive and B6-non-responsive patients, with approximately 15,000 to 18,000 estimated B6-non-responsive patients (of which approximately 6,000 to 6,600 are estimated in the key commercial markets of the United States, France, Germany, Italy, Spain, and the United Kingdom).

Impacts of the COVID-19 Pandemic

The extent of the impact of COVID-19 on our operational and financial performance will depend on certain developments, including the duration and spread of the outbreak, impact on our clinical studies, employee or industry events, and effect on our suppliers and manufacturers, all of which are uncertain and cannot be predicted.

The COVID-19 pandemic and its adverse effects have become more prevalent in the locations where we, our CROs, suppliers or third-party business partners conduct business and as a result, we have experienced disruptions and may continue to experience more pronounced disruptions in our operations.

The extent of the impact of COVID-19 on our operational and financial performance will continue to depend on certain developments, including the duration and spread of the outbreak, new variants, the vaccination and booster rate, impact on our clinical studies, employee or industry events, and effect on our suppliers and manufacturers, all of which are uncertain and cannot be predicted.

The COVID-19 pandemic and its adverse effects have been prevalent in many of the locations where we, our CROs, suppliers or third-party business partners conduct business and as a result, we have experienced disruptions and may continue to experience more pronounced disruptions in our operations.

With respect to our clinical trials, we have had patients miss scheduled dosings and experienced delays in enrollment.

We may continue to experience such delays as well as delays in distribution of clinical trial materials, study monitoring and data analysis that could materially adversely impact our business, results of operations and overall financial performance in future periods.

Specifically, we have experienced and expect to continue to experience impact from changes in how we and companies worldwide conduct business due to the COVID-19 pandemic, including but not limited to restrictions on travel and in-person meetings, delays in site activations and enrollment of clinical trials, and prioritization of hospital resources toward pandemic effort.

We may also experience delays in review by the FDA and comparable foreign regulatory agencies, and disruptions in our supply chain for our product candidates.

Specifically, we have experienced and expect to continue to experience impact from changes in how we and companies worldwide conduct business due to the COVID-19 pandemic, including but not limited to restrictions on travel and in-person meetings, disruptions in the supply chain including the raw materials needed for manufacturing, animals used in research, delays in site activations and enrollment of clinical trials, and prioritization of hospital resources toward pandemic effort.

We may also experience delays in review by the FDA and comparable foreign regulatory agencies for our product candidates.

As of the filing date of this Annual Report on Form 10-K, the extent to which COVID-19 may impact our financial condition, results of operations or guidance is uncertain.

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PEACE - Global Pivotal Phase 3 Study of Pegzilarginase in Patients with Arginase 1 Deficiency:

We are currently conducting our Phase 3 PEACE trial to evaluate the safety and efficacy of pegzilarginase.

We completed the double-blind placebo-controlled portion of our PEACE Phase 3 trial in December 2021 and are currently conducting a long-term extension study to evaluate the safety and efficacy of pegzilarginase.

The trial is believed to be the first-ever investigative therapy that directly addresses the high arginine levels that are believed to be the key drivers of this devastating disease for patients with Arginase 1 Deficiency.

We designed the PEACE trial based on input from the FDA and EMA.

As of mid-March 2021, 24 patients have been enrolled and randomized in the Phase 3 PEACE trial, with an additional nine patients in active screening or scheduled to begin screening in the next two weeks.

Trial enrollment is expected to close in March 2021, with completion of screening and all patients randomized by the end of April 2021.

Topline data is expected from the trial in the fourth quarter of 2021 .

PEACE is a single, global, randomized, double-blind, placebo-controlled trial designed to assess the effects of treatment with pegzilarginase versus placebo over 24 weeks with a primary endpoint of statistically significant plasma arginine reduction from baseline.

The primary endpoint assesses the effectiveness of pegzilarginase in lowering plasma arginine levels given the evidence that plasma arginine control has the potential to improve the clinical status and slow disease progression in patients with Arginase 1 Deficiency.

Secondary endpoints will include clinical outcome assessments focused primarily on mobility, in addition to safety and pharmacokinetics.

The pivotal trial will span 7 countries and 31 clinical sites.

Upon completion of the 24-week treatment period, patients may participate in a long-term extension study of pegzilarginase.

The FDA and EMA indicated that data from this Phase 3 PEACE trial showing plasma arginine reduction in conjunction with improvements in clinically meaningful aspects of the disease may be sufficient to support a marketing application for pegzilarginase in Arginase 1 Deficiency.

We plan to enroll approximately 30 (pediatric and adult) patients with Arginase 1 Deficiency.

Patients enrolled in the trial are randomized on a two-to-one basis to receive weekly infusions of pegzilarginase (0.1 mg/kg), or placebo for the double-blind treatment period of 24 weeks.

Dose adjustments during this period can be made to optimize plasma arginine control for levels outside the range of 50 to 150 µM.

Patients will be considered eligible for the Phase 3 PEACE trial during screening if they exhibit average plasma arginine levels of greater than 250 µM, are greater than two years of age and have a deficit in at least one dimension of mobility.

All assessments and dose adjustments will be conducted in a blinded fashion at pre-specified intervals.

Patients will remain on current disease management for the duration of the Phase 3 PEACE trial.

In addition to the primary endpoint of plasma arginine reduction, secondary endpoints in the Phase 3 PEACE trial will evaluate pegzilarginase relative to placebo through a multi-dimensional assessment of clinical response.

While the overall design of the trial remains unchanged, based on ongoing dialog with the regulatory authorities we recently updated our statistical analysis plan for the Phase 3 PEACE trial to refine the analysis of the clinical secondary endpoints for the comparison of pegzilarginase to placebo.

The statistical analysis plan updates include revising the analysis of the key secondary objective as continuous, rather than categorical, variables and refining the key clinical outcome assessment to focus on 2 Minute Walk Test or Gross Motor Function Measure E (walking, running, and jumping) as components of the key clinical outcome assessment.

Other secondary endpoints include the proportion of patients able to achieve specific levels of plasma arginine, additional assessments of mobility, and changes in adaptive behavior .

The primary endpoint assessed the effectiveness of pegzilarginase in lowering plasma arginine levels, given the evidence that plasma arginine control has the potential to improve the clinical status and slow disease progression in patients with Arginase 1 Deficiency.

Secondary endpoints included clinical outcome assessments focused primarily on mobility, including the key secondary endpoints consisting of GMFM-E and 2 Minute Walk Test, or 2MWT, in addition to safety and pharmacokinetics.

The pivotal trial enrolled 32 patients aged two years and older, who had plasma arginine levels greater than 250 µM and a baseline deficit in at least one clinical response assessment.

Patients enrolled in the trial were randomized on a two-to-one basis to receive weekly infusions of pegzilarginase (0.1 mg/kg starting dose), or placebo for the double-blind treatment period.

Dose adjustments during this period were allowed in order to optimize plasma arginine control for levels outside the range of 50 to 150 µM.

Patients remained on current disease management for the duration of the PEACE Phase 3 trial.

Upon completion of the 24-week treatment period, patients were eligible to participate in a long-term extension study of pegzilarginase, with all 31 patients who completed the double-blind period continuing into the long-term extension study and switching to subcutaneous (sc) administration.

We will review the (sc) administration data with the health authorities from our PEACE Phase 3 long-term extension trial and Phase 2 open-label extension trial to determine the best path for preferred route(s) of administration.

In December 2021, we announced the topline results for the PEACE Phase 3 trial.

The primary endpoint was met with a statistically significant reduction in plasma arginine from baseline after 24 weeks of treatment with pegzilarginase (p

value <0.0001).

In addition, plasma arginine reduction was accompanied by a positive trend in GMFM-E (p value =0.1087), one of two key clinical assessment s of patient mobility that were evaluated equally in the statistical analysis .

Topline results are summarized as follows:

PEACE achieved the primary endpoint of the clinical trial and demonstrated a highly statistically significant 80% reduction in mean plasma arginine in pegzilarginase-treated patients (p value <0.0001).

Importantly, normal plasma arginine levels (40-115µM) were achieved in 90.5% of pegzilarginase treated patients compared to none of the patients in the placebo arm.

For the key secondary endpoints, improvements in walking, running and jumping were captured using GMFM-E, and the distance a patient walks in two minutes was captured using the 2MWT.

The least squares mean GMFM-E score improved by 4.2 units for pegzilarginase-treated patients and worsened by 0.4 units in the placebo arm (p value =0.1087;

95% CI [-1.1, 10.2]), establishing a positive trend in this mobility assessment.

The least squares mean 2MWT distance increased 7.4 meters in pegzilarginase-treated patients and 1.9 meters in the placebo arm (p value =0.5961;

95% CI [-15.6, 26.7]).

Pegzilarginase was well-tolerated and safety data were consistent with results from the Phase 1/2 and open-label extension clinical trials.

Most Treatment-Emergent Adverse Events (TEAEs) were mild or moderate in severity.

Common TEAEs occurring in >=15% of subjects in treatment and placebo arms included vomiting, increased ammonia, cough, hyperammonemia, nausea, abdominal pain, pyrexia, and decreased appetite.

With the exception of vomiting, cough, and pyrexia, each event occurred at a lower rate compared to placebo.

There were four subjects in each treatment arm who experienced serious adverse events with hyperammonemia being the most frequent occurring in three subjects (19%) in the pegzilarginase group compared to four subjects (36%) in the placebo group.

Prior to the results of the PEACE study being available, the FDA and EMA indicated that data from the PEACE Phase 3 trial showing plasma arginine reduction in conjunction with improvements in clinically meaningful aspects of the disease may be sufficient to support a marketing application for pegzilarginase in Arginase 1 Deficiency.

Based on the results of the PEACE Phase 3 trial and the entirety of data from the pegzilarginase program, we plan to submit a BLA to the FDA in the second quarter of 2022 seeking full approval of pegzilarginase and Immedica plans to submit an EMA application during 2022.

Phase 1/2 Open-Label Study of Pegzilarginase in Patients with Arginase 1 Deficiency:

We completed a Phase 1/2 clinical trial for the treatment of patients with Arginase 1 Deficiency to assess the safety and clinical activity of pegzilarginase.

The Phase 1/2, multi-center, single-arm, open label trial of pegzilarginase enrolled 16 adult and pediatric patients with Arginase 1 Deficiency on background therapy in the United States, Canada, and Europe, exceeding the initial target of 10 patients.

The Phase 1/2, multi-center, single-arm, open-label trial of pegzilarginase enrolled 16 adult and pediatric patients with Arginase 1 Deficiency on background therapy in the U.S., Canada, and Europe, exceeding the initial target of 10 patients.

The Phase 1/2 dosing was completed in February 2019, with 14 patients completing 8 weeks of repeat dosing.

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The trial also evaluated the pharmacokinetic and pharmacodynamic effects of repeated doses of pegzilarginase on plasma arginine levels.

Additionally, patients who completed the repeat dose part of the Phase 1/2 trial were eligible to enroll in a long-term open label extension study, with 14 out of 14 patients that completed the Phase 1/2 trial enrolling into the extension study.

Additionally, patients who completed the repeat dose part of the Phase 1/2 trial were eligible to enroll in a long-term open-label extension study, with 14 out of 14 patients who completed the Phase 1/2 trial enrolling into the extension study.

One patient later discontinued for non-medical reasons.

Phase 2 Open-Label Extension Study to Evaluate the Long-Term Safety, Tolerability and Effects of Pegzilarginase in Patients with Arginase 1 Deficiency Who Received Treatment in a Previous Study:

After completing the repeat dose portion of the Phase 1/2 study and at least four weeks of post-treatment observation, patients were allowed to continue treatment with pegzilarginase, including subcutaneous administration, by enrolling in a long-term open label extension study.

After completing the repeat dose portion of the Phase 1/2 study and at least four weeks of post-treatment observation, patients were allowed to continue treatment with pegzilarginase, including subcutaneous (sc) administration, by enrolling in a long-term open-label extension study.

All 13 eligible patients enrolled in the Phase 2 open-label extension trial switched to subcutaneously dosed pegzilarginase.

This study is expected to provide important insights into the longer-term clinical effects of reducing plasma arginine.

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In each of the interim data announcements, we reported all patients continued to demonstrate marked and sustained reductions in plasma arginine following 20-weeks and 56-weeks of pegzilarginase administration and 79% (11 of 14) and 85% (11 of 13) of patients were clinical responders, respectively, based on a clinical meaningful improvement in one or more of three complementary mobility assessments.

For the 6 Minute Walk Test, the mean change from baseline at the 56-week analyses was 45 meters.

For Gross Motor Function Measure E, the mean change from baseline at the 56-week analyses was 6 units.

When analyzing the subset of patients who had a baseline deficit (equal to seven patients), the mean change for Gross Motor Function Measure E was 9 units.

For GMFM-E, the mean change from baseline at the 56-week analyses was 6 units.

When analyzing the subset of patients who had a baseline deficit (equal to seven patients), the mean change for GMFM-E was 9 units.

For the 6 Minute Walk Test, or 6MWT, the mean change from baseline at the 56-week analyses was 45 meters.

Pegzilarginase was well tolerated and the rates of treatment-related adverse events decreased over time.

Serious adverse events included hypersensitivity and hyperammonemia, which were infrequent, expected, and managed with standard treatment and did not lead to any patient discontinuations.

As of September 2020, all 13 eligible patients from our ongoing Phase 2 open-label extension trial for pegzilarginase in patients with Arginase 1 Deficiency had been switched to, and remained on, subcutaneously (sc) dosed pegzilarginase, with no patient discontinuations through the announcement date.

Administration of pegzilarginase by the subcutaneous route was shown to control plasma arginine levels and was generally well tolerated, with only six mild injection site reactions related to pegzilarginase following more than 850 injections.

We are evaluating the pegzilarginase (sc) route of administration in our Phase 2 open-label extension trial and will review data to determine the best path for selecting the preferred route(s) of administration for our biologics license application, or BLA, submission.

Additionally, we announced 104-week mobility data from our completed Phase 1/2 trial and ongoing Phase 2 open-label extension trial on the nine patients that had completed assessments through the period.

The mean change from baseline for GMFM-E and the 6MWT was 7 units and 38 meters, respectively, at the 104-week analyses.

The clinical outcome assessment represented continued improvements over baseline after two years on treatment with pegzilarginase in the context of a progressive disease.

Regulatory Designations:

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This designation by the FDA confirms our eligibility to receive a Rare Pediatric Disease priority review voucher upon approval of a qualifying BLA for pegzilarginase if approved before October 1, 2026.

Given recent developments relating to the COVID-19 global pandemic, we have been taking steps to minimize potential impacts of COVID-19 related disruptions on our Phase 3 PEACE trial.

The trial protocol allows for a patient to miss a few dosing appointments without being disqualified from the trial, but an excessive number of missed doses may adversely affect the usefulness of the data collected in the trial or require us to exclude a subject from the per protocol analysis.

All patients that had initially paused dosing due to COVID-19 had restarted treatment by September 2020.

However, patients may miss dosing appointments in the future, whether due to COVID-19 or other reasons.

We have not currently experienced significant impact on our supply chain and we currently have sufficient supply available for completion of our ongoing clinical trials.

Patient screening has been impacted by COVID-19, and there is uncertainty as to the cadence of screenings as sites are impacted by COVID-19 related restrictions, including staff members contracting COVID-19 and limiting operations .

Trial enrollment is expected to close in March 2021 , with completion of screening and all patients randomized by the end of April 2021 .

T opline data is expected from the trial in the fourth quarter of 2021.

We licensed to Immedica the rights to the commercialization of pegzilarginase in the European Economic Area, United Kingdom, Switzerland, Andorra, Monaco, San Marino, Vatican City, Turkey, Saudi Arabia, United Arab Emirates, Qatar, Kuwait, Bahrain, and Oman.

The license and supply agreement, or Immedica Agreement, we entered into with Immedica includes a non-refundable upfront payment of $21.5 million from Immedica and development services provided to Immedica, up to $3.0 million.

Under the terms of the Immedica Agreement, we are eligible to receive additional payments of up to approximately $125.0 million in regulatory and commercial milestone payments, assuming an exchange rate of $1.13 to €1.00.

Additionally, we are entitled to receive royalties in the mid-20 percent range on net sales of the product in countries included in the Immedica Agreement.

We will continue to be responsible for certain clinical development activities and the manufacturing of pegzilarginase and will retain commercialization rights in the United States and the rest of the world.

AGLE-177 in Homocystinuria

Our product candidate, AGLE-177, is a novel PEGylated, or polyethylene glycol modified, human enzyme engineered to degrade free homocysteine and homocystine.

We engineered AGLE-177 by directed mutagenesis of amino acid residues within the active site of human cystathionine γ-lyase, resulting in a molecule that has high substrate specificity for homocysteine and homocystine but not for the native substrate, cystathionine.

Our product candidate, AGLE-177, is a novel PEGylated, or polyethylene glycol modified, human enzyme engineered to degrade free homocysteine and its dimer homocystine.

We engineered AGLE-177 by directed mutagenesis of amino acid residues into human cystathionine γ-lyase, resulting in an enzyme that has high substrate specificity for homocysteine as a monomer and dimer.

For Classical Homocystinuria patients, we believe AGLE-177 may ameliorate the adverse impact of CBS enzyme deficiency in the transsulfuration pathway by providing an alternate pathway for enzymatic degradation of high plasma total homocysteine levels .

Phase 1/2 Open-Label Study of AGLE-177 in Patients with Homocystinuria :

We initiated a Phase 1/2 clinical trial for the treatment of patients with Homocystinuria to assess the safety and clinical activity of AGLE-177, however, timing of the first patient dosing will depend on determinations by individual sites given COVID-19 and our priorities at this time are to avoid further overburdening hospital staff and to minimize the risk of trial participants exposure to COVID-19.

The primary objective of the trial is to evaluate the safety and tolerability of AGLE-177 in subjects with Homocystinuria due to CBS deficiency.

We are currently conducting a Phase 1/2 clinical trial for the treatment of patients with Homocystinuria to assess the safety and clinical activity of AGLE-177.

The primary objective of the trial is to evaluate the safety and tolerability of AGLE-177 in subjects with Homocystinuria.

As a secondary objective, the trial will also characterize the pharmacokinetics and pharmacodynamics relationship of AGLE-177 after single and multiple doses following intravenous and subcutaneous administration, as well as the magnitude of change in plasma tHcy.

We plan to enroll 16 to 20 patients with Homocystinuria in the Phase 1/2 clinical trial with sites located in the United Kingdom and Australia.

Patients will be dosed weekly for four weeks.

We plan to enroll 16 to 20 patients diagnosed with Homocystinuria, aged 12 years or older and have plasma homocysteine levels greater than 80 µM.

Patients will be dosed once weekly for four weeks, with four patients in each of the four dosing cohorts and an option to include a fifth cohort as needed.

We announced the dosing of the first patient in June 2021 and subsequently completed dosing in the 0.15 mg/kg intravenous cohort in the Phase 1/2 clinical trial in 2021.

AGLE-177 was well tolerated with no safety concerns and data from the first cohort showed reductions in total homocysteine in all patients.

Following the results from the first cohort, we are advancing to the next cohort at a once weekly subcutaneous dose of 0.45mg/kg and have begun dosing patients in this cohort.

We expect to report initial clinical data from the Phase 1/2 trial in the second half of 2022.

Regulatory Designations:

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In addition, the FDA granted a Rare Pediatric Disease designation for AGLE-177 for the treatment of Homocystinuria.

This designation by the FDA confirms our eligibility to receive a Rare Pediatric Disease priority review voucher upon approval of a qualifying BLA for AGLE-177 if approved before October 1, 2026.

This designation by the FDA enables the potential to receive a Rare Pediatric Disease priority review voucher upon approval of a qualifying BLA for AGLE-177 if approved before October 1, 2026.

Given recent developments relating to the COVID-19 global pandemic, we have been taking steps to minimize potential impacts of COVID-19 related disruptions on our Phase 1/2 clinical trial.

We currently have sufficient supply available for completion of our ongoing clinical trials.

Patient screening and dosing have been impacted by COVID-19, and there is uncertainty as to the cadence of screenings as sites are impacted by COVID-19 related restrictions, including staff members contracting COVID-19 and limiting operations.

Preclinical Pipeline

Cystinuria Program

AGLE-325 in Cystinuria

Cystinuria is a rare genetic disease characterized by frequent and recurrent kidney stone formation requiring multiple procedural interventions, and by an increased risk of chronic kidney disease.

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This results in high cystine concentrations in the urine and formation of kidney stones.

As such, we engineered our Cystinuria program candidate to reduce plasma cystine and cysteine levels with accompanying reductions in urine cystine concentrations as an approach to inhibit both cystine crystal and kidney stone formation.

We have presented data on an early lead molecule from our Cystinuria program demonstrating reductions in plasma and urine cystine levels, accompanied by reduced kidney stone formation in a preclinical model of Cystinuria.

In alignment with our strategy of having rigorous preclinical data prior to advancing candidates to clinical evaluation, we continue preclinical work in support of the Cystinuria program.

Due to the impact of COVID-19 on laboratory work schedules, we have not provided a timeline for advancement of a therapeutic candidate into the clinic.

As such, we engineered and optimized AGLE-325 to reduce plasma cystine and cysteine levels with accompanying reductions in urine cystine concentrations as an approach to inhibit both cystine crystal and kidney stone formation.

We presented preclinical data on a precursor molecule to AGLE-325 demonstrating reduced kidney stone formation in a preclinical model of Cystinuria.

Given the compelling preclinical data and the limitations of current disease management approaches, we plan to advance AGLE-325 through IND-enabling studies in 2022.

Research Programs

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Intellectual Property

to preserve our trade secrets, to prevent third parties from infringing upon our proprietary rights and to operate without infringing upon the proprietary rights of others.

Our success depends in part on our ability to obtain and maintain patents and other forms of intellectual property rights, including in-licenses of intellectual property rights of others, for our product candidates, methods used to manufacture our product candidates and methods for treating patients using our product candidates, as well as our ability to preserve our trade secrets, to prevent third parties from infringing upon our proprietary rights and to operate without infringing upon the proprietary rights of others.

We own three granted US Patents directed towards compositions of pegzilarginase as well as to various mutations in the arginase 1 amino acid sequence.

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We also own a pending US application and pending foreign counterpart applications directed towards the use of pegzilarginase in the treatment of arginase 1 deficiency.

Any patents that issue from these US or PCT applications will expire in 2038, absent any patent term adjustment or patent term extension.

Any patents that issue from these applications will expire in 2038, absent any patent term adjustment or patent term extension.

We further own a granted US patent and pending US and foreign counterpart applications directed towards the use of pegzilarginase in the treatment of cancer.

This patent and any further patents that issue from these applications will expire in 2037, absent any patent term adjustment or patent term extension.

We also own a pending US application, a pending Taiwanese application and a pending PCT application directed towards the manufacturing of pegzilarginase, and any patents that issue from these applications will expire in 2040, absent any patent term adjustment or patent term extension.

We are the exclusive licensee of a US application and pending foreign counterpart applications directed towards the AGLE-177 program which covers recombinant human enzymes that degrade the amino acid homocysteine and homocystine.

We also own a pending US application and pending foreign counterpart applications directed towards the manufacturing of pegzilarginase, and any patents that issue from these applications will expire in 2040, absent any patent term adjustment or patent term extension.

We are the exclusive licensee of a granted US patent, a pending US application and pending foreign counterpart applications directed towards the AGLE-177 program which covers recombinant human enzymes that degrade the amino acid homocysteine and homocystine.

Any patents that issue from these applications will expire in 2038 absent any patent term adjustment or patent term extension.

We also own a pending PCT patent application directed to a method of treatment for homocystinuria.

Any patents that issue from this application will expire in 2040, absent any patent term adjustment or patent term extension.

We also are the exclusive licensee of US patents and applications, as well as foreign counterpart patents and applications, directed towards modified cystathionine-γ-lyase (CGL) enzymes with activity to degrade plasma cystine and cysteine and the use thereof.

These patents and any further patents issued from these applications will expire variously in 2036, 2037 and 2038, absent any patent term adjustment or patent term extension.

These patents and any further patents issued from these applications will expire variously between 2034 and 2039, absent any patent term adjustment or patent term extension.

We are also the exclusive licensee of US patents and foreign counterpart patents and applications directed towards modified cystathionine-y-lyase (CGL) enzymes with activity to degrade the amino acid methionine.

These patents and any further patents that issue from these applications will expire in 2034, absent any patent term adjustment or patent term extension.

We also license a PCT patent application directed to the Cystinuria program which covers novel recombinant human enzymes that degrade plasma cystine and cysteine, and any patents that issue from this PCT application will expire in 2039 absent any patent term adjustment or patent term extension.

We also license patents that cover engineered human enzymes that target the degradation of the amino acid methionine.

We own four granted US patents and pending US and foreign patent applications directed towards the compositions of the methioninase.

These patents and any

further patents that issue from these applications will expire in 2034, absent any patent term adjustment or patent term extension.

We own four granted US patents and granted foreign counterpart patents, as well as pending US and foreign patent applications directed towards the compositions of the methioninase .

These patents and any further patents that issue from these applications will expire in 2031, absent any patent term adjustment or patent term extension.

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The Restated License was amended in August 2017, December 2017, and December 2018 to revise diligence milestones and license additional patent applications, including our program candidates under the AGLE177 and Cystinuria programs.

including clinical trials and regulatory approvals, the majority of which are due upon the achievement of later development milestones, including a $5.0 million payment due on regulatory approval of a product and a $0.5 million payment payable on final regulatory approval of a product for a second indication.

With respect to each program candidate covered by the Restated License, we could be required to pay the University up to $6.4 million in milestone payments based on the achievement of certain development milestones, including clinical trials and regulatory approvals, the majority of which are due upon the achievement of later development milestones, including a $5.0 million payment due on regulatory approval of a product and a $0.5 million payment payable on final regulatory approval of a product for a second indication.

In addition, we are required to pay the University a low single digit royalty on worldwide-net sales of products covered under the Restated License, together with a revenue share on non-royalty consideration received from sublicensees.

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The University may terminate the agreement under certain circumstances, including for a breach by us that is not cured within 30 or 60 days of notice (depending on the type of breach), or if we or any of our affiliates or sublicensees participate in any proceeding to challenge the licensed patent rights (unless, with respect to sublicensees, we terminate the applicable sublicense).

As of December 31, 2020 , we have paid $0.

2 million under these license agreements.

As of December 31, 2021, we have paid $0.3 million under these license agreements.

Grant Agreement

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Recent advances in gene-based medicine, such as gene therapy have resulted in market approvals of DNA and RNA-based therapeutics in certain rare genetic diseases.

However, no gene therapy drugs have yet to demonstrate clinical success in the type of complex diseases targeted by our research approach with novel enzyme therapeutics.

However, no gene therapy drugs have demonstrated clinical success in the type of complex diseases targeted by our research approach with novel enzyme therapeutics.

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

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It is possible that competitors may produce, develop, and commercialize therapeutics, or utilize other approaches to treat Arginase 1 Deficiency.

The current disease management practice for patients with Arginase 1 Deficiency includes dietary protein restriction, essential amino acid supplementation, and ammonia scavengers .

The dietary restrictions and amino acid supplementation are intended to reduce plasma arginine levels, while ammonia scavengers (such as Horizon Therapeutics’ RAVICTI (glycerol phenylbutyrate) and BUPHENYL (sodium phenylbutyrate)) are used to manage elevated ammonia levels in patients with urea cycle disorders.

The current disease management practice for patients with Arginase 1 Deficiency includes one or more of the following:

dietary protein restriction, essential amino acid supplementation, and ammonia scavengers.

The dietary restrictions with amino acid supplementation are intended to reduce plasma arginine levels, while ammonia scavengers (such as Horizon Therapeutics’ RAVICTI (glycerol phenylbutyrate) and BUPHENYL (sodium phenylbutyrate)) are used to manage elevated ammonia levels in patients with urea cycle disorders.

From a clinical development perspective, Acer Therapeutics Inc.

is developing a taste-masked, immediate-release formulation of sodium phenylbutyrate for the treatment of hyperammonemia, and they recently announced their intent to enter a worldwide development and commercialization agreement with Relief Therapeutics Holding AG.

is developing a taste-masked, immediate-release formulation of sodium phenylbutyrate for the treatment of hyperammonemia, and in 2021 they signed a worldwide development and commercialization agreement with Relief Therapeutics Holding AG, and have disclosed a PDUFA target action date of June 5, 2022.

A small number of companies have an interest in the role of arginine depletion in other therapeutic areas, but we are not aware of any active preclinical or clinical development activities in Arginase 1 Deficiency.

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The primary treatment goal in patients with Homocystinuria is to maintain consistent plasma tHcy levels below the currently defined biochemical targets.

Current disease management practice for the majority of Homocystinuria patients consists of dietary restriction, vitamin B6, B12, folate supplementation, medical foods, and betaine.

Current disease management practice for the majority of Homocystinuria patients consists of dietary restriction, vitamin B6, vitamin B12, folate supplementation, medical foods, and betaine.

CYSTADANE® (betaine anhydrous for oral solution) was approved by the FDA in 1986 for the treatment of Homocystinuria, and Recordati Rare Diseases Inc.

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Travere Therapeutics Inc.

recently acquired Orphan Technologies Ltd., a clinical-stage biopharmaceutical company focused on the development of OT-58 (now TVT-058) for the treatment of Classical Homocystinuria.

Travere is enrolling a Phase 1/2 study of TVT-058, an enzyme replacement therapy in patients with Homocystinuria due to cystathionine β-synthase deficiency and has stated that topline data from this study will be available in 2021.

is focused on the development of pegtibatinase, an enzyme replacement therapy in patients with Homocystinuria due to cystathionine β-synthase deficiency.

Travere released topline data in December 2021 from its Phase 1/2 study of pegtibatinase which showed a 55% reduction in homocysteine at the highest dose cohort (1.5mg/kg, 2x/week).

We are aware of three other investigational therapies in preclinical stages.

The first is Synlogic, studying SYNB1353, an oral synthetic biotic platform that consumes toxic metabololites in the GI tract.

Synlogic presented pre-

clinical data on this molecul e at the I nternational C ongress of I nborn E rrors of M etabolism, or ICIEM, in November 2021.

The second is Codexis, studying CDX-6512, an oral methionine-gamma-lyase enzyme therapy.

Codexis also presented pre-clinical data on this molecul e at ICIEM in November 2021.

Additionally , Erytech Pharma SA has a product candidate for Homocystinuria in preclinical development.

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The Diosynth Agreement

In November 2018, we entered into a master services agreement (Diosynth Agreement) with Fujifilm Diosynth Biotechnologies UK Limited, Fujifilm Diosynth Biotechnologies Texas, LLC, and Fujifilm Diosynth Biotechnologies U.S.A., Inc.

(collectively, Fujifilm).

Under the Diosynth Agreement, Fujifilm provides research, development, testing and

manufacturing services of certain of our products, which are or will be designated as programs pursuant to scope of work agreements.

In November 2018, we entered into a master services agreement, or the Diosynth Agreement, with Fujifilm Diosynth Biotechnologies UK Limited, Fujifilm Diosynth Biotechnologies Texas, LLC, and Fujifilm Diosynth Biotechnologies U.S.A., Inc., collectively, Fujifilm.

Under the Diosynth Agreement, Fujifilm provides research, development, testing and manufacturing services of certain of our products, which are or will be designated as programs pursuant to scope of work agreements.

The fees for such services are or will be set out in each scope of work agreement.

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In most cases, the FDA requires two adequate and well-controlled Phase 3 clinical trials to demonstrate the efficacy of the biologic.

A single Phase 3 trial with other confirmatory evidence may be sufficient in rare instances where the trial is a large multicenter trial demonstrating internal consistency and a statistically very persuasive finding of a clinically meaningful effect on mortality, irreversible morbidity or prevention of a disease with a potentially serious outcome and confirmation of the result in a second trial would be practically or ethically impossible.

A single Phase 3 trial may be sufficient in rare instances where:

(1) the trial is a large multicenter trial demonstrating internal consistency and a statistically very persuasive finding of a clinically meaningful effect on mortality, irreversible morbidity or prevention of a disease with a potentially serious outcome and confirmation of the result in a second trial would be practically or ethically impossible or (2) the trial has a statistically significant finding in combination with other confirmatory evidence.

In addition, the manufacturer of an investigational drug in a Phase 2 or Phase 3 clinical trial for a serious or life-threatening disease is required to make available, such as by posting on its website, its policy on evaluating and responding to requests for expanded access to such investigational drug.

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Fast track designation and accelerated approval

The FDA is required to facilitate the development, and expedite the review, of biologics that are intended for the treatment of a serious or life-threatening disease or condition for which there is no effective treatment and which demonstrate the potential to address unmet medical needs for the condition.

Under the fast track program, the sponsor of a new biologic candidate may request that the FDA designate the candidate for a specific indication as a fast track biologic concurrent with, or after, the filing of the IND for the candidate.

The FDA must determine if the biologic candidate qualifies for fast track designation within 60 days of receipt of the sponsor’s request.

The FDA is required to facilitate the development, and expedite the review, of drugs or biologics that are intended for the treatment of a serious or life-threatening disease or condition for which there is no effective treatment and which demonstrate the potential to address unmet medical needs for the condition.

Under the fast track program, the sponsor of a new product candidate may request that the FDA designate the candidate for a specific indication as a fast track biologic concurrent with, or after, the filing of the IND for the candidate.

The FDA must determine if the product candidate qualifies for fast track designation within 60 days of receipt of the sponsor’s request.

In addition to other benefits such as the ability to engage in more frequent interactions with the FDA, the FDA may initiate review of sections of a fast track product’s BLA before the application is complete.

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Additionally, the fast track designation may be withdrawn by the FDA if the FDA believes that the designation is no longer supported by data emerging in the clinical trial process.

Under the FDA’s accelerated approval regulations, the FDA may approve a biologic for a serious or life-threatening illness that provides meaningful therapeutic benefit to patients over existing treatments based upon a surrogate endpoint that is reasonably likely to predict clinical benefit, or on a clinical endpoint that can be measured earlier than irreversible morbidity or mortality, that is reasonably likely to predict an effect on irreversible morbidity or mortality or other clinical benefit, taking into account the severity, rarity, or prevalence of the condition and the availability or lack of alternative treatments.

Under the FDA’s accelerated approval regulations, the FDA may approve a drug or biologic for a serious or life-threatening illness that provides meaningful therapeutic benefit to patients over existing treatments based upon a surrogate endpoint that is reasonably likely to predict clinical benefit, or on a clinical endpoint that can be measured earlier than irreversible morbidity or mortality, that is reasonably likely to predict an effect on irreversible morbidity or mortality or other clinical benefit, taking into account the severity, rarity, or prevalence of the condition and the availability or lack of alternative treatments.

In clinical trials, a surrogate endpoint is a measurement of laboratory or clinical signs of a disease or condition that substitutes for a direct measurement of how a patient feels, functions, or survives.

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Failure to conduct required post-approval trials, or confirm a clinical benefit during post-marketing trials, will allow the FDA to withdraw the biologic from the market on an expedited basis.

All promotional materials for biologic candidates approved under accelerated regulations are subject to prior review by the FDA.

All promotional materials for product candidates approved under accelerated regulations are subject to prior review by the FDA.

The FDA may also grant a full approval to a drug or biologic based on a surrogate endpoint when the surrogate biomarker is validated, allowing it to be used in place of a clinical outcome.

Validated surrogate endpoints must undergo extensive testing in clinical trials to show they can be relied upon to predict clinical benefit, which is more rigorous than the testing needed to demonstrate that a surrogate endpoint is reasonably likely to predict clinical benefit to support an accelerated approval.

Breakthrough therapy designation

The FDA is also required to expedite the development and review of the application for approval of biological products that are intended to treat a serious or life-threatening disease or condition where preliminary clinical evidence indicates that the biologic may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints.

Under the breakthrough therapy program, the sponsor of a new biologic candidate may request that the FDA designate the candidate for a specific indication as a breakthrough therapy concurrent with, or after, the filing of the IND for the biologic candidate.

The FDA must determine if the biological product qualifies for breakthrough therapy designation within 60 days of receipt of the sponsor’s request.

The FDA is also required to expedite the development and review of the application for approval of drug or biological products that are intended to treat a serious or life-threatening disease or condition where preliminary clinical evidence indicates that the biologic may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints.

Under the breakthrough therapy program, the sponsor of a new product candidate may request that the FDA designate the candidate for a specific indication as a breakthrough therapy concurrent with, or after, the filing of the IND for the biologic candidate.

The FDA must determine if the product qualifies for breakthrough therapy designation within 60 days of receipt of the sponsor’s request.

Additionally, the breakthrough therapy designation may be withdrawn by the FDA if the FDA believes that the designation is no longer supported by data emerging in the clinical trial process, including considering any new drug or biologic approvals that later the unmet medical need.

Orphan drug designation

Under the Orphan Drug Act, the FDA may grant orphan drug designation to biological products intended to treat a rare disease or condition—generally a disease or condition that affects fewer than 200,000 individuals in the United States, or if it affects more than 200,000 individuals in the United States, there is no reasonable expectation that the cost of developing and making a product available in the United States for such disease or condition will be recovered from sales of the product.

Under the Orphan Drug Act, the FDA may grant orphan drug designation to drug or biological products intended to treat a rare disease or condition—generally a disease or condition that affects fewer than 200,000 individuals in the United States, or if it affects more than 200,000 individuals in the United States, there is no reasonable expectation that the cost of developing and making a product available in the United States for such disease or condition will be recovered from sales of the product.

Orphan drug designation must be requested before submitting a BLA.

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A product is clinically superior if it is safer, more effective or makes a major contribution to patient care.

Orphan drug exclusivity does not prevent the FDA from approving a different drug or biological product for the same disease or condition, or the same biological product for a different disease or condition.

Orphan drug exclusivity does not

prevent the FDA from approving a different drug or biological product for the same disease or condition, or the same biological product for a different disease or condition.

Among the other benefits of orphan drug designation are tax credits for certain research and a waiver of the BLA user fee.

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A biosimilar product may be deemed interchangeable with a prior approved product if it meets the higher hurdle of demonstrating that it can be expected to produce the same clinical results as the reference product and, for products administered multiple times, the biologic and the reference biologic may be switched after one has been previously administered without increasing safety risks or risks of diminished efficacy relative to exclusive use of the reference biologic.

The first biosimilar was approved by FDA in 2015, and no interchangeable products have been approved under the BPCIA.

The FDA has approved numerous biosimilar products, and in 2021 approved the first interchangeable product under the BPCIA.

Complexities associated with the larger, and often more complex, structures of biological products, as well as the process by which such products are manufactured, pose significant hurdles to implementation, which is still being evaluated by the FDA.

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If the FDA concludes that the applicable criteria have been met, the FDA will issue a PMA for the approved indications, which can be more limited than those originally sought by the applicant.

The PMA can include post-approval conditions that the FDA believes necessary to ensure the safety and effectiveness of the device, including, among other things, restrictions on labeling, promotion, sale and distribution.

The PMA can include post-approval conditions that the FDA believes necessary to ensure the safety and effectiveness of the device, including, among other things, additional testing and/or restrictions on labeling, promotion, sale and distribution.

After a device is placed on the market, it remains subject to significant regulatory requirements.

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Device manufacturers must also register their establishment(s), including payment of an annual establishment registration fee, and list their device(s) with the FDA.

A medical device manufacturer’s manufacturing processes and those of its suppliers are required to comply with the applicable portions of the QSR, which cover the methods and documentation of the design, testing, production, processes, controls, quality assurance, labeling, packaging and shipping of medical devices.

Domestic facility records and manufacturing processes are subject to periodic unscheduled inspections by the FDA.

The FDA also may inspect foreign facilities that export products to the United States.

A medical device manufacturer’s manufacturing processes, and the processes of the device specification developer and repackager/relabeler (if different from the manufacturer) and initial importer (if manufactured outside of the

United States), are required to comply with the applicable portions of the QSR, which cover the methods and documentation of the design, testing, production, processes, controls, quality assurance, labeling, packaging and shipping of medical devices.

F acility records and manufacturing processes are subject to periodic unscheduled inspections by the FDA.

healthcare laws and compliance requirements

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We may be subject to data privacy and security regulations by both the federal government and the states in which we conduct our business.

HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, or HITECH, and its implementing regulations, imposes requirements relating to the privacy, security and transmission of individually identifiable health information.

identifiable health information.

Among other things, HITECH makes HIPAA’s privacy and security standards directly applicable to business associates, independent contractors or agents of covered entities that receive or obtain protected health information in connection with providing a service on behalf of a covered entity.

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In addition, state laws govern the privacy and security of health information in specified circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts.

Additionally, the federal Physician Payments Sunshine Act within the ACA, and its implementing regulations, require that certain manufacturers of drugs, devices, biological and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) to report information related to certain payments or other transfers of value made or distributed to physicians and teaching hospitals, or to entities or individuals at the request of, or designated on behalf of, the physicians and teaching hospitals and to report annually certain ownership and investment interests held by physicians and their immediate family members.

Additionally, the federal Physician Payments Sunshine Act within the ACA, and its implementing regulations, require that certain manufacturers of drugs, devices, biological and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) to report information related to certain payments or other transfers of value made or distributed to physicians, physician assistants, certain advanced care nurses and teaching hospitals, or to entities or individuals at the request of, or designated on behalf of, the physicians and teaching hospitals and to report annually certain ownership and investment interests held by physicians and their immediate family members.

The reported data are posted in searchable form on a public website on an annual basis.

Failure to submit required information may result in civil monetary penalties.

Effective January 1, 2022, we will also be required to report on transfers of value to physician assistants, nurse practitioners or clinical nurse specialists, certified registered nurse anesthetists, and certified nurse-midwives.

In order to distribute products commercially, we must comply with state laws that require the registration of manufacturers and wholesale distributors of drug and biological products in a state, including, in certain states, manufacturers and distributors who ship products into the state even if such manufacturers or distributors have no place of business within the state.

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Different pricing and reimbursement schemes exist in other countries.

In the EU, governments influence the price of pharmaceutical products through their pricing and reimbursement rules and control of national health care systems that fund a large part of the cost of those products to consumers.

In the EU, governments influence the price of pharmaceutical products through their pricing and reimbursement rules and control of national health care systems that

fund a large part of the cost of those products to consumers.

Some jurisdictions operate positive and negative list systems under which products may only be marketed once a reimbursement price has been agreed.

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Healthcare reform

The ACA has substantially changed some aspects of healthcare financing and delivery by both governmental and private insurers.

The ACA has affected existing government healthcare programs and resulted in the development of new programs.

Among the ACA provisions of importance to the pharmaceutical and biotechnology industries, in addition to those otherwise described above, are the following:

an annual, nondeductible fee on any entity that manufactures or imports certain specified branded prescription drugs and biologic agents apportioned among these entities according to their market share in some government healthcare programs, that began in 2011;

an increase in the statutory minimum rebates a manufacturer must pay under the Medicaid Drug Rebate Program, retroactive to January 1, 2010, to 23.1% and 13% of the average manufacturer price for most branded and generic drugs, respectively and capped the total rebate amount for innovator drugs at 100% of the Average Manufacturer Price, or AMP;

a Medicare Part D coverage gap discount program, in which manufacturers must agree to offer 70% point-of-sale discounts off negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period, as a condition for the manufacturers’ outpatient drugs to be covered under Medicare Part D;

extension of manufacturers’ Medicaid rebate liability to covered drugs dispensed to individuals who are enrolled in Medicaid managed care organizations;

expansion of eligibility criteria for Medicaid programs by, among other things, allowing states to offer Medicaid coverage to additional individuals beginning in 2014 and by adding new mandatory eligibility categories for individuals with income at or below 133% of the federal poverty level, thereby potentially increasing manufacturers’ Medicaid rebate liability;

expansion of the entities eligible for discounts under the Public Health Service pharmaceutical pricing program;

a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research.

On January 20, 2017, federal agencies with authorities and responsibilities under the ACA were directed to waive, defer, grant exemptions from, or delay the implementation of any provision of the ACA that would impose a fiscal burden on states or a cost, fee, tax, penalty or regulatory burden on individuals, healthcare providers, health insurers, or manufacturers of pharmaceuticals or medical devices.

More recently, the Tax Cuts and Jobs Act was signed into law in December 2017, which eliminated certain requirements of the ACA, including the individual mandate.

It is unclear the impact this legislation will have on the ACA because a decision regarding the constitutionality of the ACA after the repeal of the individual mandate was ultimately appealed to the United States Supreme Court.

On November 10, 2020, oral arguments were heard in this case.

It is unclear when a decision will be made.

We cannot predict whether challenges to the ACA will continue or whether other proposals will be made or adopted, or what impact these efforts may have on us.

Healthcare reforms that have been adopted, and that may be adopted in the future, could result in further reductions in coverage and levels of reimbursement for pharmaceutical products, increases in rebates payable under U.S.

government rebate programs and additional downward pressure on pharmaceutical product prices.

On September 9, 2021, the Biden administration published a wide-ranging list of policy proposals, most of which would need to be carried out by Congress, to reduce drug prices and drug payment.

The HHS plan includes, among other reform measures, proposals to lower prescription drug prices, including by allowing Medicare to negotiate prices and disincentivizing price increases, and to support market changes that strengthen supply chains, promote biosimilars and generic drugs, and increase price transparency.

Many similar proposals, including the plans to give Medicare Part D authority to negotiate drug prices, require drug manufacturers to pay rebates on drugs whose prices increase greater than the rate of inflation, and cap out-of-pocket costs, have already been included in policy statements and legislation currently being considered by Congress.

It is unclear to what extent these and other statutory, regulatory, and administrative initiatives will be enacted and implemented.

The Foreign Corrupt Practices Act

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Certain countries outside of the United States have a similar process that requires the submission of a clinical trial application much like the IND prior to the commencement of human clinical trials.

In the EU, for example, a clinical trial application must be submitted to each country’s national health authority and an independent ethics committee, much like the FDA and IRB, respectively.

In the EU, for example, a clinical trial application must be submitted to each country’s national health authority and an independent ethics committee, much like the FDA and IRB,

respectively.

Once the clinical trial application is approved in accordance with a country’s requirements, clinical trial development may proceed.

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

What changed 10-K

Item 1. Business