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Item 1. Business

2023-03-09 compared with 2022-03-11 · 531 added, 403 removed, 170 unchanged (85% of the section changed)

Company Overview

We are a biotechnology company advancing new treatments for patients with serious diseases that are underserved by today’s therapies.

Marketed therapies often leave room for improvements in efficacy, safety, and/or dosing convenience.

We believe that first-generation drugs rarely represent optimal solutions and that the potential exists to develop alternatives that improve patient outcomes, moderate side effects, enhance quality of life, ease access, and augment market competition.

Our business model is to identify product opportunities in indications for which clinical trial data demonstrating compelling proof of concept for a targeted mechanism of action already exists, but the competitive evolution of product profiles and number of entrants appears incomplete.

We intend to prioritize indications where fast-follower and bio superior competition could create significant medical benefit for patients.

We are engineering medicines to advance patient care.

We intend to identify and evaluate product concepts leveraging clinically validated molecular targets using established therapeutic modalities.

We prioritize product concepts aligned with clinical and commercial hypotheses that we expect will provide an attractive balance of risk and opportunity, thereby representing a compelling allocation of our resources.

We are a biopharmaceutical company focused on discovering and developing potential best-in-class medicines for serious and rare diseases.

We target under-competitive disease areas where marketed therapies often leave room for improvements in efficacy, safety, and/or dosing convenience.

We believe that first-generation medicines rarely represent optimal solutions, especially in rare disease areas, and that there is potential to develop differentiated, best-in-class medicines that could lead to improved patient outcomes, reduced side effects, improved quality of life, expanded market access, and augmented market competition.

Our business model is designed to identify and evaluate product opportunities in disease areas where trial data establishes proof-of-concept for a drug target in the clinic, but the competitive evolution of the product life cycle management and number of entrants appears incomplete.

We intend to prioritize indications where a fast-follower and a potentially differentiated drug candidate, or overall product profile, could create significant medical benefit for patients.

We are engineering medicines to address unmet medical needs for patients and further advance drug innovation.

Our goal is to identify and evaluate product concepts leveraging clinically validated molecular targets using established therapeutic modalities.

We prioritize product concepts that are aligned with clinical and commercial hypotheses, which we expect will provide an attractive balance of risk and opportunity, thereby representing a compelling allocation of our resources.

We focus on advancing therapeutic antibodies that we either in-license or discover internally, incorporating proprietary monoclonal antibody discovery and optimization platforms to advance clinical candidates with unique characteristics.

To date, this approach has led us to initiate research and development programs for therapeutic monoclonal antibodies for serious diseases.

We have built relevant expertise in monoclonal antibody discovery and engineering, biologics manufacturing, and nonclinical and clinical development for thyroid eye disease (“TED”) and other undisclosed target indications.

Our approach to rapidly discovering and developing novel therapeutics relies on our scientific expertise in evaluating pre-existing proof of concept data for the targets we are pursuing and opportunities to improve upon existing investigational and/or approved therapies.

This approach informs how we design, select, and develop our product candidates, including in such critical areas as pharmacokinetics, pharmacodynamics, trial endpoints, and the selection and enrollment of patients.

Our approach to rapidly discovering and developing novel therapeutics relies on our scientific expertise in evaluating pre-existing clinical proof-of-concept data for the drug targets we are pursuing, and opportunities to improve upon existing investigational and/or approved therapies.

This approach informs how we design, select, and develop our product candidates, including in critical areas such as pharmacokinetics, pharmacodynamics, clinical trial design, trial endpoints, and the selection and recruitment of patients.

We believe this strategy reduces the risks associated with discovering and developing novel therapeutics.

We have prioritized the development of therapies for TED, a debilitating auto-immune disease that causes inflammation and fibrosis of the orbit and tissues surrounding the eye and which can lead to proptosis, or bulging of the eyes, redness and swelling, double vision, pain, and potential blindness.

TED significantly impacts quality of life, imposing a high physical and mental burden on patients.

The only therapy approved by the U.S.

We have initially prioritized the development of therapies for the treatment of TED, a serious and debilitating rare autoimmune disease that causes inflammation within the orbit of the eye that can cause bulging of the eyes, redness and swelling, double vision, pain, and potential blindness.

TED significantly impacts quality of life, imposing a high burden on activities of daily living and mental health for patients suffering from the disease.

TED is a progressive disease consisting of an initial active phase, followed by a transition to a secondary chronic phase.

The only medicine approved by the U.S.

Food and Drug Administration (“FDA”) for TED is Tepezza® (teprotumumab), which is an intravenously administered monoclonal antibody that targets insulin-like growth factor 1 receptor (“IGF-1R”).

Tepezza® is marketed in the United States by Horizon Therapeutics plc.

The reported results obtained with teprotumumab provide strong clinical validation linking the targeting of IGF-1R to clinical benefit in TED.

However, clinical trials of teprotumumab in TED reported to date used a single dosing regimen, providing little guidance as to the optimal dosing required for clinical activity in TED.

The results from clinical trials of teprotumumab conducted by Horizon provide strong clinical validation linking the targeting of IGF-1R to clinical benefit in patients with TED.

However, clinical trials evaluating teprotumumab in patients with TED reported to date used a single dosing regimen, providing little guidance as to the optimal dosing required for clinical activity in TED.

We believe that there are multiple opportunities to develop fast-follower therapeutics that improve on teprotumumab’s features, including dosing schedule and route of administration.

We are developing two product candidates, VRDN-001 and VRDN-002, to treat patients who suffer from TED.

Our most advanced program, VRDN-001, is a differentiated humanized monoclonal antibody targeting IGF-1R for the treatment for TED.

This antibody was previously studied in over 100 oncology patients as AVE-1642.

The pharmacokinetics, pharmacodynamics, safety, and tolerability data from that clinical program has informed our plans to evaluate VRDN-001 in TED.

In November 2021, we opened an investigational new drug (“IND”) application for VRDN-001 as a new molecular entity and in December 2021, we initiated a Phase 1/2 clinical trial of VRDN-001, which will evaluate proof of concept in TED patients.

Initial proof of concept data in patients are expected in the second quarter of 2022.

VRDN-002, a distinct IGF-1R antibody that incorporates half-life extension technology, is designed to support administration as a convenient, low volume, subcutaneous injection to treat patients who suffer from TED.

In January 2022, we announced FDA clearance of our IND application for VRDN-002.

During the first quarter of 2022, we expect to initiate a Phase 1 single ascending dose trial to explore safety, tolerability, pharmacokinetics, and pharmacodynamic properties of intravenously administered VRDN-002 in healthy volunteers.

Data from this Phase 1 trial will allow us to evaluate the feasibility of a low-volume dosing paradigm and are expected to be announced in mid-2022.

Pending results, we then plan to evaluate the potential efficacy of a low volume subcutaneous injection of VRDN-002 in TED patients.

In addition to developing therapies for TED, we are executing a similar strategic approach to identify opportunities to develop fast-follower therapies in other rare and/or serious disease indications.

We intend to identify and initiate additional programs over time and plan to disclose these when we are closer to initiating clinical trials in these programs.

Our mission is to create and advance new biologic treatments for patients suffering from serious diseases that are underserved by today’s therapies.

We are engineering antibodies to develop best-in-class therapies that improve patient care.

We are developing three product candidates, VRDN-001, VRDN-002, and VRDN-003, that are being developed for intravenous (“IV”) or subcutaneous administration to treat patients who suffer from TED.

Our most advanced program, VRDN-001, is a differentiated humanized monoclonal antibody targeting IGF-1R intravenously administered for the treatment for TED.

In October 2022, we presented preclinical data from in-vitro studies demonstrating that VRDN-001 is a potentially differentiated full antagonist of IGF-1R, compared to teprotumumab’s incomplete antagonism of IGF-1R.

In addition, the Phase 1/2 clinical data reported from all three dose cohorts of VRDN-001 in patients with active TED (n=21), showed significant and rapid improvement in both signs and symptoms of TED after two infusions of VRDN-001.

Across all VRDN-001 treated patients in the trial, 71% were proptosis responders, 67% were overall responders, 62% achieved a clinical activity score (“CAS”) of 0 or 1, and 54% had complete resolution of their diplopia.

VRDN-001 had a favorable safety profile and was well-tolerated by all patients treated in the three dose cohorts.

We believe the data further validate the differentiated and potentially best-in-class clinical activity of VRDN-001.

In December 2022, we announced that we enrolled our first patient in our ongoing THRIVE Phase 3 trial (“THRIVE”) evaluating the safety and efficacy of VRDN-001 in patients with active TED.

THRIVE is a double-blind, placebo-controlled, randomized study enrolling approximately 120 patients with active TED.

The study participants will be randomized 1:1:1 across three arms:

(1) VRDN-001 10 mg/kg administered once every three weeks for eight cycles, (2) a shortened course of VRDN-001 10 mg/kg administered once every three weeks for five cycles, and (3) a placebo arm.

THRIVE will be conducted in approximately 50 centers across North America and Europe.

We expect to report topline results for the THRIVE trial in the middle of 2024.

Data from the proof-of-concept Phase 1/2 trial evaluating the safety and efficacy of VRDN-001 in patients with chronic TED is expected in the second quarter of 2023.

Following the release of the data, we are planning to initiate a global Phase 3 trial in patients with chronic TED called THRIVE-2.

We expect that the THRIVE and THRIVE-2 Phase 3 trials will support global health authority registration for marketing approval in both active and chronic TED, respectively.

The low-dose data of VRDN-001 in patients with active TED support the potential for VRDN-001 to also be administered as a convenient, low volume, subcutaneous pen.

We plan to initiate a Phase 1 trial of subcutaneously administered VRDN-001 in healthy volunteers, with results expected in the fourth quarter of 2023.

VRDN-002, a distinct IGF-1R antibody that incorporates half-life extension technology, is designed to support administration as a convenient, low volume, subcutaneous pen injection to treat patients who suffer from TED.

Data reported from the Phase 1 trial in healthy volunteers, showed that VRDN-002 achieved an extended half-life of up to 43 days.

VRDN-002 had a favorable safety profile and was well-tolerated.

We are currently planning a Phase 2 trial to evaluate the safety and efficacy of a low volume subcutaneous injection of VRDN-002 in patients with active TED.

VRDN-003 is an anti-IGF-1R monoclonal antibody with the same amino acid sequence as VRDN-001, except for the addition of the same half-life extension technology that has been incorporated into VRDN-002.

We plan to submit an investigational new drug (“IND”) application for VRDN-003 with the FDA in the second quarter of 2023.

Following FDA acceptance of the IND, we plan to initiate a Phase 1 trial of VRDN-003 in healthy volunteers, with results expected in the fourth quarter of 2023.

Our most recent pharmacokinetic (“PK”) modeling supports the feasibility of ongoing development of a self-administered pen for subcutaneous administration, and a planned dosing interval of up to once-monthly for VRDN-001, VRDN-002 and VRDN-003.

Following clinical results expected by year-end 2023, we expect to select VRDN-001, VRDN-002 or VRDN-003 as our lead subcutaneous program to advance to a pivotal Phase 3 trial in the middle of 2024.

In addition to developing therapies for TED, we are executing a similar strategic approach to identify opportunities to develop more convenient, better performing therapeutic candidates in other rare and/or serious disease indications.

We are currently advancing three preclinical programs, VRDN-004, VRDN-005, and VRDN-006.

We plan to disclose additional details around at least one of these preclinical programs in 2023.

Our mission is to create and advance new biologic medicines for patients suffering from serious and rare diseases that are underserved by today’s therapies.

Key elements of our business strategy are to:

• Identify opportunities to engineer and develop monoclonal antibodies that optimize patient care.

Our pipeline of therapeutics programs represents a patient-centric model of innovation that leverages proven biology and antibody technology to reduce research and development risk, while striving to address strategic gaps related to access, delivery, quality of life, efficacy, and/or safety and tolerability in targeted therapeutic areas.

• Evaluate opportunities to identify, engineer, and develop potential best-in-class monoclonal antibodies that optimize patient care.

Our pipeline of therapeutic programs represents a patient-centric model of innovation that leverages proven biology and antibody technology to reduce research and development risk, while striving to address strategic gaps related to access, delivery, quality of life, efficacy, and/or safety and tolerability in targeted therapeutic areas.

Our multidisciplinary search process evaluates scientific and clinical validation of therapeutic targets, market potential, and feasibility of efficiently developing a competitive product.

• Focus on Thyroid Eye Disease (TED) :

• Initial clinical development and commercial focus on thyroid eye disease (TED) :

◦ Rapidly advance VRDN-001 clinical development to enter the TED market quickly.

Our ongoing clinical trial for VRDN-001 is a Phase 1/2 proof of concept trial that includes multiple randomized, placebo-controlled cohorts of TED patients designed to assess the potential for VRDN-001 to provide improvement of signs and symptoms of TED, including proptosis.

We expect to announce top-line data from the proof-of-concept portion of the trial in the second quarter of 2022.

Our ongoing THRIVE Phase 3 clinical trial is a double-blind, placebo-controlled, randomized study evaluating the safety and efficacy of VRDN-001 in patients with active TED.

We expect data from the ongoing Phase 1/2 proof-of concept trial evaluating VRDN-001 in patients with chronic TED in the second quarter of 2023.

Following the release of the data, we are planning to initiate a global Phase 3 trial in patients with chronic TED called

We expect that the THRIVE and THRIVE-2 Phase 3 trials will support global health authority registration for marketing approval in active and chronic TED, respectively.

◦ Offer patients suffering from TED improved convenience and broader settings of care.

Our next generation IGF-1R antibody, VRDN-002, is a humanized monoclonal antibody that incorporates half-life extension technology and is designed to support administration as a convenient, low-volume, subcutaneous injection for the treatment of TED.

We expect to initiate our first-in-human Phase 1 clinical trial of VRDN-002 in the first quarter of 2022, and to announce data from this trial in mid-2022.

The results from this Phase 1 clinical trial will inform the feasibility of a low-volume and/or low-frequency, subcutaneous dosing paradigm for the treatment of TED.

Our next generation IGF-1R antibodies, VRDN-002 and VRDN-003, are humanized monoclonal antibodies that incorporate half-life extension technology and are designed as a self-administered low-volume, subcutaneous pen injection for the treatment of TED.

Low-dose data of VRDN-001 administered intravenously support its potential as a subcutaneous candidate.

Our most recent PK modeling for VRDN-001, VRDN-002, and VRDN-003 supports a planned dosing interval of up to once-monthly.

Following data expected by the end of 2023 from the ongoing clinical trials of VRDN-001, VRDN-002 and VRDN-003, we expect to select one of the programs as our lead subcutaneous product candidate by year-end 2023.

We plan to advance our selected lead subcutaneous program into a pivotal Phase 3 trial in the middle of 2024.

◦ Be a trusted partner in the care of TED patients.

We plan to cultivate a network across TED stakeholders to inform our patient centric approach, including with patients / patient advocacy groups, key opinion leaders, research institutions, healthcare professionals and payers.

◦ Prepare for commercialization of VRDN-001 and VRDN-002 for TED.

We hold worldwide commercialization rights, excluding the greater area of China, to both VRDN-001 and VRDN-002 as well as our other product candidates.

We plan to cultivate a network across TED stakeholders to inform our patient-centric approach, including with patients and advocacy groups, key opinion leaders, research institutions, healthcare professionals and payers.

◦ Prepare for commercialization of the intravenously administered VRDN-001 and one of our subcutaneously administered candidates, VRDN-001, VRDN-002, or VRDN-003, for the treatment of patients with TED.

We hold worldwide commercialization rights, excluding the greater area of China, to VRDN-001, VRDN-002, and VRDN-003.

As a result, we have the flexibility to develop and potentially commercialize products ourselves, or alternatively to enter collaborations with industry partners.

• Expand our portfolio beyond TED with strategically aligned opportunities.

• Expand our portfolio beyond TED with strategically aligned opportunities in rare and autoimmune diseases.

We believe there are significant opportunities to provide more convenient, better performing products compared to therapeutics approved or in development for several diseases.

To that end, we continue to invest in portfolio expansion and have dedicated resources to seek additional opportunities to develop best-in-class therapeutics for newly validated targets.

VRDN-004 and VRDN-005 are discovery-stage therapeutic antibody programs for undisclosed diseases.

In our VRDN-004 program, we are currently characterizing leads derived from hit molecules discovered internally.

In our VRDN-005 program, we are targeting opportunities to advance new best-in-class therapeutics.

As part of that effort, we have licensed certain antibody libraries from Xencor, Inc., pursuant to a license agreement we entered into with them in December 2021.

VRDN-004, VRDN-005, and VRDN-006 are preclinical-stage therapeutic antibody programs for undisclosed rare and autoimmune diseases.

• Leverage our therapeutic antibody and multi-disciplinary search expertise to continue discovering and developing novel, best-in class product candidates.

We plan to continue to identify and advance novel product candidates and technologies to generate best in class antibody therapeutics, either internally or through in-licensing.

We are currently evaluating a number of disease targets and therapeutic candidates with the aim of advancing a steady pipeline of best-in-class product candidates from discovery and preclinical research into clinical trials.

We plan to continue to identify and advance novel product candidates and technologies to generate potential best-in-class antibody therapeutics, either internally or through in-licensing.

We continue to identify and evaluate several disease targets and therapeutic candidates with the aim of advancing a steady pipeline of best-in-class product candidates from discovery and preclinical research into clinical trials.

Thyroid Eye Disease (TED)

TED, commonly associated with Graves’ Disease, is a sight-threatening autoimmune disorder affecting the eye and tissue adjacent to the eye.

Initial symptoms include a dry and gritty ocular sensation, sensitivity to light, excessive tearing, double vision, and a sensation of pressure behind the eyes, commonly associated with ocular pain.

By the time TED is clinically diagnosed, most patients have retraction of their upper eyelids causing exposure of the cornea and ensuing dryness resulting in further inflammatory changes and increased symptomatology.

In addition, TED causes soft tissue swelling, redness surrounding the eyes and protrusion of the eyes from their normal position within the orbit – proptosis.

As these inflammatory changes progress, they lead to increased erythema, redness, edema, and hemorrhagic appearance of the tissues external to the globe, adding to the symptoms of TED and exacerbating signs.

As the fibrocytes within the orbit become further involved, changes unfold within the extraocular muscles themselves - those muscles within the orbit that move the eye and hold the globe in positions of gaze.

The size of the muscles increases further exacerbating the proptosis and causing a cascade of increasing inflammation and worsening of symptoms.

As the swelling and stiffness of the muscles increase, they exert a tethering effect upon the globe, and ocular motility is disturbed.

Commonly, gaze becomes limited as the eyes become tethered by fibrotic and thickened muscles.

As the process is not perfectly symmetric, one orbit to the other, the eyes may have differing motility and no longer line up perfectly with each other, causing a misalignment of position that is perceived by the patient as double vision, or diplopia.

Diplopia in and of itself is a disabling condition that dramatically interferes with most activities of daily living.

Patients cannot easily read, drive, navigate ambulation, or often continue in their current work.

As the volume of tissue within the fixed bony orbit increases, the inflammatory mass squeezes upon and compresses the optic nerve, which must pass through this space from globe to optic canal and central nervous system.

This compression causes loss of central vision, color vision, and visual field and can progress to loss of acuity and eventual blindness.

TED, commonly associated with Graves’ Disease, and in some cases referred to as Graves’ orbitopathy, is a serious and rare autoimmune disorder affecting the eye and its adjacent tissue.

It is characterized by inflammation within the orbit of the eye that can cause bulging of the eyes, redness and swelling, double vision, pain, and potential blindness.

TED is a progressive disease consisting of an initial active phase, followed by a transition to a secondary chronic phase.

In the active phase of TED, patients present with several inflammatory signs and symptoms such as pain, redness, swelling, proptosis, diplopia, and eyelid retraction.

The active phase is generally defined as the first 18 to 24 months of disease onset, and is typically when inflammatory signs and symptoms reach their peak levels.

The second, chronic phase of TED is characterized by a reduction in some of the inflammatory signs, such as redness and swelling in the area surrounding the eye, compared to the active phase of the disease.

However, proptosis, pain, diplopia, and eyelid retraction often persist throughout life for patients with chronic TED.

Patients with active and chronic TED experience significant impairment to their quality of life, including difficulties activities of daily living, trouble functioning in social situations, and decreased psychological well-being.

About one in every three patients experience anxiety and depression.

Pathologies Leading to the Development of TED

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One potential cause of TED is autoimmune antibodies against IGF-1R that lead to the activation of IGF-1R, resulting in increased proliferation, secretion of extracellular complex carbohydrates, and differentiation into fat cells.

These antibodies, and autoimmune antibodies to TSHR, can elicit an immune attack against the fibrocytes that surround the eye triggering the development of TED.

These antibodies, and

autoimmune antibodies to TSHR, can elicit an immune attack against the fibrocytes that surround the eye triggering the development of TED.

Inflammation associated with this attack combined with activation of IGF-1R leads to the wide spectrum of pathologies seen with this disease.

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Current Treatments for TED

Prior to 2020, moderate to severe cases of TED were treated off-label with steroids - as daily doses of oral prednisone, or in more severe cases, weekly doses of intravenous methylprednisolone.

Prior to 2020, moderate to severe cases of TED were treated off-label with steroids as daily doses of oral prednisone, or in more severe cases, weekly doses of IV methylprednisolone.

Treatment with steroids is associated with a wide range of serious complications including high blood pressure, diabetes, psychological effects, personality change, insomnia, skin thinning, immunosuppression, hyperglycemia, and increased risks of infections.

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TED has an annual incidence of approximately 19 in 100,000 people, which corresponds to over 60,000 patients in the United States.

Of these, it is estimated that between 20,000 and 25,000 patients in the United States have acute disease that requires intravenous treatment, either with teprotumumab or steroids.

At launch, Horizon Therapeutics plc announced a price of $14,900 per vial of Tepezza ® which translates to a list price of approximately $343,000 for a six-month course of therapy.

Horizon Therapeutics plc reported full-year 2020 and 2021 net sales for Tepezza ® of $820 million and $1.66 billion, respectively, in the first two years of launch.

We believe this demonstrates that TED is a multi-billion dollar market that will accommodate multiple entrants.

Of these, it is estimated that more than 20,000 patients in the United States have moderate to severe active disease that requires IV treatment, either with teprotumumab or steroids.

In the secondary chronic phase of the disease, it is estimated that more than 75,000 patients in the United States are living with moderate to severe disease.

At launch, Horizon Therapeutics plc announced a price of approximately $16,300 per vial of Tepezza® which translates to a list price of approximately $375,000 based on patient weight for a six-month course of therapy.

In the first three years following launch, Horizon Therapeutics plc reported full-year 2020, 2021, and 2022 net sales for Tepezza® of $820.0 million, $1.66 billion, and $2.0 billion, respectively, in the first three years of launch.

This demonstrates that TED is a multi-billion-dollar market in the United States alone, with the potential for additional revenue in the United States with indication expansion to chronic TED and more convenient routes of administration.

There is also potential for additional revenue following regulatory approvals and commercial expansion outside of the United States, which will accommodate multiple entrants.

Our Product Candidates

The clinical results from teprotumumab serve to validate the role of anti-IGF-1R antibodies in the treatment of TED.

The clinical data for teprotumumab in TED highlights the opportunity to rapidly develop product candidates that work through a similar mechanism.

First, the majority of TED patients in a clinical trial of teprotumumab responded to treatment, which implies that, in clinical testing of a different IGF-1R antibody, it should be possible to detect clinical signs of improvement in a relatively small cohort of patients.

Second, significant improvements in proptosis were observed within six weeks of dosing, providing the potential to quickly determine if a product candidate is likely to be effective.

In addition, clinical trials for teprotumumab in TED did not explore the dose-dependency of the clinical response with the single teprotumumab dosing regimen selected based on data generated in oncology clinical trials, providing an opportunity to alter the dosing schedule, dosing duration, or route of administration while maintaining or improving efficacy, safety, and/or tolerability.

VRDN-001 is a monoclonal antibody that binds and blocks the IGF-1R signaling pathway with sub-nanomolar affinity.

This mechanism of action is clinically and commercially validated for the treatment of TED (see Figure 1 below).

We are aiming for VRDN-001 to be second to market in this class, with the opportunity to offer less burdensome intravenous (“IV”) dosing, as well as potential to achieve a subcutaneous product presentation that could simplify patient care by obviating the need for infusion center visits, thereby enabling administration in the prescriber’s office, or even potentially at home.

Teprotumumab led to significant reductions in proptosis in as early as six weeks of dosing.

We have an exclusive license to the worldwide rights to develop and commercialize VRDN-001 for all non-oncology indications that do not use radiopharmaceuticals, including the treatment of TED, from ImmunoGen.

This antibody had previously been developed in oncology as AVE-1642 and studied in over 100 patients.

VRDN-001, a potential best-in-class intravenously administered IGF-1R antibody

VRDN-001 is a monoclonal antibody that binds to and is believed to act as a full antagonist of IGF-1R signaling pathway.

This mechanism of action is clinically and commercially validated by the only FDA product approved for the treatment of TED, Tepezza®.

Based on our ongoing THRIVE trial, our goal is for VRDN-001 to be second to market in this class of medicine, with the opportunity to offer a differentiated IV product.

The antibody sequence that we are developing as VRDN-001 in TED had previously been developed in oncology as AVE-1642 and studied in over 100 patients.

However, development in oncology was stopped in 2009 due to its failure to meet the primary efficacy endpoints in multiple myeloma.

We are developing this antibody sequence as VRDN-001 in TED.

As described below, we have sublicensed the right to develop, manufacture, and commercialize certain IGF-1R directed antibody products for non-oncology indications in the greater area of China to Zenas BioPharma (Cayman) Limited.

A clinical trial conducted by Aventis investigated the safety and efficacy of AVE-1642 in 27 patients with solid tumors when dosed in combination with docetaxel.

In the first treatment cycle, AVE-1642 was administered as monotherapy, allowing assessment of its pharmacokinetics and tolerability.

In this trial, no Grade 3 or above drug-related adverse events were reported with AVE-1642 as monotherapy.

Importantly, there was only a single report of Grade 1/2 hyperglycemia among this group of patients.

However, at least 50% of patients experienced hyperglycemia in subsequent cycles when patients received corticosteroids as pre-medication for docetaxel.

Adverse events due to hyperglycemia have been reported for other IGF-1R antibodies, including in 10% of patients treated with teprotumumab.

Evidence of target engagement was obtained by assessing the serum levels of biomarkers previously shown to be induced by IGF-1R inhibition.

A common effect of IGF-1R inhibition is the elevation of IGF-1 serum levels.

In this Aventis oncology trial, IGF-1 serum concentrations increased subsequent to administration of AVE-1642, and these serum concentrations remained elevated through repeat doses.

No obvious dose-concentration relationship was observed, suggesting that IGF-1 levels reached their plateau at the lowest dose of AVE-1642 administered.

Serum levels of IGF-1 increased by over 300% after AVE-1642 administration.

Clinical Trial Design for VRDN-001

Clinical trials of teprotumumab in TED reported to date used a single dosing regimen, providing little guidance as to the optimal dosing required for clinical activity in TED.

Our goal is to explore dose-dependency of VRDN-001 on proptosis in TED.

Dose selection was informed by VRDN-001 pharmacokinetics and pharmacodynamics reported in previous oncology studies.

We are focused on rapidly determining a minimum effective dose.

If this trial is successful, we plan to quickly move to pivotal trials.

The first clinical trial for VRDN-001 is a Phase 1/2 proof of concept trial including multiple randomized, placebo-controlled cohorts of TED patients to assess the potential for VRDN-001 to provide rapid improvement of signs and symptoms of TED, including proptosis.

The protocol for this trial allows for additional patient cohorts to assess differing treatment paradigms that may offer advantages over currently available therapies and mitigate patient treatment burden.

We expect to announce top line data from the proof-of-concept portion of the trial in the second quarter of 2022.

VRDN-002, a Potential Best-In-Class IGF-1R Antibody

VRDN-002 is a next generation IGF-1R humanized monoclonal antibody targeting IGF-1R and incorporating half-life extension technology, designed to support administration as a convenient, low-volume, subcutaneous injection for the treatment of TED.

We believe this product profile could expand settings of care by reducing the complexity of administration.

Our first-in-human Phase 1 clinical trial of VRDN-002 is an intravenous, single ascending dose study to explore safety, tolerability, pharmacokinetics, and pharmacodynamics of intravenously administered VRDN-002 in healthy volunteers.

Data from this Phase 1 trial are expected to be announced in mid-2022 and will inform the feasibility of a low-volume subcutaneous dosing paradigm for TED patients.

We believe that VRDN-002 may offer a durable best-in-class profile for a therapeutic antibody targeting IGF-1R for the treatment of TED.

However, to ensure that Viridian is a leader in the development of novel therapies for TED, we are evaluating several hypotheses that may yield a product profile differentiated beyond what VRDN-002 may deliver.

We expect to disclose these hypotheses only if and when we have identified and advanced meaningfully differentiated molecules.

Clinical Trials for VRDN-001

Phase 1/2 Trial of VRDN-001 in Patients with Active TED

In the second half of 2022 and early 2023, we announced data from our Phase 1/2 clinical trial evaluating the safety and efficacy of VRDN-001 in patients with active TED.

The proof-of-concept portion of this double-blind, placebo-controlled Phase 1/2 trial evaluated two infusions of VRDN-001 administered intravenously, three weeks apart, with efficacy measured six weeks after the first dose.

VRDN-001 was evaluated at doses of 3, 10, and 20 mg/kg, with each cohort designed to include six patients randomized to drug, and two patients randomized to placebo.

We previously announced positive results from the first two dose cohorts, which demonstrated a favorable safety profile.

In January 2023, we announced results from the third cohort, which evaluated a VRDN-001 dose of 3 mg/kg with 6-week data.

In the 3 mg/kg dose cohort, nine patients were randomized to receive VRDN-001 to enable all consented patients who were eligible following screening to participate in the trial, and two patients were randomized to receive placebo.

The following activity was observed across all three dose groups (n=21) at week six:

• 71% proptosis responder rate, defined as a ≥2-millimeter (mm) reduction in proptosis from baseline as measured by exophthalmometry

• 2.3 mm mean reduction in proptosis from baseline as measured by exophthalmometry

• 2.76 mm mean reduction in proptosis from baseline as measured by blinded, centrally reviewed magnetic resonance imaging (“MRI”, preliminary data available for 16 of the 21 patients)

Clinical Activity Score (“CAS”)

• 4.1 point mean reduction in CAS from baseline on a 7-point measure of signs and symptoms of TED

• 62% maximal or near-maximal therapeutic effect on CAS, defined as reaching a CAS of 0 or 1 on the 7-point composite measure of signs and symptoms of TED

Overall response

• 67% overall responder rate, defined as a ≥2 mm reduction in proptosis and a ≥2 point reduction in CAS

• 54% complete resolution of diplopia, defined as patients with baseline diplopia who achieved a score of 0 on the Gorman subjective diplopia scale (13 patients with diplopia at baseline)

VRDN-001 had a favorable safety profile and was well-tolerated by all patients treated in the three dose cohorts.

There were no reported serious adverse events (“SAEs”), no discontinuations, and no infusion reactions in patients treated with VRDN-001 as of December 19, 2022, the most recent cut-off date for follow-up observation.

Phase 3 Trial (THRIVE) of VRDN-001 in Patients with Active TED

In December 2022, we enrolled our first patient in our ongoing Phase 3 THRIVE trial evaluating the safety and efficacy of VRDN-001 in patients with active TED.

The THRIVE trial is a double-blind, placebo-controlled, randomized trial enrolling approximately 120 patients with active TED.

The trial participants will be randomized 1:1:1 across three arms:

(1) VRDN-001 10 mg/kg administered once every three weeks for eight cycles, (2) a shortened course of VRDN-001 10 mg/kg administered once every three weeks for five cycles, and (3) a placebo arm.

The global THRIVE trial is expected to be conducted in approximately 50 centers across North America and Europe.

We expect to report topline results for the THRIVE trial in the middle of 2024.

Phase 1/2 Trial of VRDN-001 in Patients with Chronic TED

Data from the Phase 1/2 proof-of-concept trial evaluating the safety and efficacy of VRDN-001 in patients with chronic TED is expected in the second quarter of 2023.

Phase 3 Trial (THRIVE-2) of VRDN-001 in Patients with Chronic TED

Following the release of the data from our proof-of-concept trial in chronic TED, we plan to initiate a global Phase 3 trial in patients with chronic TED called THRIVE-2.

We expect that the THRIVE and THRIVE-2 Phase 3 trials will support global health authority registration for marketing approval in active and chronic TED, respectively.

VRDN-001, VRDN-002 and VRDN-003, potential best-in-class subcutaneously administered IGF-1R antibodies

VRDN-002 and VRDN-003 are next generation IGF-1R humanized monoclonal antibodies targeting IGF-1R and incorporating half-life extension technology, designed to support administration as a self-administered low-volume, subcutaneous pen injection for the treatment of TED.

The low-dose data of VRDN-001 in patients with active TED support the potential for VRDN-001 to also be administered as a convenient, low volume, subcutaneous pen.

We plan to initiate a Phase 1 trial of subcutaneously administered VRDN-001 in healthy volunteers, with results expected in the fourth quarter of 2023.

VRDN-002 is a distinct antibody that acts as a partial antagonist of the IGF-1R.

In 2022, we reported data from the Phase 1 trial in healthy volunteers, showing that VRDN-002 achieved a half-life of up to 43 days compared to the half-life of 10 to 11 days achieved by VRDN-001 and Tepezza in separate trials.

VRDN-002 had a favorable safety profile and was well tolerated.

We are currently planning to evaluate the safety and efficacy of a low-volume subcutaneous injection of VRDN-002 in patients with active TED.

Results from the trial are expected by year-end 2023.

VRDN-003 is an anti-IGF-1R monoclonal antibody with the same amino acid sequence as VRDN-001, except for the addition of the half-life extension technology that is incorporated in VRDN-002.

We plan to submit the IND with the FDA in the second quarter of 2023.

Following FDA acceptance of the IND, we plan to initiate a Phase 1 trial of VRDN-003 in healthy volunteers, we results expected in the fourth quarter of 2023.

Our most recent PK modeling supports the feasibility of ongoing development of a self-administered pen for subcutaneous administration, and a planned dosing interval of up to once-monthly for VRDN-001, VRDN-002, and VRDN-003.

We expect to select VRDN-001, VRDN-002, or VRDN-003 as our lead subcutaneous program by year-end 2023.

We plan to advance our selected lead subcutaneous program into a pivotal Phase 3 trial in the middle of 2024.

Intellectual Property

As of December 31, 2021, with regard to our VRDN-001 and VRDN-002 product candidates, we have two U.S.

non- provisional patent applications, two PCT applications, two foreign applications, and seven provisional applications directed to compositions and directed to methods of using VRDN-001 and/or VRDN-002 for the treatment of TED.

Any patents that were

to issue from such non-provisional applications would be expected to expire no earlier than 2041, without taking potential patent term extensions or disclaimers into account.

As of December 31, 2022, with regard to our VRDN-001, VRDN-002 and VRDN-003 product candidates, we have five pending U.S.

non- provisional patent applications, three PCT applications, two foreign applications, and one provisional application directed to compositions and directed to methods of using VRDN-001, VRDN-002 and/or VRDN-003 for the treatment of TED.

We wholly own one issued patent, U.S.

11,548,951, which issued on January 10, 2023.

The patent claims, among other things, are directed to methods of treating thyroid eye disease by inhibiting IGF-1R activity in a subject in need thereof with VRDN-001 or VRDN-003.

The ‘951 patent is expected to expire no earlier than 2041, subject to any disclaimers or extensions.

Any patents to issue from any pending non-provisional applications would be expected to expire no earlier than 2041, without taking potential patent term extensions or disclaimers into account.

The biotechnology and pharmaceutical industries are characterized by intense and rapidly changing competition to develop new technologies and proprietary products.

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Other therapies, such as corticosteroids, have been used on an off-label basis to alleviate some of the symptoms of TED.

Other companies that are developing TED therapies include Immunovant, Inc., Novartis International AG, Harbour BioMed and Valenza Bio Inc.

Other companies that are advancing therapies for the treatment of TED in clinical development include ACELYRIN, Inc., argenx, Harbour BioMed, Immunovant, Inc., and Sling Therapeutics, Inc.

• ACELYRIN, INC.

is developing Lonigutamab (VB-421), a subcutaneously delivered anti-IGF-1R currently being evaluated in a Phase 1 study for TED.

• argenx is developing efgartigimod (Vyvgart®), an antibody fragment to target the neonatal Fc receptor (FcRn) expected to be evaluated in a registrational Phase 3 trial in patients with TED.

• Immunovant and Harbour BioMed are developing batoclimab (IMVT-1401/HBM9161), a monoclonal antibody targeting FcRn currently being evaluated in an ongoing Phase 3 trial in patients with TED.

• Sling Therapeutics, Inc.

is developing linsitinib, a small molecule IGF-1R inhibitor currently be evaluated in an ongoing Phase 2b LIDS clinical trial in patients with active, moderate-to-severe TED.

License Agreements

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As consideration for the Zenas Agreements, the transaction price included upfront non-cash consideration and variable consideration in the form of payment for our goods and services provided and milestone payments due upon the achievement of specified events.

Under the Zenas Agreements, we can receive non-refundable milestone payments upon achieving specific milestone events during the contract term.

Additionally, we may receive royalty payments based on a percentage of the annual net sales of any licensed products sold on a country-by-country basis in the greater area of China.

Under the Zenas Agreements, we are eligible to receive non-refundable milestone payments upon achieving specific milestone events during the contract term.

Additionally, we are eligible to receive royalty payments based on a percentage of the annual net sales of any licensed products sold on a country-by-country basis in the greater area of China.

The royalty percentage may vary based on different tiers of annual net sales of the licensed products made.

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Additionally, if we successfully commercialize any product candidate subject to the ImmunoGen License Agreement, we are responsible for royalty payments equal to a percentage in the mid-single digits of net sales and commercial milestone payments of up to $95.0 million.

We assumed the ImmunoGen License Agreement in the Merger.

We assumed the ImmunoGen License Agreement in connection with the merger with Private Viridian in 2020.

License Agreements with Xencor, Inc.

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The shares were valued at $6.0 million and recorded as research and development expense in 2020.

Under the terms of the Xencor License Agreement, we are obligated to make future development milestone payments of up to

$30.0 million.

Under the terms of the Xencor License Agreement, we are obligated to make future development milestone payments of up to $30.0 million.

Additionally, if we successfully commercialize any product candidate subject to the Xencor License Agreement, we are responsible for royalty payments equal to a percentage in the mid-single digits of net sales and commercial milestone payments of up to $25.0 million.

In December 2021, we entered into a subsequent technology license agreement with Xencor (the “2021 Xencor License Agreement”) for a non-exclusive license to certain antibody libraries developed by Xencor.

Under the 2021 Xencor License Agreement, Xencor we received a one-year research license to review the antibodies and the right to select up to three antibodies for further development.

Under the 2021 Xencor License Agreement, we received a one-year research license to review the antibodies and the right to select up to three antibodies for further development.

In consideration for rights granted by Xencor, we issued 394,737 shares of our common stock to Xencor in December 2021.

The shares were valued at $7.5 million and recorded as research and development expense during the year ended December 31, 2021.

The shares were valued at $7.5 million and recorded as research and development expense during the year

ended December 31, 2021.

Under the terms of the 2021 Xencor License Agreement, for each licensed product, we are obligated to make future milestone payments of up to $27.75 million, which includes development and regulatory milestone payments of up to $4.75 million, special milestone payments of up to $3.0 million, and commercial milestone payments of up to $20.0 million.

Additionally, for each licensed product that we successfully commercialize, we are responsible for royalty payments equal to a percentage in the mid-single digits of net sales.

Government Regulation and Product Approvals

FDA Drug Approval Process

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

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

Failure to comply with applicable U.S.

requirements at any time during the product development process may subject a company to a variety of administrative or judicial sanctions, such as imposition of clinical hold, FDA refusal to approve pending new drug applications (“NDA”), warning or untitled letters, withdrawal of approval, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, civil penalties, and criminal prosecution.

We cannot market a drug product candidate in the United States until the drug has received FDA approval.

The steps required before a drug may be marketed in the United States generally include the following:

• completion of extensive preclinical laboratory tests, animal studies, and formulation studies in accordance with the FDA’s good laboratory practices (“GLP”) regulations;

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

• submission to the FDA of an IND for human clinical testing, which must become effective before human clinical trials may begin;

• performance of adequate and well-controlled human clinical trials in accordance with good clinical practice (“GCP”) requirements to establish the safety and efficacy of the drug for each proposed indication;

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

Antibody and Discovery Option Agreement with Paragon Therapeutics, Inc.

In January 2022, we entered into an antibody and discovery option agreement with Therapeutics, Inc.

(“Paragon”) (the “Paragon Agreement”) under which we and Paragon will cooperate to develop one or more antibodies.

Under the terms of the Paragon Agreement, Paragon will perform certain development activities in accordance with an agreed upon research plan, and we will pay Paragon agreed upon development fees in exchange for Paragon’s commitment of the necessary personnel and resources to perform these activities.

The Paragon Agreement stipulates a final deliverable to us comprising of a report summarizing the experiments and processes performed under the research plan (the “Final Deliverable”).

Additionally, Paragon agreed to grant us an option for an exclusive license to all of Paragon’s right, title and interest in and to certain antibody technology and the Final Deliverable, and a non-exclusive license to certain background intellectual property owned by Paragon solely to research, develop, make, use, sell, offer for sale and import of the licensed intellectual property and resulting products worldwide (each, an “Option” and together, the “Options”).

Paragon also granted us a limited, exclusive, royalty-free license, without the right to sublicense, to certain antibody technology and the Final Deliverable, and a non-exclusive, royalty-free license without the right to sublicense, under certain background intellectual property owned by Paragon, solely to evaluate the antibody technology and Option and for the purpose of allowing us to determine whether to exercise the Option with respect to certain programs.

We may, at our sole discretion, exercise the Option with respect to specified programs at any time until the date that is 90 days after the Company’s receipt of the Final Deliverable the applicable program, or such longer period as agreed upon by the parties (“Option Period”) by delivering written notice of such exercise to Paragon.

If we fail to exercise an Option prior to expiration of the applicable Option Period, such Option for such Program will terminate.

In consideration for Paragon’s grant of the Options to us, we paid to Paragon a non-refundable, non-creditable one-time fee of $2.5 million, which was recorded as research and development expense during the three months ended March 31, 2022.

In December 2022, we and Paragon entered into a first amendment to the Paragon Agreement, under which we obtained an additional limited license for the purpose of conducting certain activities.

In consideration for the rights and licenses obtained under the first amendment, Viridian paid Paragon a non-refundable fee of $2.3 million (the “First Amendment Payment”), which was recorded as research and development expense during the three months ended December 31, 2022.

The non-refundable upfront fee and the First Amendment Payment are separate from any development costs or cost advance paid or owing with respect to the specified program.

During the year ended December 31, 2022, the Company recorded $5.6 million in research and development costs related to the Paragon Agreement.

Government Regulation

The FDA and other regulatory authorities at federal, state and local levels, as well as in foreign countries, extensively regulate, among other things, the research, development, testing, manufacture, quality control, import, export, safety, effectiveness, labeling, packaging, storage, distribution, record keeping, approval, advertising, promotion, marketing, post-approval monitoring and post-approval reporting of biologics such as those we are developing.

We, along with third-party contractors, will be required to navigate the various preclinical, clinical and commercial approval requirements of the governing regulatory agencies of the countries in which we wish to conduct studies or seek approval or licensure of our product candidates.

Biologics Regulation

In the United States, biological products are subject to regulation under the Federal Food, Drug, and Cosmetic Act (“FDCA”), the Public Health Service Act (“PHSA”) and other federal, state, local, and foreign statutes and regulations.

The process required by the FDA before biologic product candidates may be marketed in the United States generally involves the following:

• completion of preclinical laboratory tests and animal studies performed in accordance with the FDA’s current Good Laboratory Practices (“GLP”) regulation;

• submission to the FDA of an IND, which must become effective before clinical trials may begin and must be updated annually or when significant changes are made;

• approval by an independent institutional review board (“IRB”) or ethics committee at each clinical site before the trial is commenced;

• manufacture of the proposed biologic candidate in accordance with cGMPs;

• performance of adequate and well-controlled human clinical trials in accordance with good clinical practice (“GCP”) requirements to establish the safety, purity and potency of the proposed biologic product candidate for its intended purpose;

• preparation of and submission to the FDA of a biologics license application (“BLA”) after completion of all pivotal clinical trials;

• satisfactory completion of an FDA Advisory Committee review, if applicable;

• satisfactory completion of an FDA pre-approval inspection of the manufacturing facility or facilities at which the active pharmaceutical ingredient (“API”) and finished drug product are produced and tested to assess compliance with current good manufacturing practices (“cGMPs”);

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

Satisfaction of FDA pre-market approval requirements typically takes many years, and the actual time required may vary substantially based upon the type, complexity, and novelty of the product or disease.

Preclinical tests include laboratory evaluation of product chemistry, formulation, and toxicity, as well as animal trials to assess the characteristics and potential safety and efficacy of the product.

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

An IND sponsor must submit the results of preclinical testing to the FDA as part

of an IND along with other information, including information about product chemistry, manufacturing and controls, and a proposed clinical trial protocol.

Long-term preclinical tests, such as animal tests of reproductive toxicity and carcinogenicity, may continue after the IND is submitted.

A 30-day waiting period after the submission of each IND is required prior to the commencement of clinical testing in humans.

If the FDA has neither commented on nor questioned the IND within this 30-day period, the clinical trial proposed in the IND may begin if all other requirements, including IRB review and approval, have been met.

If the FDA raises concerns or questions about the conduct of the trial, such as whether human research subjects will be exposed to an unreasonable health risk, the IND sponsor and the FDA must resolve any outstanding FDA concerns or questions before clinical trials can proceed.

Clinical trials involve the administration of the investigational new drug to healthy volunteers or patients under the supervision of a qualified investigator.

Clinical trials must be conducted in compliance with federal regulations, including GCP requirements, which include the requirement that all research subjects provide their informed consent in writing for their participation in any clinical trial.

Clinical trials are conducted under protocols detailing the objectives of the trial, the parameters to be used in monitoring safety, and the effectiveness criteria to be evaluated.

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

The FDA may order the temporary or permanent discontinuation of a clinical trial at any time, or impose other sanctions, if it believes that the clinical trial either is not being conducted in accordance with FDA requirements or presents an unacceptable risk to the clinical trial participants.

The study protocol and informed consent information for participants in clinical trials must also be submitted to an IRB for approval at each site at which the clinical trial will be conducted.

An IRB may also require the clinical trial at the site to be halted, either temporarily or permanently, for failure to comply with the IRB’s requirements or may impose other conditions.

Information about certain clinical trials must be submitted within specific timeframes to the National Institutes of Health for public dissemination on their www.clinicaltrials.gov website.

Clinical trials to support NDAs for marketing approval are typically conducted in three sequential phases, but the phases may overlap.

In Phase 1, the initial introduction of the drug into healthy human subjects or patients, the drug is tested to assess pharmacological actions, side effects associated with increasing doses and, if possible, early evidence of effectiveness.

Phase 2 usually involves trials in a limited patient population to study metabolism of the drug, pharmacokinetics, the effectiveness of the drug for a particular indication, dosage tolerance, and optimum dosage, and to identify common adverse effects and safety risks.

If a compound demonstrates evidence of effectiveness and an acceptable safety profile in Phase 2 evaluations, Phase 3 clinical trials, also called pivotal trials, are undertaken to obtain the additional information about clinical efficacy and safety in a larger number of patients, typically at geographically dispersed clinical trial sites, to permit the FDA to evaluate the overall benefit-risk relationship of the drug and to provide adequate information for the labeling of the drug.

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

A single clinical trial with other confirmatory evidence may be sufficient in rare instances where the study 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.

After completion of the required clinical testing, an NDA is prepared and submitted to the FDA.

FDA approval of the NDA is required before marketing of the product may begin in the United States.

The NDA must include the results of all preclinical, clinical, and other testing, and a compilation of data relating to the product’s pharmacology, chemistry, manufacture, and controls.

The cost of preparing and submitting an NDA is substantial.

The submission of most NDAs is additionally subject to a substantial application user fee, and the sponsor of an approved NDA is also subject to annual program fees.

These fees are typically increased annually.

Under the Prescription Drug User Fee Act (“PDUFA”) guidelines that are currently in effect, the FDA has a goal of ten months from the date of “filing” of a standard NDA for a new molecular entity to review and act on the submission.

This review typically takes twelve months from the date the NDA is submitted to the FDA because the FDA has 60 days from its receipt of an NDA to determine whether the application will be accepted for filing based on the agency’s threshold determination that it is sufficiently complete to permit substantive review.

Once the submission is accepted for filing, the FDA begins an in-depth review.

The FDA may request additional information rather than accept an NDA for filing.

In this event, the application must be resubmitted with the additional information.

The resubmitted application is also subject to review before the FDA accepts it for filing.

The FDA reviews an NDA to determine, among other things, whether the drug is safe and effective and whether the facility in which it is manufactured, processed, packaged, or held meets standards designed to assure the product’s continued safety, quality, and purity.

The FDA may also refer applications for novel drug products, or drug products that present difficult questions of safety or efficacy, to an advisory committee, which is typically a panel that includes clinicians and other experts, for review, evaluation, and a recommendation as to whether the application should be approved.

The FDA is not bound by the recommendation of an

advisory committee, but it generally follows such recommendations.

Before approving an NDA, the FDA will typically inspect one or more clinical sites to assure compliance with GCPs.

Additionally, the FDA will inspect the facility or the facilities at which the drug is manufactured.

The FDA will not approve the product unless compliance with cGMPs is satisfactory and the NDA contains data that provide substantial evidence that the drug is safe and effective in the indication studied.

After the FDA evaluates the NDA and the manufacturing facilities, it issues either an approval letter or a complete response letter.

A complete response letter generally outlines the deficiencies in the submission and may require substantial additional testing, or information, in order for the FDA to reconsider the application.

If, or when, those deficiencies have been addressed to the FDA’s satisfaction in a resubmission of the NDA, the FDA will issue an approval letter.

The FDA has committed to reviewing such resubmissions in two or six months depending on the type of information included.

Even with submission of this additional information, the FDA ultimately may decide that the application does not satisfy the regulatory criteria for approval.

An approval letter authorizes commercial marketing of the drug with specific prescribing information for specific indications.

Even if the FDA approves a product, it may limit the approved indications for use of the product, require that contraindications, warnings, or precautions be included in the product labeling, require that post-approval studies, including Phase 4 clinical trials, be conducted to further assess a drug’s safety after approval, require testing and surveillance programs to monitor the product after commercialization, or impose other conditions, including distribution and use restrictions or other risk management mechanisms under a Risk Evaluation and Mitigation Strategy (“REMS”) to ensure that the benefits of the drug outweigh the potential risks.

A REMS can include a medication guide, a communication plan for healthcare professionals and elements to assure safe use, such as special training and certification requirements for individuals who prescribe or dispense the drug, requirements that patients enroll in a registry, and other measures that the FDA deems necessary to assure the safe use of the drug.

The requirement for a REMS can materially affect the potential market and profitability of the drug.

The FDA may prevent or limit further marketing of a product based on the results of post-marketing studies or surveillance programs.

Once granted, product approvals may be withdrawn if compliance with regulatory standards is not maintained or problems are identified following initial marketing.

Changes to some of the conditions established in an approved application, including changes in indications, labeling, or manufacturing processes or facilities, require submission and FDA approval of a new NDA or NDA supplement before the change can be implemented.

An NDA supplement for a new indication typically requires clinical data similar to that in the original application, and the FDA uses the same procedures and actions in reviewing NDA supplements as it does in reviewing NDAs.

Such supplements are typically reviewed within 10 months of receipt by the FDA.

• a determination by the FDA within 60 days of its receipt of a BLA to file the application for review;

• satisfactory completion of an FDA pre-approval inspection of the manufacturing facility or facilities at which the proposed product is produced to assess compliance with cGMPs, and to assure that the facilities, methods and controls are adequate to preserve the biological product’s continued safety, purity and potency, and of selected clinical investigation sites to assess compliance with GCPs;

• FDA review and approval of a BLA to permit commercial marketing of the product for particular indications for use in the United States.

Preclinical and Clinical Development

Prior to beginning the first clinical trial with a product candidate, we must submit an IND to the FDA.

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

The central focus of an IND submission is on the general investigational plan and the protocol or protocols for preclinical studies and clinical trials.

The IND also includes results of animal and in vitro studies assessing the toxicology, pharmacokinetics, pharmacology and pharmacodynamic characteristics of the product, chemistry, manufacturing and controls information, and any available human data or literature to support the use of the investigational product.

An IND must become effective before human clinical trials may begin.

The IND automatically becomes effective 30 days after receipt by the FDA, unless the FDA, within the 30-day period, raises safety concerns or questions about the proposed clinical trial.

In such a case, the IND may be placed on clinical hold and the IND sponsor and the FDA must resolve any outstanding concerns or questions before the clinical trial can begin.

Submission of an IND therefore may or may not result in FDA authorization to begin a clinical trial.

In addition to the IND submission process, supervision of human gene transfer trials includes evaluation and assessment by an institutional biosafety committee (“IBC”), a local institutional committee that reviews and oversees research utilizing recombinant or synthetic nucleic acid molecules at that institution.

The IBC assesses the safety of the research and identifies any potential risk to public health or the environment and such review may result in some delay before initiation of a clinical trial.

Clinical trials involve the administration of the investigational product to human subjects under the supervision of qualified investigators in accordance with GCPs, which include the requirement that all research subjects provide their informed consent for their participation in any clinical study.

Clinical trials are conducted under protocols detailing, among other things, the objectives of the study, the parameters to be used in monitoring safety and the effectiveness criteria to be evaluated.

A separate submission to the existing IND must be made for each successive clinical trial conducted during product development and for any subsequent protocol amendments.

Furthermore, an independent IRB for each site proposing to conduct the clinical trial must review and approve the plan for any clinical trial and its informed consent form before the clinical trial begins at that site, and must monitor the study until completed.

Regulatory authorities, the IRB or the sponsor may suspend a clinical trial at any time on various grounds, including a finding that the subjects are being exposed to an unacceptable health risk or that the trial is unlikely to meet its stated objectives.

Some studies also include oversight by an independent group of qualified experts organized by the clinical study sponsor, known as a data safety monitoring board, which provides authorization for whether or not a study may move forward at designated check points based on access to certain data from the study and may halt the clinical trial if it determines that there is an unacceptable safety risk for subjects or other grounds, such as no demonstration of efficacy.

There are also requirements governing the reporting of ongoing preclinical studies and clinical trials and clinical study results to public registries.

For purposes of BLA approval, human clinical trials are typically conducted in three sequential phases that may overlap.

The investigational product is initially introduced into healthy human subjects or patients with the target disease or condition.

These studies are designed to test the safety, dosage tolerance, absorption, metabolism and distribution of the investigational product in humans, the side effects associated with increasing doses, and, if possible, to gain early evidence on effectiveness.

The investigational product is administered to a limited patient population with a specified disease or condition to evaluate the preliminary efficacy, optimal dosages and dosing schedule and to identify possible adverse side effects and safety risks.

Multiple Phase 2 clinical trials may be conducted to obtain information prior to beginning larger and more expensive Phase 3 clinical trials.

The investigational product is administered to an expanded patient population to further evaluate dosage, to provide statistically significant evidence of clinical efficacy and to further test for safety, generally at multiple geographically dispersed clinical trial sites.

These clinical trials are intended to establish the overall risk/benefit ratio of the investigational product and to provide an adequate basis for product approval.

In some cases, the FDA may require, or companies may voluntarily pursue, additional clinical trials after a product is approved to gain more information about the product.

These so-called Phase 4 studies may be made a condition to approval of the BLA.

Concurrent with clinical trials, companies may complete additional animal studies and develop additional information about the biological characteristics of the product candidate and must finalize a process for manufacturing the product in commercial quantities in accordance with cGMP requirements.

The manufacturing process must be capable of consistently producing quality batches of the product candidate and, among other things, must develop methods for testing the identity, strength, quality and purity of the final product, or for biologics, the safety, purity and potency.

Additionally, appropriate packaging must be selected and tested and stability studies must be conducted to demonstrate that the product candidate does not undergo unacceptable deterioration over its shelf life.

BLA Submission and Review

Assuming successful completion of all required testing in accordance with all applicable regulatory requirements, the results of product development, nonclinical studies and clinical trials are submitted to the FDA as part of a BLA requesting approval to market the product for one or more indications.

The BLA must include all relevant data available from pertinent preclinical studies and clinical trials, including negative or ambiguous results as well as positive findings, together with detailed information relating to the product’s chemistry, manufacturing, controls, and proposed labeling, among other things.

Data can come from company-sponsored clinical studies intended to test the safety and effectiveness of the product, or from a number of alternative sources, including studies initiated and sponsored by investigators.

The submission of a BLA requires payment of a substantial application user fee to the FDA, unless a waiver or exemption applies.

In addition, under the Pediatric Research Equity Act (“PREA”), a BLA or supplement to a BLA must contain data to assess the safety and effectiveness of the biological product candidate for the claimed indications in all relevant pediatric subpopulations and to support dosing and administration for each pediatric subpopulation for which the product is safe and effective.

The Food and Drug Administration Safety and Innovation Act requires that a sponsor who is planning to submit a marketing application for a biological product that includes a new active ingredient, new indication, new dosage form, new dosing regimen or new route of administration submit an initial pediatric study plan (“PSA”), within sixty days after an end-of-Phase 2 meeting or as may be agreed between the sponsor and FDA.

Unless otherwise required by regulation, PREA does not apply to any biological product for an indication for which orphan designation has been granted.

Within 60 days following submission of the application, the FDA reviews a BLA submitted to determine if it is substantially complete before the agency accepts it for filing.

The FDA may refuse to file any BLA that it deems incomplete or not properly reviewable at the time of submission and may request additional information.

In this event, the BLA must be resubmitted with the additional information.

Once a BLA has been accepted for filing, the FDA’s goal is to review standard applications within ten months after the filing date, or, if the application qualifies for priority review, six months after the FDA accepts the application for filing.

In both standard and priority reviews, the review process may also be extended by FDA requests for additional information or clarification.

The FDA reviews a BLA to determine, among other things, whether a product is safe, pure and potent and the facility in which it is manufactured, processed, packed or held meets standards designed to assure the product’s continued safety, purity and potency.

The FDA may convene an advisory committee to provide clinical insight on application review questions.

The FDA is not bound by the recommendations of an advisory committee, but it considers such recommendations carefully when making decisions.

Before approving a BLA, the FDA will typically inspect the facility or facilities where the product is manufactured.

The FDA will not approve an application unless it determines that the manufacturing processes and facilities are in compliance with cGMP requirements and adequate to assure consistent production of the product within required specifications.

Additionally, before approving a BLA, the FDA will typically inspect one or more clinical sites to assure compliance with GCPs.

If the FDA determines that the application, manufacturing process or manufacturing facilities are not acceptable, it will outline the deficiencies in the submission and often will request additional testing or information.

Notwithstanding the submission of any requested additional information, the FDA ultimately may decide that the application does not satisfy the regulatory criteria for approval.

After the FDA evaluates a BLA and conducts inspections of manufacturing facilities where the investigational product and/or its drug substance will be produced, the FDA may issue an approval letter or a Complete Response letter.

An approval letter authorizes commercial marketing of the product with specific prescribing information for specific indications.

A Complete Response letter will describe all of the deficiencies that the FDA has identified in the BLA, except that where the FDA determines that the data supporting the application are inadequate to support approval, the FDA may issue the Complete Response letter without first conducting required inspections, testing submitted product lots and/or reviewing proposed labeling.

In issuing the Complete Response letter, the FDA may recommend actions that the applicant might take to place the BLA in condition for approval, including requests for additional information or clarification.

The FDA may delay or refuse approval of a BLA if applicable regulatory criteria are not satisfied, require additional testing or information and/or require post-marketing testing and surveillance to monitor safety or efficacy of a product.

If regulatory approval of a product is granted, such approval will be granted for particular indications and may entail limitations on the indicated uses for which such product may be marketed.

For example, the FDA may approve the BLA with a Risk Evaluation and Mitigation Strategy (“REMS”) to ensure the benefits of the product outweigh its risks.

A REMS is a safety strategy to manage a known or potential serious risk associated with a product and to enable patients to have continued access to such medicines by managing their safe use, and could include medication guides, physician communication plans, or elements to assure safe use, such as restricted distribution methods, patient registries and other risk minimization tools.

The FDA also may condition approval on, among other things, changes to proposed labeling or the development of adequate controls and specifications.

Once approved, the FDA may withdraw the product approval if compliance with pre- and post-marketing requirements is not maintained or if problems occur after the product reaches the marketplace.

The FDA may require one or more Phase 4 post-market studies and surveillance to further assess and monitor the product’s safety and effectiveness after commercialization and may limit further marketing of the product based on the results of these post-marketing studies.

Orphan Drug Designation

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

Orphan drug designation must be requested before submitting an NDA or a biological license application (“BLA”).

Orphan drug designation must be requested before submitting an New Drug Application (“NDA”) or BLA.

After the FDA grants orphan drug designation, the generic identity of the therapeutic agent and its potential orphan use are disclosed publicly by the FDA.

The orphan drug designation does not convey any advantage in, or shorten the duration of, the regulatory review or approval process.

If a product that has orphan drug designation subsequently receives the first FDA approval for the disease for which it has such designation, the product is entitled to orphan drug exclusive approval (or exclusivity), which means that the FDA may not approve any other applications, including a full NDA or BLA, to market the same product for the same indication for seven years, except in limited circumstances, such as a showing of clinical superiority to the product with orphan drug exclusivity.

If a product that has orphan drug designation subsequently receives the first FDA approval for the disease for which it has such designation, the product is entitled to orphan drug exclusive approval (or exclusivity), which means that the FDA may not approve any other applications, including a full BLA, to market the same product for the same indication for seven years, except in limited circumstances, such as a showing of clinical superiority to the product with orphan drug exclusivity.

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

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Expedited Development and Review Programs

The FDA has a Fast Track program that is intended to expedite or facilitate the process for development and review of new drug products that meet certain criteria.

Specifically, new drug products are eligible for Fast Track designation if they are intended to treat a serious or life-threatening disease or condition and demonstrate the potential to address unmet medical needs for the disease or condition.

The FDA offers a number of expedited development and review programs for qualifying product candidates.

The fast track program is intended to expedite or facilitate the process for reviewing new products that meet certain criteria.

Specifically, new products are eligible for fast track designation if they are intended to treat a serious or life-threatening disease or condition and demonstrate the potential to address unmet medical needs for the disease or condition.

Fast track designation applies to the combination of the product and the specific indication for which it is being studied.

The sponsor of a new drug may request that the FDA designate the drug as a Fast Track product at any time during the clinical development of the product.

For a Fast Track-designated product, the sponsor may provide a schedule for the submission of the sections of the application, and the FDA may consider for review sections of the marketing application on a rolling basis before the complete application is submitted.

The sponsor pays any required user fees upon submission of the first section of the application.

The FDA may choose not to perform an earlier review even if it agrees to accept sections of the application in advance.

The PDUFA date for regular or priority review, including two months for the filing determination, is set based on the date when the FDA receives the complete application.

Any product submitted to the FDA for marketing, including under a Fast Track program, may be eligible for other types of FDA programs intended to expedite development and review, such as priority review and accelerated approval.

Any product is eligible for priority review if it has the potential to provide safe and effective therapy where no satisfactory alternative therapy exists or a significant improvement in the treatment, diagnosis, or prevention of a disease compared to marketed products.

The FDA will attempt to direct additional resources to the evaluation of an application for a new drug product designated for priority review in an effort to facilitate the review.

Additionally, a product may be eligible for accelerated approval.

Drug products studied for their safety and effectiveness in treating serious or life-threatening illnesses and that provide meaningful therapeutic benefit over existing treatments may be eligible for accelerated approval, which means that they may be approved on the basis of adequate and well-controlled clinical trials establishing that the product has an effect on a surrogate endpoint that is reasonably likely to predict a clinical benefit, or on the basis of an effect on a clinical endpoint other than survival or 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.

As a condition of approval, the FDA may require that a sponsor of a drug product subject to accelerated approval perform adequate and well-controlled post-marketing clinical trials.

The sponsor of a fast track product has opportunities for more frequent interactions with the review team during product development and, once a BLA is submitted, the product may be eligible for priority review.

A fast track product may also be eligible for rolling review, where the FDA may consider for review sections of the BLA on a rolling basis before the complete application is submitted, if the sponsor provides a schedule for the submission of the sections of the BLA, the FDA agrees to accept sections of the BLA and determines that the schedule is acceptable, and the sponsor pays any required user fees upon submission of the first section of the BLA.

A product intended to treat a serious or life-threatening disease or condition may also be eligible for breakthrough therapy designation to expedite its development and review.

A product can receive breakthrough therapy designation if preliminary clinical evidence indicates that the product, alone or in combination with one or more other drugs or biologics, may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development.

The designation includes all of the fast track program features, as well as more intensive FDA interaction and guidance beginning as early as Phase 1 and an organizational commitment to expedite the development and review of the product, including involvement of senior managers.

Any marketing application for a biologic submitted to the FDA for approval, including a product with a fast track designation and/or breakthrough therapy designation, may be eligible for other types of FDA programs intended to expedite the FDA review and approval process, such as priority review and accelerated approval.

A product is eligible for priority review if it has the potential to provide a significant improvement in the treatment, diagnosis or prevention of a serious disease or condition.

For original BLAs, priority review designation means the FDA’s goal is to take action on the marketing application within six months of the 60-day filing date (as compared to ten months under standard review).

Additionally, products studied for their safety and effectiveness in treating serious or life-threatening diseases or conditions may receive accelerated approval upon a determination that the product has an effect on 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.

As a condition of accelerated approval, the FDA will generally require the sponsor to perform adequate and well-controlled post-marketing clinical studies to verify and describe the anticipated effect on irreversible morbidity or mortality or other clinical benefit.

Products receiving accelerated approval may be subject to expedited withdrawal procedures if the sponsor fails to conduct the required post-marketing studies or if such studies fail to verify the predicted clinical benefit.

In addition, the FDA currently requires as a condition for accelerated approval pre-approval of promotional materials, which could adversely impact the timing of the commercial launch of the product.

In addition, the Breakthrough Therapy Designation is intended to expedite the development and review of products that treat serious or life-threatening diseases or conditions.

A breakthrough therapy is defined as a drug that is intended, alone or in combination with one or more other drugs, to treat a serious or life-threatening disease or condition, where preliminary clinical evidence indicates that the drug may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development.

The designation includes all of the features of Fast Track designation, as well as more intensive FDA interaction and guidance.

The Breakthrough Therapy Designation is distinct from both accelerated approval and priority review, but these can also be granted to the same product candidate if the relevant criteria are met.

The FDA must take certain actions, such as holding timely meetings and providing advice, intended to expedite the development and review of an application for approval of a breakthrough therapy.

Requests for breakthrough therapy designation will be reviewed within 60 days of receipt, and the FDA will either grant or deny the request.

Fast Track designation, breakthrough therapy designation, and priority review do not change the standards for approval but may expedite the development or approval process by allowing more frequent and timely interactions with the FDA review team and/or the potential for a more efficient or more rapid application review.

Similarly, products granted accelerated approval must meet statutory standards for safety and effectiveness although they may be approved based on a surrogate endpoint likely to predict clinical benefit of the underlying drug, rather than through a direct measure of clinical benefit.

Even if our product candidates are deemed eligible for one or more of these programs for expedited product development and approval, the FDA may later decide that our product candidates no longer meet the conditions for qualification.

In addition, these programs may not provide us with a material commercial advantage.

In 2017, the FDA established a new regenerative medicine advanced therapy (“RMAT”) designation as part of its implementation of the 21st Century Cures Act.

The RMAT designation program is intended to fulfill the 21st Century Cures Act requirement that the FDA facilitate an efficient development program for, and expedite review of, any drug that meets the following criteria:

(i) the drug qualifies as a RMAT, which is defined as a cell therapy, therapeutic tissue engineering product, human cell and tissue product, or any combination product using such therapies or products, with limited exceptions;

(ii) the drug is intended to treat, modify, reverse, or cure a serious or life-threatening disease or condition;

and (iii) preliminary clinical evidence indicates that the drug has the potential to address unmet medical needs for such a disease or condition.

RMAT designation provides all the benefits of breakthrough therapy designation, including more frequent meetings with the FDA to discuss the development plan for the product candidate and eligibility for rolling review and priority review.

Products granted RMAT designation may also be eligible for accelerated approval on the basis of a surrogate or intermediate endpoint reasonably likely to predict long-term clinical benefit, or reliance upon data obtained from a meaningful number of sites, including through expansion to additional sites.

Once approved, when appropriate, the FDA can permit fulfillment of post-approval requirements under accelerated approval through:

the submission of clinical evidence, preclinical studies, clinical trials, patient registries or other sources of real world evidence such as electronic health records;

the collection of larger confirmatory datasets;

or post-approval monitoring of all patients treated with the therapy prior to approval.

Fast track designation, breakthrough therapy designation, priority review and RMAT designation do not change the standards for approval but may expedite the development or approval process.

Even if a product qualifies for one or more of these programs, the FDA may later decide that the product no longer meets the conditions for qualification or decide that the time period for FDA review or approval will not be shortened.

In May 2018, the Right to Try Act established a new regulatory

pathway to increase access to unapproved, investigational treatments for patients diagnosed with life-threatening diseases or conditions who have exhausted approved treatment options and who are unable to participate in a clinical trial.

The Consolidated Appropriations Act, 2023 strengthens the FDA’s authority to require and regulate post-approval studies of accelerated approval drugs and to expedite the rescission of accelerated approval based on these post-approval studies.

Post-Approval Requirements

Once an NDA is approved, a product may be subject to certain post-approval requirements.

For instance, the FDA closely regulates the post-approval marketing and promotion of drugs, including standards and regulations for direct-to-consumer advertising, off-label promotion, industry-sponsored scientific and educational activities, and promotional activities involving the internet and social media.

Drugs may be marketed only for the approved indications and in accordance with the provisions of the approved labeling.

Adverse event reporting and submission of periodic reports are required following FDA approval of an NDA.

The FDA also may require post-approval testing, known as Phase 4 testing, REMS, surveillance to monitor the effects of an approved product, or restrictions on the distribution or use of the product.

In addition, quality control, drug manufacture, packaging, and labeling procedures must continue to conform to cGMPs after approval.

Drug manufacturers and certain of their subcontractors are required to register their establishments with the FDA and certain state agencies.

Registration with the FDA subjects entities to periodic unannounced inspections by the FDA, during which the agency inspects manufacturing facilities to assess compliance with cGMPs.

Accordingly, manufacturers must continue to expend time, money, and effort in the areas of production and quality control to maintain compliance with cGMPs.

Later discovery of previously unknown problems with a product, including adverse events of unanticipated severity or frequency, or failure to comply with regulatory requirements may result in mandatory revisions to the approved labeling to add new safety information, imposition of post-market studies or clinical trials to assess new safety risks, or imposition of distribution or other restrictions under a REMS program.

Any products manufactured or distributed by us pursuant to FDA approvals are subject to pervasive and continuing regulation by the FDA, including, among other things, requirements relating to record-keeping, reporting of adverse experiences, periodic reporting, product sampling and distribution, and advertising and promotion of the product.

After approval, most changes to the approved product, such as adding new indications or other labeling claims, are subject to prior FDA review and approval.

There also are continuing user fee requirements, under which the FDA assesses an annual program fee for each product identified in an approved BLA.

Biologic manufacturers and their subcontractors are required to register their establishments with the FDA and certain state agencies, and are subject to periodic unannounced inspections by the FDA and certain state agencies for compliance with cGMPs, which impose certain procedural and documentation requirements upon us and our third-party manufacturers.

Changes to the manufacturing process are strictly regulated, and, depending on the significance of the change, may require prior FDA approval before being implemented.

FDA regulations also require investigation and correction of any deviations from cGMPs and impose reporting requirements upon us and any third-party manufacturers that we may decide to use.

Accordingly, manufacturers must continue to expend time, money and effort in the area of production and quality control to maintain compliance with cGMPs and other aspects of regulatory compliance.

The FDA may withdraw approval if compliance with regulatory requirements and standards is not maintained or if problems occur after the product reaches the market.

Later discovery of previously unknown problems with a product, including adverse events of unanticipated severity or frequency, or with manufacturing processes, or failure to comply with regulatory requirements, may result in revisions to the approved labeling to add new safety information;

imposition of post-market studies or clinical studies to assess new safety risks;

or imposition of distribution restrictions or other restrictions under a REMS program.

Other potential consequences include, among other things:

• restrictions on the marketing or manufacturing of the product, complete withdrawal of the product from the market, or product recalls;

• fines, warning letters, or holds on post-approval clinical trials;

• refusal of the FDA to approve pending applications or supplements to approved applications or suspension or revocation of product approvals;

• product seizure or detention, or refusal to permit the import or export of products, or injunctions or the imposition of civil or criminal penalties.

The FDA strictly regulates marketing, labeling, advertising, and promotion of products that are placed on the market.

Drugs may be promoted only for the approved indications and in accordance with the provisions of the approved label.

The FDA and other agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses, and a company that is found to have improperly promoted off-label uses may be subject to significant liability.

• restrictions on the marketing or manufacturing of a product, complete withdrawal of the product from the market or product recalls;

• fines, warning letters or holds on post-approval clinical studies;

• refusal of the FDA to approve pending applications or supplements to approved applications, or suspension or revocation of existing product approvals;

• product seizure or detention, or refusal of the FDA to permit the import or export of products;

• consent decrees, corporate integrity agreements, debarment or exclusion from federal healthcare programs;

• mandated modification of promotional materials and labeling and the issuance of corrective information;

• the issuance of safety alerts, Dear Healthcare Provider letters, press releases and other communications containing warnings or other safety information about the product;

• injunctions or the imposition of civil or criminal penalties.

The FDA closely regulates the marketing, labeling, advertising and promotion of biologics.

A company can make only those claims relating to safety and efficacy, purity and potency that are approved by the FDA and in accordance with the provisions of the approved label.

The FDA and other agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses.

Failure to comply with these requirements can result in, among other things, adverse publicity, warning letters, corrective advertising and potential civil and criminal penalties.

Physicians may prescribe legally available products for uses that are not described in the product’s labeling and that differ from those tested by us and approved by the FDA.

Such off-label uses are common across medical specialties.

Physicians may believe that such off-label uses are the best treatment for many patients in varied circumstances.

The FDA does not regulate the behavior of physicians in their choice of treatments.

The FDA does, however, restrict manufacturer’s communications on the subject of off-label use of their products.

Biosimilars and Reference Product Exclusivity

The Affordable Care Act (“ACA”) includes a subtitle called the Biologics Price Competition and Innovation Act of 2009 (“BPCIA”), which created an abbreviated approval pathway for biological products that are highly similar, or “biosimilar,” to or interchangeable with an FDA-approved reference biological product.

The FDA has issued several guidance documents outlining an approach to review and approval of biosimilars.

Biosimilarity, which requires that there be no clinically meaningful differences between the biological product and the reference product in terms of safety, purity, and potency, is generally shown through analytical studies, animal studies, and a clinical study or studies.

Interchangeability requires that a product is biosimilar to the reference product and the product must demonstrate that it can be expected to produce the same clinical results as the reference product in any given patient and, for products that are administered multiple times to an individual, the biologic and the reference biologic may be alternated or switched after one has been previously administered without increasing safety risks or risks of diminished efficacy relative to exclusive use of the reference biologic.

A product shown to be biosimilar or interchangeable with an FDA-approved reference biological product may rely in part on the FDA’s previous determination of safety and effectiveness for the reference product for approval, which can potentially reduce the cost and time required to obtain approval to market the product.

Complexities associated with the larger, and often more complex, structures of biological products, as well as the processes by which such products are manufactured, pose significant hurdles to implementation of the abbreviated approval pathway that are still being worked out by the FDA.

In September 2021, the FDA issued two guidance documents intended to inform prospective applicants and facilitate the development of proposed biosimilars and interchangeable biosimilars, as well as to describe the FDA’s interpretation of certain statutory requirements added by the BPCIA.

Under the BPCIA, an application for a biosimilar product may not be submitted to the FDA until four years following the date that the reference product was first licensed by the FDA.

In addition, the approval of a biosimilar product may not be made effective by the FDA until 12 years from the date on which the reference product was first licensed.

During this 12-year period of exclusivity, another company may still market a competing version of the reference product if the FDA approves a full BLA for the competing product containing that applicant’s own preclinical data and data from adequate and well-controlled clinical trials to demonstrate the safety, purity and potency of its product.

The BPCIA also created certain exclusivity periods for biosimilars approved as interchangeable products.

At this juncture, it is unclear whether products deemed “interchangeable” by the FDA will, in fact, be readily substituted by pharmacies, which are governed by state pharmacy law.

A biological product can also obtain pediatric market exclusivity in the United States.

Pediatric exclusivity, if granted, adds six months to existing exclusivity periods and patent terms.

This six-month exclusivity, which runs from the end of other exclusivity protection or patent term, may be granted based on the voluntary completion of a pediatric study in accordance with an FDA-issued “Written Request” for such a study.

The BPCIA is complex and continues to be interpreted and implemented by the FDA.

In July 2018, the FDA announced an action plan to encourage the development and efficient review of biosimilars, including the establishment of a new office within the agency that will focus on therapeutic biologics and biosimilars.

On December 20, 2020, Congress amended the PHSA as part of the COVID-19 relief bill to further simplify the biosimilar review process by making it optional to show that conditions of use proposed in labeling have been previously approved for the reference product, which used to be a requirement of the application.

In addition, government proposals have sought to reduce the 12-year reference product exclusivity period.

As of March 2020, certain products previously approved as drugs under the FDCA, such as insulin and human growth hormone, are now deemed to be biologics under the PHSA, which means they may face competition through the biosimilars pathway and are not be eligible for the twelve-year period of exclusivity granted to new BLAs.

Other aspects of the BPCIA, some of which may impact the BPCIA exclusivity provisions, have also been the subject of recent litigation.

As a result, the ultimate impact, implementation, and impact of the BPCIA is subject to significant uncertainty.

As discussed below, the Inflation Reduction Act of 2022 (“IRA”) is a significant new law that intends to foster generic and biosimilar competition and to lower drug and biologic costs.

Foreign Regulation

In order to market any product outside of the United States, we would need to comply with numerous and varying regulatory requirements of other countries and jurisdictions regarding quality, safety, and efficacy and governing, among other things, clinical trials, marketing authorization, commercial sales, and distribution of our products.

Whether or not we obtain FDA approval for a product, we would need to obtain the necessary approvals by the comparable foreign regulatory authorities before we can commence clinical trials or marketing of the product in foreign countries and jurisdictions.

Some countries outside of the United States have a similar process that requires the submission of a clinical trial application (“CTA”) much like the IND prior to the commencement of human clinical trials.

In addition to regulations in the United States, we are subject to a variety of regulations in other jurisdictions governing, among other things, research and development, clinical trials, testing, manufacturing, safety, efficacy, quality control, labeling, packaging, storage, record keeping, distribution, reporting, export and import, advertising, marketing and other promotional practices involving biological products as well as authorization, approval as well as post-approval monitoring and reporting of our products.

Because biologically sourced raw materials are subject to unique contamination risks, their use may be restricted in some countries.

Whether or not we obtain FDA approval for a product, we must obtain the requisite approvals from regulatory authorities in foreign countries prior to the commencement of clinical trials or marketing of the product in those countries.

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

The requirements and process governing the conduct of clinical trials, including requirements to conduct additional clinical trials, product licensing, safety reporting, post-authorization requirements, marketing and promotion, interactions with healthcare professionals, pricing and reimbursement may vary widely from country to country.

No action can be taken to market any product in a country until an appropriate approval application has been approved by the regulatory authorities in that country.

The current approval process varies from country to country, and the time spent in gaining approval varies from that required for FDA approval.

In certain countries, the sales price of a product must also be approved.

The pricing review period often begins after market approval is granted.

Even if a product is approved by a regulatory authority, satisfactory prices may not be approved for such product, which would make launch of such products commercially unfeasible in such countries.

Regulation in the European Union

European Data Laws

The collection and use of personal health data and other personal data in the European Union (“EU”) is governed by the provisions of the European General Data Protection Regulation 2016/679 (“GDPR”), which came into force in May 2018, and related data protection laws in individual EU Member States.

The GDPR imposes a number of strict obligations and restrictions on the ability to process, including collecting, analyzing and transferring, personal data of individuals, in particular with respect to health data from clinical trials and adverse event reporting.

The GDPR includes requirements relating to the legal basis of the processing (such as consent of the individuals to whom the personal data relates), the information provided to the individuals prior to processing their personal data, the notification obligations to the national data protection authorities, and the security and confidentiality of the personal data.

EU Member States may also impose additional requirements in relation to health, genetic and biometric data through their national legislation.

In addition, the GDPR imposes specific restrictions on the transfer of personal data to countries outside of the EU/European Economic Area (“EEA”) that are not considered by the European Commission (“EC”) to provide an adequate level of data protection (including the United States).

Appropriate safeguards are required to enable such transfers.

Among the appropriate safeguards that can be used, the data exporter may use the standard contractual clauses (“SCCs”).

On March 25, 2022, the EC and the United States announced that they have agreed in principle on a new Trans-Atlantic Data Privacy Framework.

Following this statement, on October 7, 2022, President Biden signed an Executive Order on ‘Enhancing Safeguards for United States Signals Intelligence Activities’, which implemented the agreement in principle.

On that basis, the EC prepared a draft adequacy decision and launched its adoption procedure.

While this new EU-U.S.

privacy framework is expected to enter into force in 2023, there is still some uncertainty around the new framework.

Failure to comply with the requirements of the GDPR and the related national data protection laws of the EU Member States may result in significant monetary fines for noncompliance of up to €20 million or 4% of the annual global revenues of the noncompliant company, whichever is greater, other administrative penalties and a number of criminal offenses (punishable by uncapped fines) for organizations and, in certain cases, their directors and officers, as well as civil liability claims from individuals whose personal data was processed.

Data protection authorities from the different EU Member States may still implement certain variations, enforce the GDPR and national data protection laws differently, and introduce additional national regulations and guidelines, which adds to the complexity of processing personal data in the EU.

Guidance developed at both the EU level and at the national level in individual EU Member States concerning implementation and compliance practices are often updated or otherwise revised.

Furthermore, there is a growing trend towards the required public disclosure of clinical trial data in the EU, which adds to the complexity of obligations relating to processing health data from clinical trials.

Such public disclosure obligations are provided in the new EU Clinical Trials Regulation No.536/2014 (“CTR”), European Medicines Agency (“EMA”) disclosure initiatives and voluntary commitments by industry.

Failure to comply with these obligations could lead to government enforcement actions and significant penalties against us, harm to our reputation, and adversely impact our business and operating results.

The uncertainty regarding the interplay between different regulatory frameworks, such as the CTR and the GDPR, further adds to the complexity that we face with regard to data protection regulation.

With regard to the transfer of data from the EU to the United Kingdom, personal data may now freely flow from the EU to the UK since the UK is deemed to have an adequate data protection level.

However, the adequacy decisions include a ‘sunset clause’ which entails that the decisions will automatically expire four years after their entry into force.

Additionally, following

the UK’s withdrawal from the EU and the EEA, companies also have to comply with the UK’s data protection laws (including the GDPR, as incorporated into UK national law), the latter regime having the ability to separately fine up to the greater of £17.5 million or 4% of global turnover.

Drug and Biologic Development Process

The conduct of clinical trials is currently governed by the EU Clinical Trials Regulation (EU) No.

536/2014 (“CTR”), which entered into force on January 31, 2022.

The CTR introduced a complete overhaul of the previous regulation of clinical trials for medicinal products in the EU, the EU Clinical Trials Directive 2001/20/EC, or Clinical Trials Directive.

The Clinical Trials Directive will expire after a transition period of three years.

During the first year of the transition period, clinical trial sponsors may choose to apply to run a trial under the CTR or under the Clinical Trials Directive.

Under the Clinical Trials Directive, which will expire after a transition period of one or three years, respectively, as outlined below in more detail, before a clinical trial can be initiated it must be approved in each EU Member State where there is a site at which the trial is to be conducted.

Regardless of where they are conducted, all clinical trials included in applications for marketing authorization for human medicines in the European EU / EEA must have been carried out in accordance with EU regulations.

This means that clinical trials conducted in the EU / EEA have to comply with EU clinical trial legislation but also that clinical trials conducted outside the EU / EEA have to comply with ethical principles equivalent to those set out in the EEA, including adhering to international good clinical practice and the Declaration of Helsinki.

The conduct of clinical trials in the EU is governed by the CTR, which entered into force on January 31, 2022.

The CTR replaced the Clinical Trials Directive 2001/20/EC, (Clinical Trials Directive) and introduced a complete overhaul of the existing regulation of clinical trials for medicinal products in the EU.

Under the former regime, which will expire after a transition period of one or three years, respectively, as outlined below in more detail, before a clinical trial can be initiated it must be approved in each EU member state where there is a site at which the clinical trial is to be conducted.

The approval must be obtained from two separate entities:

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Any substantial changes to the trial protocol or other information submitted with the clinical trial applications must be submitted to or approved by the relevant NCA and Ethics Committees.

Under the Clinical Trials Directive all suspected unexpected serious adverse reactions to the investigated drug that occur during the clinical trial must be reported to the NCA and to the Ethics Committees of the EU Member State where they occur.

Under the current regime all suspected unexpected serious adverse reactions to the investigated drug that occur during the clinical trial must be reported to the NCA and to the Ethics Committees of the EU member state where they occur.

A more unified procedure will apply under the new CTR.

A sponsor will be able to submit a single application for approval of a clinical trial through a centralized EU clinical trials portal.

One national regulatory authority (the reporting EU Member State proposed by the applicant) will take the lead in validating and evaluating the application and will consult and coordinate with the other concerned Member States.

One national regulatory authority (the reporting EU member state proposed by the applicant) will take the lead in validating and evaluating the application consult and coordinate with the other concerned EU Member States.

If an application is rejected, it may be amended and resubmitted through the EU clinical trials portal.

If an approval is issued, the sponsor may start the clinical trial in all concerned Member States.

If an approval is issued, the sponsor may start the clinical trial in all concerned EU Member States.

However, a concerned EU member state may in limited circumstances declare an “opt-out” from an approval and prevent the clinical trial from being conducted in such member state.

The CTR also aims to streamline and simplify the rules on safety reporting, and introduces enhanced transparency requirements such as mandatory submission of a summary of the clinical trial results to the EU Database.

After several postponements of the coming into effect of the CTR due to technical difficulties with the underlying information technology systems , the “go live” of these systems and, accordingly, the coming into force of the regulation, occurred on January 31, 2022.

The CTR foresees a three-year transition period.

Member States will work in Clinical Trials Information System (“CTIS”) immediately after the system has gone live.

For one year, until 31 January 2023, clinical trial sponsors can still choose whether to submit an initial clinical trial application in line with the current system (Clinical Trials Directive) or via CTIS.

From 31 January 2023, submission of initial clinical trial applications via CTIS becomes mandatory, and by 31 January 2025, all ongoing trials approved under the current Clinical Trials Directive will be governed by the new Regulation and have to be transitioned to CTIS.

Under both the Clinical Trials Directive and the new CTR, national laws, regulations, and the applicable Good Clinical Practice and Good Laboratory Practice standards must also be respected during the conduct of the trials, including the International Council for Harmonization of Technical Requirements for Pharmaceuticals for Human Use (“ICH”) guidelines on Good Clinical Practice (“GCP)” and the ethical principles that have their origin in the Declaration of Helsinki.

During the development of a medicinal product, the European Medical Agency (“EMA”) and national regulators within the EU provide the opportunity for dialogue and guidance on the development program.

EU Member States will work in CTIS immediately after the system has gone live.

On January 31, 2023, submission of initial clinical trial applications via CTIS became mandatory, and by January 31, 2025, all ongoing trials approved under the former Clinical Trials Directive will need to comply with the CTR and have to be transitioned to CTIS.

Under both the former regime and the new CTR, national laws, regulations, and the applicable Good Clinical Practice, or GCP, and Good Laboratory Practice standards must also be respected during the conduct of the trials, including the International Council for Harmonization of Technical Requirements for Pharmaceuticals for Human Use, or ICH, guidelines on Good Clinical Practice and the ethical principles that have their origin in the Declaration of Helsinki.

During the development of a medicinal product, the European Medical Agency, or EMA and national regulators within the EU provide the opportunity for dialogue and guidance on the development program.

At the EMA level, this is usually done in the form of scientific advice, which is given by the Committee for Medicinal Products for Human Use (“CHMP”) on the recommendation of the Scientific Advice Working Party (“SAWP”).

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Advice from the EMA is typically provided based on questions concerning, for example, quality (chemistry, manufacturing and controls testing), nonclinical testing and clinical studies, and pharmacovigilance plans and risk-management programs.

Advice is not legally binding with regard to any future marketing authorization application of the product concerned.

Advice is not legally binding with regard to any future Marketing Authorization Application (“MAA”) of the product concerned.

Drug Marketing Authorization

In the European Union, medicinal products, including advanced therapy medicinal products (“ATMPs”) are subject to extensive pre- and post-market regulation by regulatory authorities at both the European Union and national levels.

ATMPs comprise gene therapy products, somatic cell therapy products and tissue engineered products, which are genes, cells or tissues that have undergone substantial manipulation and that are administered to human beings in order to cure, diagnose or prevent diseases or regenerate, repair or replace a human tissue.

Pursuant to the ATMP Regulation, the Committee on Advanced Therapies

(“CAT”) is responsible in conjunction with the CHMP for the evaluation of ATMPs.

The CHMP and CAT are also responsible for providing guidelines on ATMPs.

These guidelines provide additional guidance on the factors that the EMA will consider in relation to the development and evaluation of ATMPs and include, among other things, the preclinical studies required to characterize ATMPs manufacturing and control information that should be submitted in a In the EU and EEA, after completion of all required clinical testing, pharmaceutical products may only be placed on the market after obtaining a Marketing Authorization (“MA”).

To obtain an MA of a drug under European Union regulatory systems, an applicant can submit an MAA, through, amongst others, a centralized or decentralized procedure.

Centralized Authorization Procedure

The centralized procedure provides for the grant of a single MA that is issued by the EC, following the scientific assessment of the application by the EMA that is valid for all EU Member States as well as in the three additional EEA Member States.

The centralized procedure is compulsory for specific medicinal products, including for medicines developed by means of certain biotechnological processes, products designated as orphan medicinal products, ATMP, and medicinal products with a new active substance indicated for the treatment of certain diseases (AIDS, cancer, neurodegenerative disorders, diabetes, auto-immune and viral diseases).

For medicinal products containing a new active substance not yet authorized in the EEA before May 20, 2004 and indicated for the treatment of other diseases, medicinal products that constitute significant therapeutic, scientific or technical innovations or for which the grant of a MA through the centralized procedure would be in the interest of public health at EU level, an applicant may voluntarily submit an application for a marketing authorization through the centralized procedure.

Under the centralized procedure, the Committee for Medicinal Products for Human Use established at the EMA, is responsible for conducting the initial assessment of a drug.

The CHMP is also responsible for several post-authorization and maintenance activities, such as the assessment of modifications or extensions to an existing marketing authorization.

Under the centralized procedure, the timeframe for the evaluation of an MAA by the EMA’s CHMP is, in principle, 210 days from receipt of a valid MAA.

However, this timeline excludes clock stops, when additional written or oral information is to be provided by the applicant in response to questions asked by the CHMP, so the overall process typically takes a year or more, unless the application is eligible for an accelerated assessment.

Accelerated evaluation might be granted by the CHMP in exceptional cases, when a medicinal product is expected to be of a major public health interest, particularly from the point of view of therapeutic innovation.

Upon request, the CHMP can reduce the time frame to 150 days if the applicant provides sufficient justification for an accelerated assessment.

The CHMP will provide a positive opinion regarding the application only if it meets certain quality, safety and efficacy requirements.

This opinion is then transmitted to the EC, which has the ultimate authority for granting MA within 67 days after receipt of the CHMP opinion.

Decentralized Authorization Procedure

Medicines that fall outside the mandatory scope of the centralized procedure have three routes to authorization:

(i) they can be authorized under the centralized procedure if they concern a significant therapeutic, scientific or technical innovation, or if their authorization would be in the interest of public health;

(ii) they can be authorized under a decentralized procedure where an applicant applies for simultaneous authorization in more than one EU member state;

or (iii) they can be authorized in an EU member state in accordance with that state’s national procedures and then be authorized in other EU countries by a procedure whereby the countries concerned agree to recognize the validity of the original, national marketing authorization (mutual recognition procedure).

The decentralized procedure permits companies to file identical MA applications for a medicinal product to the competent authorities in various EU Member States simultaneously if such medicinal product has not received marketing approval in any EU Member State before.

This procedure is available for pharmaceutical products not falling within the mandatory scope of the centralized procedure.

The competent authority of a single EU Member State, the reference member state, is appointed to review the application and provide an assessment report.

The competent authorities of the other EU Member States, the concerned member states, are subsequently required to grant a marketing authorization for their territories on the basis of this assessment.

The only exception to this is where the competent authority of an EU Member State considers that there are concerns of potential serious risk to public health, the disputed points are subject to a dispute resolution mechanism and may eventually be referred to the EC, whose decision is binding for all EU Member States.

Risk Management Plan

All new MAAs must include a Risk Management Plan (“RMP”) describing the risk management system that the company will put in place and documenting measures to prevent or minimize the risks associated with the product.

RMPs are continually modified and updated throughout the lifetime of the medicine as new information becomes available.

An updated RMP must be

(i) at the request of EMA or a national competent authority, or (ii) whenever the risk-management system is modified, especially as the result of new information being received that may lead to a significant change to the benefit-risk profile or as a result of an important pharmacovigilance or risk-minimization milestone being reached.

The regulatory authorities may also impose specific obligations as a condition of the MA.

RMPs and Periodic Safety Update Reports (“PSURs”) are routinely available to third parties requesting access, subject to limited redactions.

MA Validity Period

Marketing Authorizations have an initial duration of five years.

After these five years, the authorization may subsequently be renewed on the basis of a reevaluation of the risk-benefit balance.

Once renewed, the MA is valid for an unlimited period unless the EC or the national competent authority decides, on justified grounds relating to pharmacovigilance, to proceed with only one additional five-year renewal.

Applications for renewal must be made to the EMA at least nine months before the five-year period expires.

Additionally, the holder of a MA for an ATMP must put in place and maintain a system to ensure that each individual product and its starting and raw materials, including all substances coming into contact with the cells or tissues it may contain, can be traced through the sourcing, manufacturing, packaging, storage, transport and delivery to the relevant healthcare institution where the product is used.

Exceptional Circumstances/Conditional Approval

Similar to accelerated approval regulations in the United States, conditional MAs can be granted in the EU in exceptional circumstances.

A conditional MA can be granted for medicinal products where, although comprehensive clinical data referring to the safety and efficacy of the medicinal product have not been supplied, a number of criteria are fulfilled:

(i) the benefit/risk balance of the product is positive, (ii) it is likely that the applicant will be in a position to provide the comprehensive clinical data, (iii) unmet medical needs will be fulfilled by the grant of the MA and (iv) the benefit to public health of the immediate availability on the market of the medicinal product concerned outweighs the risk inherent in the fact that additional data are still required.

A conditional MA must be renewed annually.

Orphan Designation and Exclusivity

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Upon the grant of a marketing authorization, orphan drug designation provides up to ten years of market exclusivity in the orphan indication.

During the 10-year period of market exclusivity, with a limited number of exceptions, the regulatory authorities of the EU Member States and the EMA may not accept applications for marketing authorization, accept an application to extend an existing marketing authorization or grant marketing authorization for other similar medicinal products for the same therapeutic

A similar medicinal product is defined as a medicinal product containing a similar active substance or substances as contained in a currently authorized orphan medicinal product, and which is intended for the same therapeutic indication.

An orphan medicinal product can also obtain an additional two years of market exclusivity for an orphan-designated condition when the results of specific studies are reflected in the Summary of Product Characteristics (“SmPC”), addressing the pediatric population and completed in accordance with a fully compliant Pediatric Investigation Plan (“PIP”).

An orphan medicinal product can also obtain an additional two years of market exclusivity for an orphan-designated condition

when the results of specific studies are reflected in the Summary of Product Characteristics (“SmPC”), addressing the pediatric population and completed in accordance with a fully compliant Pediatric Investigation Plan (“PIP”).

No extension to any supplementary protection certificate can be granted on the basis of pediatric studies for orphan indications.

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In March 2016, the EMA launched an initiative to facilitate development of product candidates in indications, often rare, for which few or no therapies currently exist.

The Priority Medicines, or PRIME, scheme is intended to encourage drug development in areas of unmet medical need and provides accelerated assessment of products representing substantial innovation reviewed under the centralized procedure.

The Priority Medicines (“PRIME”) scheme is intended to encourage drug development in areas of unmet medical need and provides accelerated assessment of products representing substantial innovation reviewed under the centralized procedure.

Products from small- and medium-sized enterprises may qualify for earlier entry into the PRIME scheme than larger companies on the basis of compelling non-clinical data and tolerability data from initial clinical trials.

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Other Regulations

Although we currently do not have any products on the market, our current and future business operations may be subject to additional healthcare regulation and enforcement by the federal government and by authorities in the states and foreign jurisdictions in which we conduct our business.

Such laws or regulations include, without limitation, state, federal, and foreign anti-kickback, fraud and abuse, false claims, privacy and security, price reporting, and physician sunshine laws or regulations.

Some of our pre-commercial activities are subject to some of these laws.

The federal Anti-Kickback Statute makes it illegal for any person or entity, including a prescription drug manufacturer or a party acting on its behalf, to knowingly and willfully, directly or indirectly, solicit, receive, offer, or pay any remuneration that is intended to induce the referral of business, including the purchase, order, lease of any good, facility, item or service for which payment may be made under a federal healthcare program, such as Medicare or Medicaid.

The term “remuneration” has been broadly interpreted to include anything of value.

The Anti-Kickback Statute has been interpreted to apply to arrangements between pharmaceutical manufacturers on one hand and prescribers, purchasers, formulary managers, and beneficiaries on the other.

Although there are a number of statutory exceptions and regulatory safe harbors protecting some common activities from prosecution, the exceptions and safe harbors are drawn narrowly.

Practices that involve remuneration that may be alleged to be intended to induce prescribing, purchases, or recommendations may be subject to scrutiny if they do not qualify for an exception or safe harbor.

Failure to meet all of the requirements of a particular applicable statutory exception or regulatory safe harbor does not make the conduct per se illegal under the Anti-Kickback Statute.

Instead, the legality of the arrangement will be evaluated on a case-by-case basis based on a cumulative review of all its facts and circumstances.

The government often takes the position that to violate the Anti-Kickback Statute, only one purpose of the remuneration need be to induce referrals, even if there are other legitimate purposes for the remuneration.

Several courts have interpreted the statute’s intent requirement to mean that if any one purpose of an arrangement involving remuneration is to induce referrals of federal healthcare covered business, the Anti-Kickback Statute has been violated.

In addition, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation.

Violations of this law are punishable by up to five years in prison, and can also result in criminal fines, civil money penalties, and exclusion from participation in federal

healthcare programs.

Moreover, a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the federal civil False Claims Act.

The federal civil False Claims Act prohibits, among other things, any person or entity from knowingly presenting, or causing to be presented, for payment to, or approval by, federal programs, including Medicare and Medicaid, claims for items or services, including drugs, that are false or fraudulent or not provided as claimed.

Persons and entities can be held liable under these laws if they are deemed to “cause” the submission of false or fraudulent claims by, for example, providing inaccurate billing or coding information to customers or promoting a product off-label.

Pharmaceutical companies have been prosecuted under the False Claims Act for engaging in a variety of different types of conduct that caused the submission of false claims to federal healthcare programs.

Under the Anti-Kickback Statute, for example, a claim resulting from a violation of the Anti-Kickback Statute is deemed to be a false or fraudulent claim for purposes of the False Claims Act.

The False Claims Act imposes mandatory treble damages and per-violation civil penalties up to approximately $23,000.

In addition, our future activities relating to the reporting of wholesaler or estimated retail prices for our products, the reporting of prices used to calculate Medicaid rebate information and other information affecting federal, state, and third-party reimbursement for our products, and the sale and marketing of our products are subject to scrutiny under this law.

Penalties for federal civil False Claims Act violations may include up to three times the actual damages sustained by the government, plus mandatory civil penalties for each separate false claim, the potential for exclusion from participation in federal healthcare programs, and, although the federal False Claims Act is a civil statute, False Claims Act violations may also implicate various federal criminal statutes.

The Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) created additional federal criminal statutes that prohibit, among other actions, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, including private third-party payors, knowingly and willfully embezzling or stealing from a healthcare benefit program, willfully obstructing a criminal investigation of a healthcare offense, and knowingly and willfully falsifying, concealing, or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items, or services.

Like the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation.

The civil monetary penalties statute imposes penalties against any person or entity that, among other things, is determined to have presented or caused to be presented a claim to a federal health program that the person knows or should know is for an item or service that was not provided as claimed or is false or fraudulent.

Also, many states have similar fraud and abuse statutes or regulations that may be broader in scope and may apply regardless of payor, in addition to items and services reimbursed under Medicaid and other state programs.

Additionally, to the extent that any of our products are sold in a foreign country, we may be subject to similar foreign laws.

HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act (“HITECH”), and their implementing regulations, mandates, among other things, the adoption of uniform standards for the electronic exchange of information in common healthcare transactions, as well as standards relating to the privacy and security of individually identifiable health information, which require the adoption of administrative, physical, and technical safeguards to protect such information.

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

HITECH also increased the civil and criminal penalties that may be imposed against covered entities and business associates and gave state attorneys general new authority to file civil actions for damages or injunctions in federal courts to enforce the federal HIPAA laws and seek attorney’s fees and costs associated with pursuing federal civil actions.

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

Failure to comply with these laws, where applicable, can result in the imposition of significant civil and/or criminal penalties.

The Physician Payments Sunshine Act imposes, among other things, annual reporting requirements for covered manufacturers for certain payments and other transfers of value provided to physicians, as defined under such law, and teaching hospitals, as well as certain ownership and investment interests held by physicians and their immediate family members.

Failure to submit timely, accurately, and completely the required information for all payments and transfers of value and ownership or investment interests may result in civil monetary penalties.

Certain states also mandate implementation of compliance programs, impose restrictions on drug manufacturer marketing practices, and/or require the tracking and reporting of gifts, compensation, and other remuneration to physicians or drug pricing, and certain states and localities require the registration of pharmaceutical sales representatives.

If we intend to commercialize products that could be reimbursed under a federal healthcare program and other government healthcare programs, we will develop a comprehensive compliance program that establishes internal control to facilitate adherence to the rules and program requirements to which we will or may become subject.

Although the development and implementation of compliance programs designed to establish internal controls and facilitate compliance can mitigate the risk of investigation, prosecution, and penalties assessed for violations of these laws, the risks cannot be entirely eliminated.

Certain states have also adopted comparable privacy and security laws and regulations, some of which may be more stringent than HIPAA.

Such laws and regulations will be subject to interpretation by various courts and other governmental authorities, thus creating potentially complex compliance issues for us and our future customers and strategic partners.

In addition, California enacted the California Consumer Privacy Act (“CCPA”) on June 28, 2018, which went into effect on January 1, 2020.

The CCPA creates individual privacy rights for California consumers and increases the privacy and security obligations of entities handling certain personal data.

The CCPA provides for civil penalties for violations, as well as a private right of action for data breaches that is expected to increase data breach litigation.

The CCPA may increase our compliance costs and potential liability, and many similar laws have been proposed at the federal level and proposed or enacted in other states.

Any liability from failure to comply with the requirements of these laws could adversely affect our financial condition.

Foreign data protection laws, including, without limitation, the EU’s General Data Protection Regulation (“GDPR”) and EU member state data protection legislation, also apply to health-related and other personal data that we process, including, without limitation, personal data relating to clinical trial participants in the EU.

The United Kingdom and Switzerland have also adopted data protection laws and regulations.

The collection and use of personal health data and other personal information in the European Union is governed by the provisions of the GDPR, which came into force in May 2018 and related implementing laws in individual EU Member States.

The GDPR imposes a number of strict obligations and restrictions on the ability to process (processing includes collection, analysis and transfer of) personal data of individuals within the European Union and in the EEA, including health data from clinical trials and adverse event reporting.

The GDPR also includes requirements relating to the consent of the individuals to whom the personal data relates, the information provided to the individuals prior to processing their personal data or personal health data, notification of data processing obligations to the national data protection authorities and the security and confidentiality of the personal data.

EU Member States may also impose additional requirements in relation to health, genetic and biometric data through their national implementing legislation.

Failure to comply with the requirements of the GDPR and the related national data protection laws of the EU Member States may result in significant monetary fines for noncompliance of up to €20 million or 4% of the annual global revenues of the noncompliant company, whichever is greater, other administrative penalties and a number of criminal offenses (punishable by uncapped fines) for organizations and in certain cases their directors and officers as well as civil liability claims from individuals whose personal data was processed.

Guidance developed at both EU level and at the national level in individual EU Member States concerning implementation and compliance practices are often updated or otherwise revised.

There is, moreover, a growing trend towards required public disclosure of clinical trial data in the European Union which adds to the complexity of obligations relating to processing health data from clinical trials.

Such public disclosure obligations are provided in the new EU Clinical Trials Regulation, EMA disclosure initiatives and voluntary commitments by industry.

Failing to comply with these obligations could lead to government enforcement actions and significant penalties against us, harm to our reputation, and adversely impact our business and operating results.

The uncertainty regarding the interplay between different regulatory frameworks, such as the Clinical Trials Regulation and the GDPR, further adds to the complexity that we face with regard to data protection regulation.

With regard to the transfer of data from the European Union to the United Kingdom, the Trade and Cooperation Agreement (“TCA”) provided for a transition period of up to six months as of January 1, 2021 to enable the European Commission to complete its adequacy assessment of the UK’s data protection laws.

On June 28, 2021 the European Commission adopted two adequacy decisions for the United Kingdom – one under the GDPR and the other for the Law Enforcement Directive.

Personal data may now freely flow from the European Union to the United Kingdom since the United Kingdom is deemed to have an adequate data protection level.

Additionally, following the UK's withdrawal from the European Union and the EEA, companies also have to comply with the UK’s data protection laws (including the UK GDPR, which is based on the EU GDPR), the latter regime having the ability to separately fine up to the greater of £17.5 million or 4% of global turnover.

The adequacy decisions include a ‘sunset clause’ which entails that the decisions will automatically expire four years after their entry into force.

If our operations are found to be in violation of any of such laws or any other governmental regulations that apply to us, we may be subject to penalties, including, without limitation, significant administrative, regulatory, civil and criminal penalties, damages, fines, disgorgement, contractual damages, reputational harm, diminished profits and future earnings, imprisonment, additional reporting requirements and/or oversight if we become subject to a corporate integrity agreement or similar agreement to resolve allegations of non-compliance with these laws, the curtailment or restructuring of our operations, and exclusion from participation in federal and state healthcare programs, any of which could adversely affect our ability to operate our business and our financial results.

These laws or governmental regulations could require us or our collaborators to incur additional costs to achieve compliance, limit our competitiveness, necessitate the acceptance of more onerous obligations in our contracts, restrict our ability to use, store, transfer, and process data, impact our or our collaborators’ ability to process or use data in order to support the provision of our products or services, affect our or our collaborators’ ability to offer our products and services in certain locations, or cause regulators to reject, limit, or disrupt our clinical trial activities.

Pharmaceutical companies are subject to additional healthcare regulation and enforcement by the federal government and by authorities in the states and foreign jurisdictions in which they conduct their business.

Such laws include, without limitation:

the federal Anti-Kickback Statute (“AKS”);

the federal False Claims Act (“FCA”);

the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) and similar foreign, federal and state fraud, abuse and transparency laws.

The AKS prohibits, among other things, persons and entities from knowingly and willfully soliciting, receiving, offering or paying remuneration, to induce, or in return for, either the referral of an individual, or the purchase or recommendation of an item or service for which payment may be made under any federal healthcare program.

The term remuneration has been interpreted broadly to include anything of value.

The AKS has been interpreted to apply to arrangements between pharmaceutical manufacturers on one hand, and prescribers and purchasers on the other.

The government often takes the position that to violate the AKS, only one purpose of the remuneration need be to induce referrals, even if there are other legitimate purposes for the remuneration.

There are a number of statutory exceptions and regulatory safe harbors protecting some common activities from AKS prosecution, but they are drawn narrowly and practices that involve remuneration, such as consulting agreements, that may be alleged to be intended to induce prescribing, purchasing or recommending may be subject to scrutiny if they do not qualify for an exception or safe harbor.

Our practices may not in all cases meet all of the criteria for protection under a statutory exception or regulatory safe harbor.

Failure to meet all of the requirements of a particular applicable statutory exception or regulatory safe harbor does not make the conduct per se illegal under the AKS.

Instead, the legality of the arrangement will be evaluated on a case-by-case basis based on a cumulative review of all of its facts and circumstances.

A person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation.

Civil and criminal false claims laws, including the FCA, and civil monetary penalty laws, which can be enforced through civil whistleblower or qui tam actions, prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment of federal government funds, including in federal healthcare programs, that are false or fraudulent.

Pharmaceutical and other healthcare companies have been prosecuted under these laws for engaging in a variety of different types of conduct that caused the submission of false claims to federal healthcare programs.

Under the AKS, for example, a claim resulting from a violation of the AKS is deemed to be a false or fraudulent claim for purposes of the FCA.

The FCA imposes mandatory treble damages and per-violation civil penalties up to approximately $25,000.

HIPAA created additional federal criminal statutes that prohibit, among other things, executing a scheme to defraud any healthcare benefit program, including private third-party payors, and making false statements relating to healthcare matters.

A person or entity does not need to have actual knowledge of the healthcare fraud statute implemented under HIPAA or specific intent to violate the statute in order to have committed a violation.

The FDCA addresses, among other things, the design, production, labeling, promotion, manufacturing, and testing of drugs, biologics and medical devices, and prohibits such acts as the introduction into interstate commerce of adulterated or misbranded drugs or devices.

The PHSA also prohibits the introduction into interstate commerce of unlicensed or mislabeled biological products.

federal Physician Payments Sunshine Act requires certain manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program, with specific exceptions, to annually report to CMS information related to payments or other transfers of value made to various healthcare professionals including physicians, physician assistants, nurse practitioners, clinical nurse specialists, certified nurse anesthetists, certified nurse-midwives, and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members.

Beginning on January 1, 2023, California Assembly Bill 1278 requires California physicians and surgeons to notify patients of Open Payments.

We are also subject to additional similar U.S.

state and foreign law equivalents of each of the above federal laws, which, in some cases, differ from each other in significant ways, and may not have the same effect, thus complicating compliance efforts.

If our operations are found to be in violation of any of such laws or any other governmental regulations that apply, we may be subject to penalties, including, without limitation, civil, criminal and administrative penalties, damages, fines, exclusion from government-funded healthcare programs, such as Medicare and Medicaid or similar programs in other countries or jurisdictions, integrity oversight and reporting obligations to resolve allegations of non-compliance, disgorgement, individual imprisonment, contractual damages, reputational harm, diminished profits and the curtailment or restructuring of our operations.

Data Privacy and Security

Numerous state, federal, and foreign laws govern the collection, dissemination, use, access to, confidentiality, and security of personal information, including health-related information.

In the United States, numerous federal and state laws and regulations, including state data breach notification laws, state health information privacy laws, and federal and state consumer protection laws and regulations, govern the collection, use, disclosure, and protection of health-related and other personal information could apply to our operations or the operations of our partners.

For example, HIPAA, as amended by Health Information Technology for Economic and Clinical Health Act (“HITECH”), and their respective implementing regulations imposes privacy, security, and breach notification obligations on certain health care providers, health plans, and health care clearinghouses, known as covered entities, as well as their business associates that perform certain services that involve using, disclosing, creating, receiving, maintaining, or transmitting individually identifiable health information for or on behalf of such covered entities.

Entities that are found to be in violation of HIPAA may be subject to significant civil, criminal, and administrative fines and penalties and/or additional reporting and oversight obligations if required to enter into a resolution agreement and corrective action plan with HHS to settle allegations of HIPAA non-compliance.

Further, entities that knowingly obtain, use, or disclose individually identifiable health information maintained by a HIPAA covered entity in a manner that is not authorized or permitted by HIPAA may be subject to criminal penalties.

Even when HIPAA does not apply, according to the FTC, violating consumers’ privacy rights or failing to take appropriate steps to keep consumers’ personal information secure may constitute unfair acts or practices in or affecting commerce in violation of Section 5(a) of the Federal Trade Commission Act.

In addition, state laws govern the privacy and security of personal information, including health-related information, in certain circumstances.

Failure to comply with these laws, where applicable, can result in the imposition of significant civil and/or criminal penalties and private litigation.

For example, the CCPA, which went into effect on January 1, 2020, creates new data privacy obligations for covered companies and provides new privacy rights to California residents.

Health Reform

In the United States and foreign jurisdictions, there have been a number of legislative and regulatory changes to healthcare systems that could affect our future results of operations.

There have been and continue to be a number of initiatives at the U.S.

federal and state levels that seek to reduce healthcare costs.

In particular, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act (the “Affordable Care Act”), has had a significant impact on the healthcare industry.

The Affordable Care Act was designed to expand coverage for the uninsured while at the same time containing overall healthcare costs.

With regard to pharmaceutical products, among other things, the Affordable Care Act revised the definition of “average manufacturer price” for calculating and reporting Medicaid drug rebates on outpatient prescription drug prices and imposed a significant annual fee on companies that manufacture or import certain branded prescription drug products.

There remain judicial and Congressional challenges to certain aspects of the Affordable Care Act.

In January 2017, Congress voted to adopt a budget resolution for fiscal year 2017 (the “Budget Resolution”) that authorizes the implementation of legislation that would repeal portions of the Affordable Care Act.

Further, on January 20, 2017, an Executive Order was signed, directing federal agencies with authorities and responsibilities under the Affordable Care Act to waive, defer, grant exemptions from, or delay the implementation of any provision of the Affordable Care Act that would impose a fiscal or regulatory burden on states, individuals, healthcare providers, health insurers, or manufacturers of pharmaceuticals or medical devices.

Congress also has considered subsequent legislation to repeal or replace elements of the Affordable Care Act.

While Congress has not passed comprehensive repeal legislation, several bills affecting the implementation of certain taxes under the Affordable Care Act have been signed into law.

The legislation informally titled the Tax Cuts and Jobs Act of 2017 (the “Tax Act”) included a provision which repealed, effective January 1, 2019, the tax-based shared responsibility payment imposed by the Affordable Care Act on certain individuals who fail to maintain qualifying health coverage for all or part of a year that is commonly referred to as the “individual mandate.” Additionally, the 2020 federal spending package permanently eliminated, effective January 1, 2020, the Affordable Care Act-mandated “Cadillac” tax on high-cost employer-sponsored health coverage and medical device tax and, effective January 1, 2021, also eliminates the health insurer tax.

On December 14, 2018, a Texas U.S.

District Court Judge ruled that the Affordable Care Act is unconstitutional in its entirety because the “individual mandate” was repealed by Congress as part of the Tax Act.

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

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

On November 10, 2020, the Supreme Court heard oral arguments on the case.

In June 2021, the Supreme Court held that the states and individuals that brought the lawsuit challenging the Affordable Care Act’s individual mandate did not have standing to challenge the law.

Although the Supreme Court did not reach the merits of the challenge, it vacated the judgment of the Texas U.S.

District Court and remanded the case with instructions to dismiss, effectively ending the case.

There are no changes to our business as a result of the decision, however, in the coming years, additional legislative and regulatory changes could be made to governmental health programs that could significantly impact pharmaceutical companies and the success of their product candidates.

In addition, other legislative changes have been proposed and adopted since the Affordable Care Act was enacted.

In August 2011, President Obama signed into law the Budget Control Act of 2011, which, among other things, created the Joint Select Committee on Deficit Reduction to recommend to Congress proposals in spending reductions.

The Joint Select Committee did not achieve a targeted deficit reduction of at least $1.2 trillion for the years 2013 through 2021, triggering the legislation’s automatic reduction to several government programs.

These included reductions to Medicare payments to providers of 2% per fiscal year, which went into effect on April 1, 2013, and, due to subsequent legislative amendments to the statute, will stay in effect through 2029 unless additional Congressional action is taken.

Additionally, in January 2013, the American Taxpayer Relief Act of 2012 was signed into law, which, among other things, further reduced Medicare payments to several providers and increased the statute of limitations period for the government to recover overpayments to providers from three to five years.

Moreover, the Drug Supply Chain Security Act imposes obligations on manufacturers of pharmaceutical products, among others, related to product tracking and tracing.

Among its requirements, manufacturers need to provide certain information regarding the drug product to individuals and entities to which product ownership is transferred, label drug product with a product identifier, and keep certain records regarding the drug product.

The transfer of information to subsequent product owners by manufacturers will eventually be required to be done electronically.

Manufacturers will also be required to verify that purchasers of the manufacturers’ products are appropriately licensed.

Further, manufacturers will have drug product investigation, quarantine, disposition, and notification responsibilities related to counterfeit, diverted, stolen, and intentionally adulterated products, as well as products that are the subject of fraudulent transactions or which are otherwise unfit for distribution such that they would be reasonably likely to result in serious health consequences or death.

Further, there has been increasing legislative and enforcement interest in the United States with respect to specialty drug pricing practices.

Specifically, there have been recent U.S.

Congressional inquiries and proposed bills designed to, among other things, bring more transparency to drug pricing, reduce the cost of prescription drugs under Medicare, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for drugs.

Additionally, on November 20, 2020, the Center for Medicare & Medicaid Services (“CMS”) issued an interim final rule implementing a Most Favored Nation (“MFN”) model that would cap the price Medicare can pay for a drug to the lowest price paid in an economically comparable country within the Organization for Economic Cooperation and Development.

The MFN model regulations mandate participation by identified Part B providers and would have applied to all U.S.

states and territories for a seven-year period beginning January 1, 2021, and ending December 31, 2027.

However, on December 29, 2021, CMS rescinded the proposed MFN rule.

Additionally, on December 2, 2020, HHS published a regulation removing safe harbor protection for price reductions from pharmaceutical manufacturers to plan sponsors under Part D, either directly or through pharmacy benefit managers, unless the price reduction is required by law.

The rule also creates a new safe harbor for price reductions reflected at the point-of-sale, as well as a safe harbor for certain fixed fee arrangements between pharmacy benefit managers and manufacturers.

Pursuant to court order, the removal and addition of the aforementioned safe harbors have been delayed until January 1, 2023, requiring manufacturers to ensure the full value of co-pay assistance is passed on to the patient or these dollars will count toward the Average Manufacturer Price and Best Price calculation of the drug.

On May 21, 2021, PhRMA sued the HHS in the U.S.

District Court for the District of Columbia, to stop the implementation of the rule claiming that the rule contradicts federal law surrounding Medicaid rebates.

It is unclear how the outcome of this litigation will affect the rule.

We cannot predict how the implementation of and any further changes to this rule will affect our business.

It is unclear whether or how the Biden administration will move forward with the rule.

But if the new administration implements the rule in its current form and the rule survives judicial scrutiny, the MFN model will subject certain physician-administered drugs or biologicals identified by CMS as having the highest annual Medicare Part B spending to an alternative payment methodology based on international reference prices, with the list of products to be updated annually to add more products and products not to be removed absent limited circumstances.

The Department of Health and Human Services (“HHS”) has solicited feedback on some of these measures and has implemented others under its existing authority.

For example, in May 2019, CMS issued a final rule to allow Medicare Advantage plans the option to use step therapy for Part B drugs beginning January 1, 2020.

This final rule codified CMS’s policy change that was effective January 1, 2019.

Further, in December 2019, the FDA issued draft guidance describing procedures for drug manufacturers to facilitate the importation of FDA-approved drugs and biologics manufactured abroad and originally intended for sale in a foreign country into the United States.

On November 2, 2021, President Biden’s administration announced a new framework for prescription drug pricing.

This plan allows Medicare to negotiate prices for a set number of small molecule drugs that have been on the market for more than nine years, and for biologics that have been on the market for more than 12 years.

The plan also imposes a tax penalty on drug companies that increase prices faster than inflation and lowers out-of-pocket costs for seniors.

Individual states in the United States have also become increasingly active in passing legislation and implementing regulations designed to control pharmaceutical product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.

For example, after some pharmacy benefit managers and insurers adopted policies stating that the amount of a copay coupon would not be applied to the enrollee’s deductible or out-of-pocket maximum (referred to as “accumulator adjustment programs”), some states passed legislation banning these policies.

On January 31, 2020, CMS released its proposed 2021 Notice of Benefit and Payment Parameters rule, which provides that insurers would no longer be required to count any coupons from drug manufacturers towards a consumer’s out-of-pocket limit.

The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability, or commercialize our product candidates, if approved.

The United States and some foreign jurisdictions are considering or have enacted a number of reform proposals to change the healthcare system.

There is significant interest in promoting changes in healthcare systems with the stated goals of containing healthcare costs, improving quality or expanding access.

In the United States, the pharmaceutical industry has been a particular focus of these efforts and has been significantly affected by federal and state legislative initiatives, including those designed to

limit the pricing, coverage, and reimbursement of pharmaceutical and biopharmaceutical products, especially under government-funded health care programs, and increased governmental control of drug pricing.

The ACA, which was enacted in March 2010, substantially changed the way healthcare is financed by both governmental and private insurers in the United States, and significantly affected the pharmaceutical industry.

The ACA contains a number of provisions of particular import to the pharmaceutical and biotechnology industries, including, but not limited to, those governing enrollment in federal healthcare programs, a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are inhaled, infused, instilled, implanted or injected, and annual fees based on pharmaceutical companies’ share of sales to federal health care programs.

Since its enactment, there have been judicial and Congressional challenges to certain aspects of the ACA, and we expect there will be additional challenges and amendments to the ACA in the future.

Other legislative changes have been proposed and adopted since the ACA was enacted, including automatic aggregate reductions of Medicare payments to providers of 2% per fiscal year as part of the federal budget sequestration under the Budget Control Act of 2011.

These reductions went into effect in April 2013 and, due to subsequent legislative amendments, will remain in effect through 2030 with the exception of a temporary suspension from May 1, 2020 through December 31, 2020, unless additional action is taken by Congress.

In addition, the Bipartisan Budget Act of 2018, among other things, amended the Medicare Act (as amended by the ACA) to increase the point-of-sale discounts that manufacturers must agree to offer under the Medicare Part D coverage discount program from 50% to 70% off negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period, as a condition for the manufacturer’s outpatient drugs being covered under Medicare Part D.

Moreover, there has recently been heightened governmental scrutiny over the manner in which manufacturers set prices for their marketed products, which has resulted in several Congressional inquiries and proposed and enacted federal and state measures designed to, among other things, reduce the cost of prescription drugs, bring more transparency to product pricing, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for drug products.

For example, in May 2019, CMS adopted a final rule allowing Medicare Advantage Plans the option to use step therapy for Part B drugs, permitting Medicare Part D plans to apply certain utilization controls to new starts of five of the six protected class drugs, and requiring the Explanation of Benefits for Part D beneficiaries to disclose drug price increases and lower cost therapeutic alternatives, which went into effect on January 1, 2021.

Notwithstanding the IRA, continued legislative and enforcement interest exists in the United States with respect to specialty drug pricing practices.

Specifically, we expect regulators to continue pushing for transparency to drug pricing, reducing the cost of prescription drugs under Medicare, reviewing the relationship between pricing and manufacturer patient programs, and reforming government program reimbursement methodologies for drugs.

Coverage and Reimbursement

Sales of our product candidates, once approved, will depend, in part, on the extent to which the costs of our products will be covered by third-party payors, such as government health programs, private health insurers, and managed care organizations.

Third-party payors generally decide which drugs they will cover and establish certain reimbursement levels for such drugs.

In particular, in the United States, private health insurers and other third-party payors often provide reimbursement for products and services based on the level at which the government (through the Medicare or Medicaid programs) provides reimbursement for such treatments.

Patients who are prescribed treatments for their conditions and providers performing the prescribed services generally rely on third-party payors to reimburse all or part of the associated healthcare costs.

Patients are unlikely to use products unless coverage is provided and reimbursement is adequate to cover a significant portion of the cost of such products.

Sales of our product candidates, and any future product candidates, will therefore depend substantially on the extent to which the costs of our product candidates, and any future product candidates, will be paid by third-party payors.

Additionally, the market for our product candidates, and any future product candidates, will depend significantly on access to third-party payors’ formularies without prior authorization, step therapy, or other limitations such as approved lists of treatments for which third-party payors provide coverage and reimbursement.

Additionally, coverage and reimbursement for therapeutic products can differ significantly from payor to payor.

One third-party payor’s decision to cover a particular medical product or service does not ensure that other payors will also provide coverage for the medical product or service or will provide coverage at an adequate reimbursement rate.

As a result, the coverage determination process will require us to provide scientific and clinical support for the use of our products to each payor separately and will be a costly and time-consuming process.

Third-party payors are developing increasingly sophisticated methods of controlling healthcare costs and increasingly challenging the prices charged for medical products and services.

Additionally, the containment of healthcare costs has become a priority of federal and state governments and the prices of drugs have been a focus in this effort.

government, state legislatures, and foreign governments have shown significant interest in implementing cost-containment programs, including price controls and transparency requirements, restrictions on reimbursement, and requirements for substitution of generic products.

Adoption of price controls and cost-containment measures, and adoption of more restrictive policies in jurisdictions with existing controls and measures, could limit our net revenue and results.

If these third-party payors do not consider our products to be cost-effective compared to other therapies, they may not cover our products once approved as a benefit under their plans or, if they do, the level of reimbursement may not be sufficient to allow us to sell our products on a profitable basis.

Decreases in third-party reimbursement for our products once approved or a decision by a third-party payor to not cover our products could reduce or eliminate utilization of our products and have an adverse effect on our sales, results of operations, and financial condition.

In addition, state and federal healthcare reform measures have been and will be adopted in the future, any of which could limit the amounts that federal and state governments will pay for healthcare products and services, which could result in reduced demand for our products once approved or additional pricing pressures.

Significant uncertainty exists as to the coverage and reimbursement status of any pharmaceutical or biological product for which we obtain regulatory approval.

Sales of any product, if approved, depend, in part, on the extent to which such product will be covered by third-party payors, such as federal, state, and foreign government healthcare programs, commercial insurance and managed healthcare organizations, and the level of reimbursement, if any, for such product by third-party payors.

Decisions regarding whether to cover any of our product candidates, if approved, the extent of coverage and amount of reimbursement to be provided are made on a plan-by-plan basis.

Further, no uniform policy for coverage and reimbursement exists in the United States, and coverage and reimbursement can differ significantly from payor to payor.

Third-party payors often rely upon Medicare coverage policy and payment limitations in setting their own reimbursement rates, but also have their own methods and approval process apart from Medicare determinations.

As a result, the coverage determination process is often a time-consuming and costly process that will require us to provide scientific and clinical support for the use of our product candidates to each payor separately, with no assurance that coverage and adequate reimbursement will be applied consistently or obtained in the first instance.

Third-party payors are increasingly challenging the prices charged for medical products and services, examining the medical necessity and reviewing the cost effectiveness of pharmaceutical or biological products, medical devices and medical services, in addition to questioning safety and efficacy.

Adoption of price controls and cost-containment measures, and adoption of more restrictive policies in jurisdictions with existing controls and measures, could further limit sales of any product that receives approval.

Decreases in third-party reimbursement for any product or a decision by a third-party not to cover a product could reduce physician usage and patient demand for the product.

For products administered under the supervision of a physician, obtaining coverage and adequate reimbursement may be particularly difficult because of the higher prices often associated with such drugs.

Additionally, separate reimbursement for the product itself or the treatment or procedure in which the product is used may not be available, which may impact physician utilization.

In addition, companion diagnostic tests require coverage and reimbursement separate and apart from the coverage and reimbursement for their companion pharmaceutical or biological products.

Similar challenges to obtaining coverage and reimbursement, applicable to pharmaceutical or biological products, will apply to companion diagnostics.

In addition, the U.S.

government, state legislatures and foreign governments have continued implementing cost-containment programs, including price controls, restrictions on coverage and reimbursement and requirements for substitution of generic products.

The IRA provides CMS with significant new authorities intended to curb drug costs and to encourage market competition.

For the first time, CMS will be able to directly negotiate prescription drug prices and to cap out-of-pocket costs.

Each year, CMS will select and negotiate a preset number of high-spend drugs and biologics that are covered under Medicare Part B and Part D that do not have generic or biosimilar competition.

These price negotiations will begin in 2023.

The IRA also provides a new “inflation rebate” covering Medicare patients that will take effect in 2023 and is intended to counter certain price increases in prescriptions drugs.

The inflation rebate provision will require drug manufacturers to pay a rebate to the federal government if the price for a drug or biologic under Medicare Part B and Part D increases faster than the rate of inflation.

To support biosimilar competition, beginning in October 2022, qualifying biosimilars may receive a Medicare Part B payment increase for a period of five years.

Separately, if a biologic drug for which no biosimilar exists delays a biosimilar’s market entry beyond two years, CMS will be authorized to subject the biologics manufacturer to price negotiations intended to ensure fair competition.

Notwithstanding these provisions, the IRA’s impact on commercialization and competition remains largely uncertain.

Manufacturing

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Historically, we have relied on third-party contract development and manufacturing organizations (“CDMOs”), to manufacture and supply our preclinical and clinical materials used during the development of our product candidates.

Over the last twelve months, demand for biological therapeutic manufacturing has increased and supply has been constrained, in part due to the displacement caused by efforts to manufacture COVID-19 vaccines.

We initially pursued three separate manufacturing paths to supply investigational product for our planned clinical trials in order to mitigate delays and uncertainties.

We currently rely on a single multi-site CDMO for such manufacturing, although other avenues remain if our current manufacturer were to be negatively impacted.

We currently rely on a single multi-site CDMO for such manufacturing, although other avenues remain available if our current manufacturer were to be negatively impacted.

We maintain a long-term master services agreement with our CDMO pursuant to which the CDMO provides biologics development and manufacturing services on a per-project basis and a related cell line license.

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We do not currently have arrangements in place for redundant supply.

While any reduction or halt in supply from the CDMO could limit our ability to

develop our product candidates until a replacement CDMO is found and qualified, we believe that we have sufficient supply to support our current clinical trial programs.

While any reduction or halt in supply from the CDMO could limit our ability to develop our product candidates until a replacement CDMO is found and qualified, we believe that we have sufficient supply to support our current clinical trial programs.

Any reduction or halt in supply from the CDMO could limit our ability to develop our product candidates until a replacement CDMO is found and qualified, although we believe that we have supply on hand that can partially support our current clinical trial programs until a replacement CDMO is secured.

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We plan to further evaluate these alternatives as we continue to advance into later stages of development for each one of our product candidates.

As of December 31, 2021, we had 50 full-time employees located in the United States.

Human Capital Management

As of December 31, 2022, we employed 86 full-time employees located in the United States.

During 2022, we expanded our capabilities in the organization by hiring 49 new employees.

These employees were hired to support our clinical development,

preclinical research and development, and efforts associated with operating as a public company.

We consider our relationship with our employees to be good.

We have never had a work stoppage, and none of our employees is represented by a labor organization or under any collective bargaining arrangements.

We consider our employee relations to be good.

We track and report internally on key talent metrics including workforce demographics, diversity data and the status of open positions.

We are committed to equality, inclusion and diversity in the workplace.

As of December 31, 2022, nearly 35% of our workforce identify as members of underrepresented ethnic communities and 55% identify as female.

We strive to interview diverse candidates for our open positions.

Attracting, developing and retaining talented employees to support the growth of our business is an integral part of our human capital strategy and critical to our long-term success.

We continue to seek additions to our staff, although the competition in our industry and in the Greater Boston area, where our headquarters is located, is significant.

The principal purpose of our equity incentive and annual bonus programs is to attract, retain and motivate personnel through the granting of stock-based compensation awards and cash-based performance bonus awards.

As a biopharmaceutical company, we recognize the importance of access to high quality healthcare and as such we cover 100% of our employees’ monthly healthcare premiums.

We offer a package of competitive employee benefits, including 401(k) plan matching contributions and an employee stock purchase plan.

We have a performance development review process in which managers provide regular feedback to assist with the development of our employees, including the use of individual plans to assist with career development.

We also invest in the growth and development of our employees through various training and development programs that help build and strengthen our employees’ leadership and professional skills.

We believe our management team has the experience necessary to effectively execute our strategy and advance our product and technology leadership.

A large majority of our employees have obtained advanced degrees in their professions.

We support our employees’ further development with individualized development plans, mentoring, coaching, group training and conference attendance.

Our Corporate Information

We were initially founded as a Delaware limited liability company in January 2010 and subsequently incorporated as a Delaware corporation in June 2014.

On January 20, 2021, pursuant to the Merger Agreement (as defined below) under which miRagen Therapeutics, Inc.

On January 20, 2021, pursuant to a merger agreement under which miRagen Therapeutics, Inc.

acquired Viridian Therapeutics, Inc., we changed our name from Miragen Therapeutics, Inc.

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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