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If our product candidates are not successfully developed and approved, we may never generate any revenue.
−Removed: Our net losses were $65.8 million and $56.1 million for the nine months ended September 30, 2022 and 2021, respectively, and $75.8 million for the year ended December 31, 2021.
−Removed: As of September 30, 2022, we had an accumulated deficit of $226.6 million.
+Added: Our net losses were $22.6 million and $21.4 million for the three months ended March 31, 2023 and 2022, respectively, and $88.2 million for the year ended December 31, 2022.
+Added: As of March 31, 2023, we had an accumulated deficit of $271.8 million.
To date, we have funded our operations primarily through proceeds from the sale of preferred units and convertible preferred stock, a debt financing and our initial public offering, or IPO.
We have devoted substantially all of our financial resources and efforts to research and development.
−Removed: We are still in the early stages of development of our product candidates, and we have not completed clinical development for XTX202 or XTX301, our clinical-stage cytokine product candidates, or XTX101, our clinical-stage mAb product candidate, and we have not commenced clinical development for any of our other product candidates.
+Added: We are still in the early stages of development of our product candidates, and we have not completed clinical development for our clinical-stage, tumor-activated product candidates, XTX101 (anti-CTLA-4), XTX202 (IL-2) and XTX301 (IL-12), and we have not commenced clinical development for any of our other product candidates.
We have not generated any revenue from product sales to date.
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Food and Drug Administration, or FDA, clearance for any investigational new drug application, or IND, for any current or future product candidates;
−Removed: ● successfully initiate and complete clinical trials for our clinical-stage cytokine product candidates, XTX202 and XTX301, and any other current or future product candidates, including all safety and efficacy studies necessary to obtain U.S.
+Added: ● successfully initiate and complete clinical trials for our clinical-stage product candidates and any other current or future product candidates, including all safety and efficacy studies necessary to obtain U.S.
and foreign regulatory approval for our product candidates;
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We will need to obtain substantial additional capital to finance our operations and complete the development and any commercialization of any current or future product candidates.
−Removed: If we are unable to raise this capital when needed, we may be forced to delay, reduce or eliminate one or more of our research and development programs or other operations.
+Added: If we are unable to raise this capital, we may be forced to delay, reduce or eliminate one or more of our research and development programs or other operations.
We expect to incur increasing expenses and operating losses over the next several years in connection with our ongoing research and development activities, particularly as we pursue clinical development of our product candidates, expand research efforts and preclinical activities associated with our other existing programs and discovery platform and continue to implement the additional infrastructure necessary to support our operations as a public reporting company.
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Some of these expenses may be incurred in advance of marketing approval and could be substantial.
−Removed: As of September 30, 2022, we had cash and cash equivalents of $139.1 million.
−Removed: We believe that our existing cash and cash equivalents will be sufficient to enable us to fund our operating expenses and capital expenditure requirements into the second quarter of 2024.
−Removed: However, our existing cash and cash equivalents will not be sufficient to complete development of any current or future product candidate.
+Added: As of March 31, 2023, we had cash and cash equivalents of $93.3 million.
+Added: We believe that our existing cash and cash equivalents will be sufficient to enable us to fund our operating expenses and capital expenditure requirements into the end of the second quarter of 2024.
+Added: Our existing cash and cash equivalents will not be sufficient to complete development of any current or future product candidate.
Accordingly, we will be required to obtain further funding through public or private equity offerings, debt, collaborations, licensing arrangements or other sources.
Adequate additional capital may not be available to us on acceptable terms, or at all.
−Removed: Our failure to raise capital as and when needed, on attractive terms or at all, would have a negative effect on our financial condition and our ability to develop and commercialize our current and any future product candidates, and otherwise pursue our business strategy, and we may be forced to delay, reduce or eliminate our research and development programs or future commercialization efforts.
+Added: Our failure to raise capital, on attractive terms or at all, would have a negative effect on our financial condition and our ability to develop and commercialize our current and any future product candidates, and otherwise pursue our business strategy and we may be forced to delay, reduce or eliminate our research and development programs or future commercialization efforts.
In addition, our cash forecasts are based on assumptions that may prove to be wrong, and we could use our available capital resources earlier than we currently expect.
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Our future capital requirements, both short-term and long-term, will depend on many factors, including:
−Removed: ● the scope, progress, results and costs of research and development for our current and future product candidates, including our ongoing and planned clinical trials for our clinical-stage cytokine product candidates, XTX202 and XTX301;
+Added: ● the scope, progress, results and costs of research and development for our current and future product candidates, including our ongoing and planned clinical trials for our clinical-stage product candidates;
● the scope, prioritization and number of our research and development programs;
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● the extent to which we may acquire or in-license other products, product candidates, technologies or intellectual property, as well as the terms of any such arrangements;
−Removed: ● our ability to seek, establish and maintain a collaboration to develop XTX101, our mAb product candidate, with a collaborator, including the financial terms and any cost-sharing arrangements of any such collaboration;
+Added: ● our ability to seek, establish and maintain a collaboration to further develop XTX101, our Fc-enhanced, tumor-activated anti-CTLA-4 mAb, with a collaborator, including the financial terms and any cost-sharing arrangements of any such collaboration;
● the impacts of the COVID-19 pandemic;
● the costs of continuing to expand our operations and operating as a public company.
−Removed: Other than the ability to request an additional $10.0 million term loan under our loan and security agreement with Pacific Western Bank, or PacWest, we currently do not have any committed external sources of funds and adequate additional capital may not be available to us on acceptable terms, or at all.
−Removed: In addition, our ability to raise additional capital may be adversely impacted by potential worsening global economic conditions, including as a result of the ongoing COVID-19 pandemic, rising inflation rates, and any disruptions to, or volatility in, the credit and financial markets in the United States and worldwide that have arisen or that may arise from the COVID-19 pandemic or from any geopolitical tensions or trade wars.
−Removed: We can give no assurance that we will be able to secure such additional capital to support our operations, or if such funds are available to us, that such additional funding will be sufficient to meet our needs.
+Added: We currently do not have any committed external sources of funds and adequate additional capital may not be available to us on acceptable terms, or at all.
+Added: In addition, our ability to raise additional capital may be adversely impacted by potential worsening economic conditions, both inside and outside the U.S., including without limitation heightened inflation, capital market volatility, interest rate and currency rate fluctuations, any potential economic slowdown or recession, the COVID-19 pandemic (including variants of COVID-19) and geopolitical events, including trade wars or civil or political unrest.
+Added: We can give no assurance that we will be able to secure additional capital to support our operations, or if such funds are available to us, that such additional funding will be sufficient to meet our needs.
Raising additional capital may cause dilution to our stockholders, restrict our operations, or require us to relinquish rights to product candidates or our technology.
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The incurrence of any additional indebtedness would result in additional payment obligations.
−Removed: Under our loan and security agreement with PacWest, we are required to comply with certain restrictive covenants, such as limitations on our ability to incur additional debt, limitations on our ability to declare dividends, limitations on our ability to sell or dispose any part of our business or property and other operating restrictions that could adversely impact our ability to conduct our business, and any agreements governing any other indebtedness that we may incur could require us to comply with additional covenants.
+Added: Under our loan and security agreement with Pacific Western Bank, or PacWest, we are required to comply with certain restrictive covenants, such as limitations on our ability to incur additional debt, limitations on our ability to declare dividends, limitations on our ability to sell or dispose any part of our business or property and other operating restrictions that could adversely impact our ability to conduct our business, and any agreements governing any other indebtedness that we may incur could require us to comply with additional covenants.
If we raise funds through collaborations and licensing arrangements with third parties, we may have to relinquish valuable rights, partially or fully, to our technologies, future revenue streams, research programs or product candidates or grant licenses on terms unfavorable to us.
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Our limited operating history may make it difficult for an investor to evaluate the success of our business to date and to assess our future viability.
−Removed: We are a clinical-stage biopharmaceutical company with a limited operating history upon which investors can evaluate our business and prospects.
+Added: We are a clinical-stage biotechnology company with a limited operating history upon which investors can evaluate our business and prospects.
Since inception, we have devoted substantially all of our financial resources and efforts to performing research and development activities.
−Removed: Our approach to the discovery and development of product candidates using our geographically precise solutions, or GPS, platform is unproven, and we do not know whether we will be able to develop any approved products of commercial value.
+Added: Our approach to the discovery and development of tumor-activated product candidates using our geographically precise solutions, or GPS, platform is unproven, and we do not know whether we will be able to develop any approved products of commercial value.
In addition, each of our product candidates is either in early clinical or preclinical development, and all of our other development programs are still in discovery stages.
We have not yet demonstrated an ability to successfully complete any clinical trials, obtain regulatory approvals, manufacture a commercial-scale product, or arrange for a third party to do so on our behalf, or conduct the sales and marketing activities necessary for successful product commercialization.
−Removed: Consequently, any predictions made about our future success or
−Removed: viability may not be as accurate as they could be if we had a history of successfully developing and commercializing biopharmaceutical products.
+Added: Consequently, any predictions made about our
+Added: future success or viability may not be as accurate as they could be if we had a history of successfully developing and commercializing biopharmaceutical products.
Our ability to utilize our net operating loss carryforwards and certain other tax attributes may be limited.
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There is also a risk that due to regulatory changes, such as suspensions on the use of NOLs, or other unforeseen reasons, our existing NOLs could expire or otherwise become unavailable to offset future income tax liabilities.
−Removed: As described below in “Risks Related to Ownership of Our Common Stock —Changes in tax laws or in their implementation or interpretation may adversely affect our business and financial condition,” the Tax Cuts and Jobs Act of 2017, or Tax Act, as amended by the Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, includes changes to U.S.
+Added: As described below in “Risks Related to Ownership of Our Common Stock—Changes in tax laws or in their implementation or interpretation may adversely affect our business and financial condition,” the Tax Cuts and Jobs Act of 2017, or the Tax Act, as amended by the Coronavirus Aid, Relief, and Economic Security Act, or the CARES Act, includes changes to U.S.
federal tax rates and the rules governing NOL carryforwards that may significantly impact our ability to utilize our NOLs to offset taxable income in the future.
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Our business is highly dependent on the success of our current product candidates, which are in the early stages of development and will require significant additional preclinical and clinical development before we can seek regulatory approval for and commercially launch a product.
−Removed: Our business and future success is highly dependent on our ability to obtain regulatory approval for, and if approved, successfully launch and commercialize, our current product candidates, including our clinical-stage cytokine product candidates, XTX202 and XTX301, or our clinical-stage mAb product candidate, XTX101.
−Removed: We are currently evaluating XTX101 and XTX202 in Phase 1 clinical trials and anticipate commencing a Phase 1 clinical trial for the evaluation of XTX301 in patients with advanced solid tumors in the first quarter of 2023.
−Removed: Additionally, we have a portfolio of programs that are in even earlier stages of preclinical development and may never advance to clinical-stage development.
+Added: Our business and future success is highly dependent on our ability to obtain regulatory approval for, and if approved, successfully launch and commercialize, our current product candidates, including our clinical-stage, tumor-activated product candidates:
+Added: XTX101 (anti-CTLA-4), XTX202 (IL-2), and XTX301 (IL-12).
+Added: We are currently evaluating XTX101 in an ongoing Phase 1 clinical trial and XTX202 in an ongoing Phase 1/2 clinical trial.
+Added: In addition, in the first quarter of 2023, we opened clinical trial sites and are actively screening patients for enrollment in our Phase 1 clinical trial for XTX301.
+Added: We also have a portfolio of programs that are in even earlier stages of preclinical development and may never advance to clinical-stage development.
Commencing clinical trials in the United States is subject to acceptance by the FDA of an IND and finalizing the trial design based on discussions with the FDA and other regulatory authorities.
In the event that the FDA requires us to complete additional preclinical studies, or we are required to satisfy other FDA requests prior to commencing clinical trials, the start of our clinical trials may be delayed.
−Removed: Even after we receive and incorporate guidance from these regulatory authorities, the FDA or other regulatory authorities could disagree that we have satisfied their requirements to commence any clinical trial or change their position on the acceptability of our trial design or the clinical endpoints selected, which may require us to complete additional preclinical studies or clinical trials or impose stricter approval conditions than we currently expect.
+Added: Even after we receive and incorporate guidance from these regulatory authorities, the FDA or other regulatory authorities could disagree that we have satisfied their requirements to commence any clinical trial or change their position on the acceptability of our trial design or the clinical endpoints selected, which may require us to complete additional preclinical studies or clinical trials or impose stricter approval conditions than we
+Added: currently expect.
There are equivalent processes and risks applicable to clinical trial applications in other countries, including countries in the EU.
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In particular, while we have conducted certain preclinical studies for each of our clinical stage product candidates, we do not know whether these product candidates will perform in our clinical trials as they have performed in these prior preclinical studies.
−Removed: For example, in preclinical mouse models, we observed that XTX202 had comparable tumor growth inhibition to aldesleukin and non-masked IL-2, with XTX202 avoiding mortality and body weight loss.
+Added: For example, in preclinical mouse models, we observed XTX101 had tumor-selective activity and tumor growth inhibition superior to that of an ipilimumab analog, and that XTX202 had comparable tumor growth inhibition to aldesleukin and non-masked IL-2, with both XTX101 and XTX202 avoiding mortality and body weight loss.
However, there is no guarantee these preclinical results will be replicated in clinical trials.
−Removed: Similarly, there can be no assurance that interim or preliminary clinical data or results will be predictive of future clinical data or results.
+Added: Similarly, there can be no assurance that interim or preliminary clinical data or results, including without limitation the preliminary intra-tumoral pharmacodynamic data reported for two patients treated with XTX202, will be predictive of future clinical data or results.
Many companies in the biopharmaceutical and biotechnology industries have suffered significant setbacks in late-stage clinical trials after achieving positive results in early-stage development and we cannot be certain that we will not face similar setbacks.
−Removed: These setbacks have been caused by, among other things, preclinical findings made while clinical trials were underway, or safety or efficacy observations made in preclinical studies and clinical trials, including previously unreported adverse events.
+Added: These setbacks have been caused by, among other things, preclinical findings made while clinical trials were underway, or safety or efficacy observations made in preclinical studies and clinical trials, including previously unreported adverse events, or AEs.
Moreover, preclinical and clinical data are often susceptible to varying interpretations and analyses, and many companies that have believed their product candidates performed satisfactorily in preclinical studies and clinical trials have nonetheless failed to obtain marketing approval of their products.
In some instances, there can be significant variability in safety or efficacy results between different clinical trials of the same product candidate due to numerous factors, including changes in clinical trial procedures set forth in protocols, differences in the size and type of the patient populations, adherence to the dosing regimen and other clinical trial protocols, and the rate of dropout among clinical trial participants.
−Removed: If we fail to produce positive results in our planned and ongoing preclinical studies or clinical trials, or if we experience material changes in clinical data or results, the development timeline and regulatory approval and commercialization prospects for our product candidates, and, correspondingly, our business, financial condition and results of operations would be materially and adversely affected.
+Added: If we fail to produce positive results in our planned and ongoing preclinical studies or clinical trials, or if we experience material changes in clinical data or results from those we have previously reported, the development timeline and regulatory approval and commercialization prospects for our product candidates, and, correspondingly, our business, financial condition and results of operations would be materially and adversely affected.
We may encounter substantial delays in the commencement or completion, or termination or suspension, of our clinical trials, which could result in increased costs to us, delay or limit our ability to generate revenue and adversely affect our commercial prospects.
Before obtaining marketing approval from regulatory authorities for the sale of our product candidates, we must conduct extensive clinical trials to demonstrate the safety and efficacy of the product candidate for its intended indications.
−Removed: We cannot guarantee that any clinical trials, including our Phase 1/2 clinical trial for XTX202 and our Phase 1 clinical trial for XTX101 or our planned Phase 1/2 clinical trial for XTX301, will be conducted as planned or completed on schedule, if at all.
−Removed: For example, in November 2022, we announced that we plan to continue to explore opportunities for strategic collaborations to advance XTX101 and that we do not plan to initiate an anti-PD-1 combination cohort in the Phase 1 clinical trial or initiate a Phase 2 clinical trial for XTX101 without a partner.
+Added: We cannot guarantee that any clinical trials, including our Phase 1 clinical trial for XTX101, our Phase 1/2 clinical trial for XTX202 or our Phase 1 clinical trial for XTX301, will be conducted as planned or completed on schedule, if at all.
We may experience numerous unforeseen events during or as a result of clinical trials that could delay or prevent our ability to receive marketing approval or commercialize our product candidates, including:
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● we may experience manufacturing delays, and any changes to manufacturing processes or third-party contractors that may be necessary or desired could result in other delays;
−Removed: ● we or our third-party contractors may experience delays due to complications resulting from the impact of the COVID-19 pandemic;
+Added: ● we or our third-party contractors may experience delays due to complications resulting from the impact of public health crises, including epidemics and pandemics such as the COVID-19 pandemic;
● the cost of preclinical testing and studies and clinical trials of any product candidates may be greater than we anticipate or greater than our available financial resources;
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● the patient eligibility and the inclusion and exclusion criteria defined in the protocol;
−Removed: ● adverse events in our clinical trials and in third-party clinical trials of agents similar to our product candidates;
+Added: ● AEs in our clinical trials and in third-party clinical trials of agents similar to our product candidates;
● the size and health of the patient population required for analysis of the trial’s primary endpoints;
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Adverse differences between preliminary or interim data and final data could significantly harm our business prospects.
−Removed: We expect to develop certain of our product candidates in combination with third-party drugs and we will have limited or no control over the safety, supply, regulatory status or regulatory approval of such drugs.
+Added: We expect to develop certain of our product candidates in combination with third-party drugs and we will have limited or no control over the safety, supply, regulatory status or regulatory approval of such third-party drugs.
We intend to develop our clinical-stage product candidates, and likely other future product candidates, in combination with third-party cancer drugs, which may be either approved or unapproved.
−Removed: For example, as part of our ongoing Phase 1/2 clinical trial for XTX202, we plan to evaluate XTX202 for the treatment of solid tumors both as monotherapy and in combination with other agents potentially including, but not limited to, anti-PD-1 agents or tyrosine kinase inhibitors.
+Added: For example, as part of our ongoing Phase 1/2 clinical trial for XTX202, we plan to evaluate XTX202 for the treatment of solid tumors both as monotherapy and in combination with other agents potentially including, but not limited to, anti-PD-1/PD-L1 agents or tyrosine kinase inhibitors.
Our ability to develop and ultimately commercialize our current product candidates, and any future product candidates, used in combination with third-party drugs will depend on our ability to access such drugs on commercially reasonable terms for clinical trials and their availability for use with our commercialized product, if approved.
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Moreover, the development of product candidates for use in combination with another product or product candidate may present challenges that are not faced for single agent product candidates.
−Removed: For example, our plans to evaluate current or future product candidates in combination with other agents may result in adverse events based on the combination therapy that may negatively impact the reported safety profile of the monotherapy in clinical trials.
+Added: For example, our plans to evaluate current or future product candidates in combination with other agents may result in AEs based on the combination therapy that may negatively impact the reported safety profile of the monotherapy in clinical trials.
In addition, the FDA or comparable foreign regulatory authorities may require us to use more complex clinical trial designs in order to evaluate the contribution of each product and product candidate to any observed effects.
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The occurrence of any of these risks could result in our own products, if approved, being removed from the market or being less successful commercially.
−Removed: We may not be successful in our efforts to use our GPS platform to enable the development of a pipeline of product candidates.
−Removed: A key element of our strategy is to use our novel GPS platform to engineer and develop molecules with the potential to trigger anti-tumor immunity with minimal systemic toxicity in order to build a pipeline of product candidates.
+Added: We may not be successful in our efforts to use our GPS platform to enable the development of a pipeline of tumor-activated product candidates.
+Added: A key element of our strategy is to use our novel GPS platform to engineer and develop tumor-activated molecules with the potential to trigger anti-tumor immunity with minimal systemic toxicity in order to build a pipeline of product candidates.
We may not be able to continue to identify and develop novel immuno-oncology therapies.
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For some of the product candidates we may develop, we may decide to collaborate with other pharmaceutical and biotechnology companies for the development and potential commercialization of those product candidates.
−Removed: For example, we plan to continue to explore opportunities for strategic collaborations to advance XTX101 and do not plan to initiate an anti-PD-1 combination cohort in the Phase 1 clinical trial or initiate a Phase 2 clinical trial for XTX101 without a partner.
+Added: For example, we plan to continue to explore strategic opportunities to advance XTX101 with a partner beyond the current Phase 1 clinical trial.
We face significant competition in seeking appropriate collaborators.
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A natural disaster, epidemic or pandemic, including the recent COVID-19 pandemic, trade war, political unrest, economic conditions, changes in legislation, including the passage of the People’s Republic of China Biosecurity law, which became effective on April 15, 2021, and subsequent legislation that China may adopt in the future, or other events in China could disrupt the business or operations of CROs, collaborators, manufacturers or other third parties with whom we conduct business now or in the future.
−Removed: Any disruption in China that significantly impacts such third parties, including
−Removed: services provided by CROs for our research and development programs, or our manufacturers’ ability to produce raw materials in adequate quantities to meet our needs could impair our ability to operate our business on a day-to-day basis and impede, delay, limit or prevent the research, development or commercialization of our current and future products or product candidates.
+Added: Any disruption in China that significantly impacts such third parties, including services provided by CROs for our research and development programs, or our manufacturers’ ability to produce raw materials in adequate quantities to meet
+Added: our needs could impair our ability to operate our business on a day-to-day basis and impede, delay, limit or prevent the research, development or commercialization of our current and future products or product candidates.
In addition, for any activities conducted in China, we are exposed to the possibility of product supply disruption and increased costs in the event of changes in the policies of the U.S.
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Potential competitors also include academic institutions, government agencies and other public and private research organizations that conduct research, seek patent protection and establish collaborative arrangements for research, development, manufacturing and commercialization.
−Removed: We are developing our current product candidates for the treatment of cancer and have not completed clinical development for XTX202 or XTX301, our clinical-stage cytokine product candidates, or XTX101, our clinical-stage mAb product candidate, and we have not commenced clinical development for any of our other product candidates or received marketing approval for any of our product candidates.
+Added: We are developing our current product candidates for the treatment of cancer and have not completed clinical development for our clinical-stage, tumor-activated product candidates, XTX101 (anti-CTLA-4), XTX202 (IL-2) or XTX301 (IL-12), and we have not commenced clinical development for any of our other product candidates or received marketing approval for any of our product candidates.
There are already a variety of available therapies marketed for cancer and some of the currently approved therapies are branded and subject to patent protection, and others are available on a generic basis.
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We expect that if our product candidates are approved, they will be priced at a significant premium over competitive generic products.
−Removed: This may make
−Removed: it difficult for us to achieve our business strategy of using our product candidates in combination with existing therapies or replacing existing therapies with our product candidates.
+Added: This may make it difficult for us to achieve our business strategy of using our product candidates in combination with existing therapies
+Added: or replacing existing therapies with our product candidates.
Competition may further increase with advances in the commercial applicability of technologies and greater availability of capital for investment in these industries.
+Added: XTX101, if approved, may face competition from other anti-CTLA-4 based therapies.
+Added: For example, Yervoy (ipilimumab), an anti-CTLA-4, is approved to treat melanoma, renal cell carcinoma and certain cancers of the large intestine, and Imjudo (tremelimumab) is approved as a combination therapy to treat unresectable hepatocellular carcinoma.
+Added: In addition, we are aware that several companies have anti-CTLA-4 programs in development, including Adagene, Inc., Agenus Inc., AstraZeneca plc, BioAtla, Inc., Bristol-Myers Squibb Inc., CytomX Therapeutics, Inc., MacroGenics, Inc.
+Added: and OncoC4, Inc.
XTX202, if approved, may face competition from other IL-2-based cancer therapies.
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With respect to XTX301, there are no approved IL-12 therapies currently on the market for the treatment of cancer;
−Removed: however, we are aware of several other companies that have modified IL-12 or intra-tumoral IL-12 delivery programs for the treatment of cancer in development, including Amunix Pharmaceuticals, Inc., Cullinan Management Inc., DragonFly Therapeutics Inc., ImmunityBio, Inc., Philogen S.p.A., Sonnet BioTherapeutics Holdings, Inc., Werewolf Therapeutics, Inc., Xencor Inc.
+Added: however, we are aware of several other companies that have modified IL-12 or intra-tumoral IL-12 delivery programs for the treatment of cancer in development, including Amunix Pharmaceuticals, Inc., AstraZeneca plc / Moderna, Inc., Cullinan Management Inc., Dragonfly Therapeutics, Inc., ImmunityBio, Inc., PDS Biotechnology Corporation, Philogen S.p.A., Sonnet BioTherapeutics, Werewolf Therapeutics, Inc., Xencor Inc.
and Zymeworks Inc.
−Removed: XTX101, if approved, may face competition from other anti-CTLA-4 based therapies.
−Removed: For example, Yervoy (ipilimumab), an anti-CTLA-4, is approved to treat melanoma, renal cell carcinoma and certain cancers of the large intestine, and Imjudo (tremelimumab) is approved as a combination therapy to treat unresectable hepatocellular carcinoma.
−Removed: In addition, we are aware that several companies have anti-CTLA-4 programs in development, including Adagene, Inc., Agenus Inc., BeiGene, Ltd., Bristol-Myers Squibb Inc., CytomX Therapeutics, Inc.
−Removed: and MacroGenics, Inc.
Our competitors may succeed in developing, acquiring or licensing, on an exclusive basis, products that are safer, more effective, have fewer or less severe side effects, are more convenient or are less expensive than any products that we may develop.
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The degree of patent protection we require to successfully compete in the marketplace may be unavailable or severely limited in some cases and may not adequately protect our rights or permit us to gain or keep any competitive advantage.
−Removed: The USPTO and various foreign governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other provisions during the patent process.
+Added: The United States Patent and Trademark Office, or the USPTO, and various foreign governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other provisions during the patent process.
Our or our licensor’s failure to comply with all such provisions during the patent process could result in abandonment or lapse of a patent or patent application that we own or license, resulting in partial or complete loss of patent rights in the relevant jurisdiction.
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and, more generally, may affect the value of our intellectual property, including the narrowing of the scope of our patents and any that we may license.
−Removed: Under the America Invents Act enacted in 2011, or the AIA, the United States moved
−Removed: to a first-to-file system in early 2013 (whereby, assuming the other requirements for patentability are met, the first to file a patent application is entitled to the patent), from the previous system under which the first to make a claimed invention was entitled to the patent.
+Added: Under the Leahy-Smith America Invents Act enacted in 2011, or the AIA, the United
+Added: States moved to a first-to-file system in early 2013 (whereby, assuming the other requirements for patentability are met, the first to file a patent application is entitled to the patent), from the previous system under which the first to make a claimed invention was entitled to the patent.
Publications of discoveries in the scientific and academic literature often lag behind the actual discoveries, and patent applications in the United States and other jurisdictions are typically not published until 18 months after filing, or in some cases not at all.
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There also may be prior art of which we are aware, but which we do not believe affects the validity or enforceability of a claim, which may, nonetheless, ultimately be found to affect the validity or enforceability of a claim.
−Removed: We may in the future, become subject to a third-party pre-issuance submission of prior art, pre- or post-issuance opposition, derivation, revocation, re-examination, post-grant and inter partes review, or interference proceeding and other similar proceedings challenging our patent rights or the patent rights of others in the U.S.
−Removed: Patent and Trademark Office, or USPTO, or other foreign patent office.
+Added: We may in the future, become subject to a third-party pre-issuance submission of prior art, pre- or post-issuance opposition, derivation, revocation, re-examination, post-grant and inter partes review, or interference proceeding and other similar proceedings challenging our patent rights or the patent rights of others in the USPTO or other foreign patent office.
An unfavorable determination in any such submission, proceeding or litigation could reduce the scope of, or invalidate, our patent rights, allow third parties to commercialize our technology or products and compete directly with us, without payment to us.
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Changes to patent law in the United States and in foreign jurisdictions could diminish the value of patents in general, thereby impairing our ability to protect our products.
−Removed: As is the case with other biopharmaceutical companies, our success is heavily dependent on intellectual property, particularly patents.
−Removed: Obtaining and enforcing patents in the biopharmaceutical industry involve both technological and
−Removed: legal complexity, and is therefore costly, time-consuming and inherently uncertain.
+Added: As is the case with other biotechnology companies, our success is heavily dependent on intellectual property, particularly patents.
+Added: Obtaining and enforcing patents in the biopharmaceutical industry involve both technological and legal
+Added: complexity, and is therefore costly, time-consuming and inherently uncertain.
In addition, the United States continues to adapt to wide-ranging patent reform legislation that became effective starting in 2012.
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Depending on new legislation and decisions by the federal courts, and the USPTO, the laws and regulations governing patents could change in unpredictable ways that would weaken our ability to obtain new patents or to enforce our existing patents and patents that we might obtain in the future.
−Removed: For example, in the case Amgen v.
−Removed: Sanofi , the Federal Circuit held that broad functional antibody claims are invalid for lack of enablement, and in the case Juno v.
+Added: For example, although currently under review by the U.S.
+Added: Supreme Court, in the case Amgen v.
+Added: Sanofi, the Federal Circuit held that broad functional antibody claims are invalid for lack of enablement.
+Added: In addition, in Juno v.
Kite, the Federal Circuit held broad antibody and chimeric antigen receptor claims supported by few examples invalid for lack of written description.
−Removed: While we do not believe that any of the patents owned or licensed by us will be found invalid based on this decision, we cannot predict how future decisions by the courts, Congress or the USPTO may impact the value of our patents.
+Added: While we do not believe that any of the patents owned or licensed by us will be found invalid based on these decisions, we cannot predict how future decisions by the courts, Congress or the USPTO may impact the value of our patents.
Similarly, changes in the patent laws of other jurisdictions could adversely affect our ability to obtain and effectively enforce our patent rights, which would have a material adverse effect on our business and financial condition.
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We rely on third-party license agreements pursuant to which we have non-exclusive and exclusive rights to technology that is incorporated into our development programs and product candidates.
−Removed: For example, under our cross-license agreement with AskGene, we have exclusively in-licensed patent rights relating to our IL-2 program, and we also have the option to obtain exclusive licenses to patent rights relating to our IL-15 program.
+Added: For example, under our cross-license agreement with AskGene, we have exclusively in-licensed patent rights relating to our IL-2 program.
In addition, under our license agreement with City of Hope, we have exclusively in-licensed certain patent rights that cover our anti-CTLA-4 antibody.
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Recent or future patent reform legislation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents.
−Removed: For example, the Leahy-Smith America Invents Act, or America Invents Act, implemented in March 2013, moved the United States from a “first to invent” to a “first-to-file” system.
+Added: For example, the AIA implemented in March 2013, moved the United States from a “first to invent” to a “first-to-file” system.
Under a “first-to-file” system, assuming the other requirements for patentability are met, the first inventor to file a patent application generally will be entitled to a patent on the invention regardless of whether another inventor had made the invention earlier.
−Removed: The America Invents Act includes a number of other significant changes to U.S.
+Added: The AIA includes a number of other significant changes to U.S.
patent law, including provisions that affect the way patent applications are prosecuted, redefine prior art and establish a USPTO-administered post-grant review system that has affected patent litigation.
−Removed: The America Invents Act and its implementation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents, all of which could have a material adverse effect on our business and financial condition.
+Added: The AIA and its implementation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents, all of which could have a material adverse effect on our business and financial condition.
The degree of future protection for our proprietary rights is uncertain because legal means afford only limited protection and may not adequately protect our rights or permit us to gain or keep our competitive advantage.
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● we or our licensors, as the case may be, may fail to meet our obligations to the U.S.
−Removed: government in regards to any patents and patent applications funded by U.S.
+Added: government in regard to any patents and patent applications funded by U.S.
government grants, leading to the loss of patent rights;
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This type of patent may only be enforced against a competitor through indirect infringement, i.e.
−Removed: , inducement or contributory infringement, which is more difficult to prove than that for direct infringement.
+Added: , inducement or contributory infringement, which is more difficult to prove than direct infringement.
A competitor may be able to circumvent this type of patent by skinny labelling.
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Separately, in response to the COVID-19 pandemic, a number of companies announced receipt of complete response letters due to the FDA’s inability to complete required inspections for their applications.
−Removed: As of May 26, 2021, the FDA noted it was continuing to ensure timely reviews of applications for medical products during the ongoing COVID-19 pandemic in line with its user fee performance goals and conducting mission critical domestic and foreign inspections to ensure compliance of manufacturing facilities with FDA quality standards.
−Removed: The FDA announced on February 2, 2022, that it would resume domestic inspections beginning on February 7, 2022.
−Removed: As for foreign inspections, the FDA indicated that it would continue planned inspections in countries that have received country clearance and are within the Centers for Disease Control and Prevention’s level 1 or level 2 COVID-19 travel recommendation.
−Removed: However, the FDA may not be able to continue its current pace and review timelines could be extended, including where a pre-approval inspection or an inspection of clinical sites is required and due to the ongoing COVID-19 pandemic and travel restrictions, the FDA is unable to complete such required inspections during the review period.
+Added: As of early 2022, the FDA has resumed inspections of domestic and foreign facilities to ensure timely reviews of applications for medical products.
+Added: However, the FDA may not be able to continue its current pace and review timelines could be extended, including where a pre-approval inspection or an inspection of clinical sites is required.
+Added: Moreover, on January 30, 2023, the Biden administration announced that it will end the public health emergency declarations related to COVID-19 on May 11, 2023.
+Added: On January 31, 2023, the FDA indicated that it would soon issue a Federal Register notice describing how the termination of the public health emergency will impact the agency’s COVID-19 related guidance.
+Added: At this point, it is unclear how, if at all, these developments will impact our efforts to develop and commercialize our product candidates.
Regulatory authorities outside the U.S.
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As both parties continue to work on the rules for implementation, significant political and economic uncertainty remains about how the precise terms of the relationship between the parties will differ from the terms before withdrawal.
−Removed: Since the regulatory framework for pharmaceutical products in the United Kingdom covering the quality, safety, and efficacy of pharmaceutical products, clinical trials, marketing authorization, commercial sales, and distribution of pharmaceutical products is derived from EU directives and regulations, the consequences of Brexit and the impact the future regulatory regime that applies to products and the approval of product candidates in the United Kingdom remains unclear.
−Removed: As of January 1, 2021, the Medicines and Healthcare products Regulatory Agency, or the MHRA, became responsible for supervising medicines and medical devices in Great Britain, comprising England, Scotland and Wales under domestic law, whereas Northern Ireland will continue to be subject to EU rules under the Northern Ireland Protocol.
+Added: The U.K.'s withdrawal from the EU took place on January 31, 2020.
+Added: The EU and the U.K.
+Added: reached an agreement on their new partnership in the Trade and Cooperation Agreement, or the TC Agreement, which was applied provisionally beginning on January 1, 2021 and which entered into force on May 1, 2021.
+Added: The TC Agreement focuses primarily on free trade by ensuring no tariffs or quotas on trade in goods, including healthcare products such as medicinal products.
+Added: Thereafter, the EU and the U.K.
+Added: will form two separate markets governed by two distinct regulatory and legal regimes.
+Added: As such, the TC Agreement seeks to minimize barriers to trade in goods while accepting that border checks will become inevitable as a consequence that the U.K.
+Added: is no longer part of the single market.
+Added: As of January 1, 2021, the Medicines and Healthcare Products Regulatory Agency, or the MHRA, became responsible for supervising medicines and medical devices in Great Britain, comprising England, Scotland and Wales under domestic law, whereas Northern Ireland continues to be subject to EU rules under the Northern Ireland Protocol.
The MHRA will rely on the Human Medicines Regulations 2012 (SI 2012/1916), as amended, or the HMR, as the basis for regulating medicines.
−Removed: The HMR has incorporated into the domestic law of the body of EU law instruments governing medicinal products that pre-existed prior to the United Kingdom’s withdrawal from the EU.
+Added: The HMR has incorporated into the domestic law the body of EU law instruments governing medicinal products that pre-existed prior to the U.K.’s withdrawal from the EU.
+Added: Since a significant proportion of the regulatory framework for pharmaceutical products in the U.K.
+Added: covering the quality, safety, and efficacy of pharmaceutical products, clinical trials, marketing authorization, commercial sales, and distribution of pharmaceutical products is derived from EU directives and regulations, Brexit may have a material impact upon the regulatory regime with respect to the development, manufacture, importation, approval and commercialization of our product candidates in the U.K.
+Added: For example, the U.K.
+Added: is no longer covered by the centralized procedures for obtaining EU-wide marketing authorization from the EMA, and a separate marketing authorization will be required to market our product candidates in the U.K.
+Added: Until December 31, 2023, it is possible for the MHRA to rely on a decision taken by the European Commission, or the EC, on the approval of a new marketing authorization via the centralized procedure.
Any delay in obtaining, or an inability to obtain, any marketing approvals, as a result of Brexit or otherwise, may force us to restrict or delay efforts to seek regulatory approval in the United Kingdom for our product candidates, which could significantly and materially harm our business.
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compliance with tax, employment, immigration and labor laws for employees living or traveling abroad;
−Removed: foreign currency fluctuations, which could result in increased operating expenses and reduced revenue, and other obligations incident to doing business in another country;
+Added: foreign currency fluctuations, which could result in increased operating expenses and reduced revenue, and other
+Added: obligations incident to doing business in another country;
and workforce uncertainty in countries where labor unrest is more common than in the United States.
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The applicable exclusivity period is seven years in the United States and ten years in the EU.
−Removed: The European exclusivity period can be reduced to six years if a product no
−Removed: longer meets the criteria for orphan drug designation or if the product is sufficiently profitable so that market exclusivity is no longer justified.
+Added: The European exclusivity period can be reduced to six years if a product no longer meets the criteria for orphan drug designation or if the product is sufficiently profitable so that market exclusivity is no longer justified.
We may seek orphan drug designations for our product candidates and may be unable to obtain such designations.
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The FDA may further reevaluate the Orphan Drug Act and its regulations and policies.
−Removed: This may be particularly true in light of a decision from the Court of Appeals for the 11th Circuit in September 2021 finding that, for the purpose of determining the scope of exclusivity, the term “same disease or condition” means the designated “rare disease or condition” and could not be interpreted by the Agency to mean the “indication or use.” Thus, the court concluded, orphan drug exclusivity applies to the entire designated disease or condition rather than the “indication or use.” We do not know if, when, or how the FDA may change the orphan drug regulations and policies in the future, and it is uncertain how any changes might affect our business.
+Added: This may be particularly true in light of a decision from the Court of Appeals fo r the 11th Circuit in September 2021 finding that, for the purpose of determining the scope of exclusivity, the term “same disease or condition” means the designated “rare disease or condition” and could not be interpreted by the Agency to mean the “indication or use.” Thus, the court concluded, orphan drug exclusivity applies to the entire designated disease or condition rather than the “indication or use.” Although there have been legislative proposals to overrule this decision, they have not been enacted into law.
+Added: On January 23, 2023, the FDA announced that, in matters beyond the scope of that court order, the FDA will continue to apply its existing regulations tying orphan-drug exclusivity to the uses or indications for which the orphan drug was approved.
+Added: We do not know if, when, or how the FDA may change the orphan drug regulations and policies in the future, and it is uncertain how any changes might affect our business.
Depending on what changes the FDA may make to its orphan drug regulations and policies, our business could be adversely impacted.
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Similarly, failure to comply with the EU’s requirements regarding the protection of personal information can also lead to significant penalties and sanctions.
−Removed: Further, the marketing and promotion of authorized drugs, including industry-sponsored continuing medical education and advertising directed toward the prescribers of drugs and/or the general public, are strictly regulated in the EU notably under Directive 2001/83EC, as amended, and are also subject to EU Member State laws.
+Added: Further, the marketing and promotion of authorized drugs, including industry-sponsored continuing medical education and advertising directed toward the prescribers of drugs and/or the general public, are strictly
+Added: regulated in the EU notably under Directive 2001/83EC, as amended, and are also subject to EU Member State laws.
Direct-to-consumer advertising of prescription medicines is prohibited across the EU.
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If reimbursement of our products is unavailable or limited in scope, our business could be materially harmed.
−Removed: In March 2010, President Obama signed into law the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Affordability Reconciliation Act, or collectively the ACA.
+Added: In March 2010, President Obama signed into law the ACA.
In addition, other legislative changes have been proposed and adopted since the ACA was enacted.
In August 2011, the Budget Control Act of 2011, among other things, created measures for spending reductions by Congress.
−Removed: A Joint Select Committee on Deficit Reduction, tasked with recommending a targeted deficit reduction of at least $1.2 trillion for the years 2013 through 2021, was unable to reach
−Removed: required goals, thereby triggering the legislation’s automatic reduction to several government programs.
+Added: A Joint Select Committee on Deficit Reduction, tasked with recommending a targeted deficit reduction of at least $1.2 trillion for the years 2013 through 2021, was unable to reach required goals, thereby triggering the legislation’s automatic reduction to several government programs.
These changes included aggregate reductions to Medicare payments to providers of up to 2% per fiscal year, which went into effect in April 2013 and will remain in effect through 2031 under the CARES Act.
−Removed: Pursuant to subsequent legislation, however, these Medicare sequester reductions have been suspended through the end of March 2022.
−Removed: Beginning April 2022 through June 2022, a 1% sequester cut is in effect, with the full 2% cut resuming thereafter.
+Added: Pursuant to subsequent legislation, however, these Medicare sequester reductions were reduced and suspended through the end of June 2022, with the full 2% cut resuming thereafter.
The American Taxpayer Relief Act of 2012, among other things, 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.
These laws may result in additional reductions in Medicare and other healthcare funding and otherwise affect the prices we may obtain for any of our product candidates for which we may obtain regulatory approval or the frequency with which any such product candidate is prescribed or used.
+Added: Under current legislation, the actual reductions in Medicare payments may vary up to 4%.
Since enactment of the ACA, there have been, and continue to be, numerous legal challenges and Congressional actions to repeal and replace provisions of the law.
−Removed: For example, with enactment of the Tax Cuts and Jobs Act of 2017, which was signed by President Trump on December 22, 2017, Congress repealed the “individual mandate.” The repeal of this provision, which requires most Americans to carry a minimal level of health insurance, became effective in 2019.
+Added: For example, with enactment of the Tax Act, which was signed by President Trump on December 22, 2017, Congress repealed the “individual mandate.” The repeal of this provision, which requires most Americans to carry a minimal level of health insurance, became effective in 2019.
Further, on December 14, 2018, a U.S.
−Removed: District Court judge in the Northern District of Texas ruled that the individual mandate portion of the ACA is an essential and inseverable feature of the ACA and therefore because the mandate was repealed as part of the TCJA, the remaining provisions of the ACA are invalid as well.
+Added: District Court judge in the Northern District of Texas ruled that the individual mandate portion of the ACA is an essential and inseverable feature of the ACA and therefore because the mandate was repealed as part of the Tax Act, the remaining provisions of the ACA are invalid as well.
Supreme Court heard this case on November 10, 2020 and on June 17, 2021, dismissed this action after finding that the plaintiffs do not have standing to challenge the constitutionality of the ACA.
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These regulations include an interim final rule implementing a most favored nation model for prices that would tie Medicare Part B payments for certain physician-administered pharmaceuticals to the lowest price paid in other economically advanced countries, effective January 1, 2021.
−Removed: That rule, however, has been subject to a nationwide preliminary injunction and, on December 29, 2021, CMS issued a final rule to rescind it.
+Added: That rule, however, has been subject to a nationwide preliminary injunction and, on December 29, 2021, the Centers for Medicare & Medicaid Services, or CMS, issued a final rule to rescind it.
With issuance of this rule, CMS stated that it will explore all options to incorporate value into payments for Medicare Part B pharmaceuticals and improve beneficiaries’ access to evidence-based care.
−Removed: In addition, in October 2020, HHS and the FDA published a final rule allowing states and other entities to develop a Section 804 Importation Program, or SIP, to import certain prescription drugs from Canada into the United States.
+Added: In addition, in October 2020, the Department of Health and Human Services, or HHS, and the FDA published a final rule allowing states and other entities to develop a Section 804 Importation Program, or SIP, to import certain prescription drugs from Canada into the United States.
The final rule is currently the subject of ongoing litigation, but at least six states (Vermont, Colorado, Florida, Maine, New Mexico, and New Hampshire) have passed laws allowing for the importation of drugs from Canada with the intent of developing SIPs for review and approval by the FDA.
−Removed: Further, on November 20, 2020, HHS finalized a regulation
−Removed: 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.
+Added: Further, on November 20, 2020, HHS finalized 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 implementation of the rule has been delayed by the Biden administration until January 1, 2026 by the Infrastructure Investment and Jobs Act.
−Removed: The rule also creates a new safe harbor for price reductions reflected at the point-of-sale, as well as a new safe harbor for certain fixed fee arrangements between pharmacy benefit managers and manufacturers, the implementation of which have also been delayed by the Biden administration until January 1, 2023.
+Added: The final rule would eliminate the current safe harbor for Medicare drug rebates and create new safe harbors for beneficiary point-of-sale discounts and pharmacy benefit manager service fees.
+Added: It originally was set to go into effect on January 1, 2022, but with the passage of the Inflation Reduction Act of 2022, or the IRA, has been delayed by Congress to January 1, 2032.
On July 9, 2021, President Biden signed Executive Order 14063, which focuses on, among other things, the price of pharmaceuticals.
−Removed: The Order directs the Department of Health and Human Services, or HHS, to create a plan within 45 days to combat “excessive pricing of prescription pharmaceuticals and enhance domestic pharmaceutical supply chains, to reduce the prices paid by the federal government for such pharmaceuticals, and to address the recurrent problem of price gouging.” On September 9, 2021, HHS released its plan to reduce pharmaceutical prices.
+Added: The Order directs HHS to create a plan within 45 days to combat “excessive pricing of prescription pharmaceuticals and enhance domestic pharmaceutical supply chains, to reduce the prices paid by the federal government for such pharmaceuticals, and to address the recurrent problem of price gouging.” On September 9, 2021, HHS released its plan to reduce pharmaceutical prices.
The key features of that plan are to:
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and (c) foster scientific innovation to promote better healthcare and improve health by supporting public and private research and making sure that market incentives promote discovery of valuable and accessible new treatments.
−Removed: More recently, with passage of the Inflation Reduction Act in August 2022, Congress authorized Medicare beginning in 2026 to negotiate lower prices for certain costly single-source drug and biologic products that do not have competing generics or biosimilars.
−Removed: This provision is limited in terms of the number of pharmaceuticals whose prices can be negotiated in any given year and it only applies to drug products that have been approved for at least nine years and biologics that have been licensed for 13 years.
−Removed: Drugs and biologics that have been approved for a single rare disease or condition are excluded from price negotiation.
−Removed: The new legislation also provides that if pharmaceutical companies raise prices in Medicare faster than the rate of inflation, they must pay rebates back to the government for the difference.
−Removed: The new law also caps Medicare out-of-pocket drug costs at an estimated $4,000 a year in 2024 and, thereafter, at $2,000 a year beginning in 2025.
+Added: More recently, on August 16, 2022, the IRA was signed into law by President Biden.
+Added: The new legislation has implications for Medicare Part D, which is a program available to individuals who are entitled to Medicare Part A or enrolled in Medicare Part B, to give them the option of paying a monthly premium for outpatient prescription drug coverage.
+Added: Among other things, the IRA requires manufacturers of certain drugs to engage in price negotiations with Medicare (beginning in 2026), with prices that can be negotiated subject to a cap;
+Added: imposes rebates under Medicare Part B and Medicare Part D to penalize price increases that outpace inflation (first due in 2023);
+Added: and replaces the Part D coverage gap discount program with a new discounting program (beginning in 2025).
+Added: The IRA permits the Secretary of the Department of HHS to implement many of these provisions through guidance, as opposed to regulation, for the initial years.
+Added: Specifically, with respect to price negotiations, Congress authorized Medicare to negotiate lower prices for certain costly single-source drug and biologic products that do not have competing generics or biosimilars and are reimbursed under Medicare Part B and Part D.
+Added: CMS may negotiate prices for ten high-cost drugs paid for by Medicare Part D starting in 2026, followed by 15 Part D drugs in 2027, 15 Part B or Part D drugs in 2028, and 20 Part B or Part D drugs in 2029 and beyond.
+Added: This provision applies to drug products that have been approved for at least 9 years and biologics that have been
+Added: licensed for 13 years, but it does not apply to drugs and biologics that have been approved for a single rare disease or condition.
+Added: Nonetheless, since CMS may establish a maximum price for these products in price negotiations, we would be fully at risk of government action if our products are the subject of Medicare price negotiations.
+Added: Moreover, given the risk that could be the case, these provisions of the IRA may also further heighten the risk that we would not be able to achieve the expected return on our drug products or full value of our patents protecting our products if prices are set after such products have been on the market for nine years.
+Added: Further, the legislation subjects drug manufacturers to civil monetary penalties and a potential excise tax for failing to comply with the legislation by offering a price that is not equal to or less than the negotiated “maximum fair price” under the law or for taking price increases that exceed inflation.
+Added: The legislation also requires manufacturers to pay rebates for drugs in Medicare Part D whose price increases exceed inflation.
+Added: The new law also caps Medicare out-of-pocket drug costs at an estimated $4,000 a year in 2024 and, thereafter beginning in 2025, at $2,000 a year.
+Added: In addition, the IRA potentially raises legal risks with respect to individuals participating in a Medicare Part D prescription drug plan who may experience a gap in coverage if they required coverage above their initial annual coverage limit before they reached the higher threshold, or “catastrophic period” of the plan.
+Added: Individuals requiring services exceeding the initial annual coverage limit and below the catastrophic period must pay 100% of the cost of their prescriptions until they reach the catastrophic period.
+Added: Among other things, the IRA contains many provisions aimed at reducing this financial burden on individuals by reducing the co-insurance and co-payment costs, expanding eligibility for lower income subsidy plans, and price caps on annual out-of-pocket expenses, each of which could have potential pricing and reporting implications.
+Added: Accordingly, while it is currently unclear how the IRA will be effected, we cannot predict with certainty what impact any federal or state health reforms will have on us, but such changes could impose new or more stringent regulatory requirements on our activities or result in reduced reimbursement for our products, any of which could adversely affect our business, results of operations and financial condition.
At the state level, individual states are increasingly aggressive in passing legislation and implementing regulations designed to control pharmaceutical and biological 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.
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Healthcare providers, third-party payors and others will play a primary role in the recommendation and prescription of any products for which we obtain marketing approval.
−Removed: Our current and future arrangements with healthcare providers and third-party payors will expose us to broadly applicable fraud and abuse and other healthcare laws and regulations that may
−Removed: constrain the business or financial arrangements and relationships through which we research as well as market, sell and distribute any products for which we obtain marketing approval.
+Added: Our current and future arrangements with healthcare providers and third-party payors will expose us to broadly applicable fraud and abuse and other healthcare laws and regulations that may constrain the business or financial arrangements and relationships through which we research as well as market, sell and
+Added: distribute any products for which we obtain marketing approval.
Potentially applicable U.S.
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The federal Physician Payments Sunshine Act requires certain manufacturers of drugs, devices, biologics, and medical supplies for which payment is available under Medicare, Medicaid, or the Children’s Health Insurance Program, with specific exceptions, to report annually to the Department of Health and Human Services information related to payments and other transfers of value made to physicians (defined to include doctors, dentists, optometrists, podiatrists, and chiropractors), other healthcare providers, and ownership and investment interests by physicians and their immediate family members.
−Removed: Beginning in 2022, applicable manufacturers are also required to report such information regarding its payments and other transfers of value to physician assistants, nurse practitioners, clinical nurse specialists, anesthesiologist assistants, certified registered nurse anesthetists and certified nurse midwives during the previous year.
+Added: As of January 1, 2022, applicable manufacturers are also required to report such information regarding its payments and other transfers of value to physician assistants, nurse practitioners, clinical nurse specialists, anesthesiologist assistants, certified registered nurse anesthetists and certified nurse midwives during the previous year.
● Analogous State and Foreign Laws .
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Payments made to physicians in certain EU Member States must be publicly disclosed.
−Removed: Moreover, agreements with physicians often must be the subject
−Removed: of prior notification and approval by the physician’s employer, his or her competent professional organization and/or the regulatory authorities of the individual EU Member States.
+Added: Moreover, agreements with physicians often must be the subject of prior notification and approval by the physician’s employer, his or her competent professional organization and/or the
+Added: regulatory authorities of the individual EU Member States.
These requirements are provided in the national laws, industry codes or professional codes of conduct applicable in the EU Member States.
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If any of the physicians or other providers or entities with whom we expect to do business is found not to be in compliance with applicable laws, they may be subject to criminal, civil or administrative sanctions, including exclusions from government funded healthcare programs.
−Removed: Compliance with state, national and international privacy and data security requirements could result in additional costs and liabilities to us or inhibit our ability to collect and process data globally, and the failure to comply with such requirements could subject us to a variety of harms, including significant fines and penalties, litigation and reputational damage, any of which may have a material adverse effect on our business, financial condition or results of operations.
−Removed: The regulatory framework for the collection, use, safeguarding, sharing, transfer and other processing of information worldwide is rapidly evolving and is likely to remain uncertain for the foreseeable future.
−Removed: Globally, virtually every jurisdiction in which we operate or are likely to operate has established its own data security and privacy frameworks with which we must comply.
−Removed: For example, the collection, use, disclosure, transfer, or other processing of personal data regarding individuals in the EU, including personal health data, is subject to the EU General Data Protection Regulation, or the GDPR, which took effect across all member states of the European Economic Area, or EEA, in May 2018.
−Removed: The GDPR is wide-ranging in scope and imposes numerous requirements on companies that process personal data, including strict rules on the transfer of personal data to countries outside the EU, including the United States.
−Removed: Our efforts to comply with GDPR or other applicable EU laws and regulations or other privacy and security rules around the world.
−Removed: may not be successful, or may be perceived to be unsuccessful, which could adversely affect our business in the EU.
−Removed: Further, a decision from the European Court of Justice, or ECJ, invalidated the EU-U.S.
−Removed: Privacy Shield and also raised questions about the continued validity of one of the primary alternatives to the EU-U.S.
−Removed: Privacy Shield, namely the European Commission’s Standard Contractual Clauses.
−Removed: The ECJ’s decision and other regulatory guidance or developments otherwise may impose additional obligations with respect to the transfer of personal data from the EU and Switzerland to the United States, each of which could restrict our activities in those jurisdictions, limit our ability to provide our products and services in those jurisdictions, or increase our costs and obligations and impose limitations upon our ability to efficiently transfer personal data from the EU and Switzerland to the United States.
−Removed: As a result of these uncertainties, there is increased scrutiny on the extent to which clinical trial sites located in the EEA should apply the GDPR to transfers of personal data from such sites to countries that are considered to lack an adequate level of data protection, such as the United States.
−Removed: The GDPR also permits data protection authorities to require destruction of improperly gathered or used personal information and/or impose substantial fines for violations of the GDPR, which can be up to four percent of global revenues or 20 million Euros, whichever is greater, and it also confers a private right of action on data subjects and consumer associations to lodge complaints with supervisory authorities, seek judicial remedies, and obtain compensation for damages resulting from violations of the GDPR.
−Removed: In addition, the GDPR provides that EU member states may make their own further laws and regulations limiting the processing of personal data, including genetic, biometric or health data.
−Removed: Actions are either in place or under way in the United States to enact similar legislation.
−Removed: There are a broad variety of data protection laws that are applicable to our activities, and a wide range of enforcement agencies at both the state and federal levels that can review companies for privacy and data security concerns based on general consumer protection laws.
−Removed: The Federal Trade Commission and state Attorneys General all are aggressive in reviewing privacy and data security
−Removed: protections for consumers.
−Removed: New laws also are being considered at both the state and federal levels.
−Removed: For example, the CCPA, which went into effect on January 1, 2020, is creating similar risks and obligations as those created by GDPR, though the Act does exempt certain information collected as part of a clinical trial subject to the Federal Policy for the Protection of Human Subjects (the Common Rule).
−Removed: Many other states are considering similar legislation.
−Removed: A broad range of legislative measures also have been introduced at the federal level.
−Removed: Accordingly, failure to comply with federal and state laws (both those currently in effect and future legislation) regarding privacy and security of personal information could expose us to fines and penalties under such laws.
−Removed: There also is the threat of consumer class actions related to these laws and the overall protection of personal data.
−Removed: Even if we are not determined to have violated these laws, government investigations into these issues typically require the expenditure of significant resources and generate negative publicity, which could harm our reputation and our business.
−Removed: Similar actions are either in place or under way in the United States.
−Removed: There are a broad variety of data protection laws that are applicable to our activities, and a wide range of enforcement agencies at both the state and federal levels that can review companies for privacy and data security concerns based on general consumer protection laws.
−Removed: The Federal Trade Commission and state attorneys general all are aggressive in reviewing privacy and data security protections for consumers.
−Removed: New laws also are being considered at both the state and federal levels.
−Removed: For example, the CCPA, which went into effect on January 1, 2020, is creating similar risks and obligations as those created by GDPR, though the CCPA does exempt certain information collected as part of a clinical trial subject to the Common Rule.
−Removed: Accordingly, failure to comply with federal and state laws (both those currently in effect and future legislation) regarding privacy and security of personal information could expose us to fines and penalties under such laws.
−Removed: There also is the threat of consumer class actions related to these laws and the overall protection of personal data.
−Removed: Even if we are not determined to have violated these laws, government investigations into these issues typically require the expenditure of significant resources and generate negative publicity, which could harm our reputation and our business.
−Removed: In addition to the foregoing, any breach of privacy laws or data security laws, particularly resulting in a significant security incident or breach involving the misappropriation, loss or other unauthorized use or disclosure of sensitive or confidential patient or consumer information, could have a material adverse effect on our business, reputation and financial condition.
−Removed: As a data controller, we will be accountable for any third-party service providers we engage to process personal data on our behalf, including our CROs.
−Removed: There is no assurance that privacy and security-related safeguards we implement will protect us from all risks associated with the third-party processing, storage and transmission of such information.
−Removed: In certain situations, both in the United States and in other countries, we also may be obligated as a result of a security breach to notify individuals and/or government entities about these breaches.
−Removed: New privacy and security legislation continues to be proposed or enacted across the United States.
−Removed: These laws impose, or have the potential to impose, additional obligations on companies that collect, store, use, retain, disclose, transfer and otherwise process confidential, sensitive and personal information, and will continue to shape the data privacy environment nationally.
−Removed: State laws are changing rapidly and there is discussion in Congress of a new federal data protection and privacy law to which we would become subject if it is enacted.
−Removed: There is also discussion of an executive order on cybersecurity that could affect how we collect and process information.
−Removed: All of these evolving compliance and operational requirements impose significant costs that are likely to increase over time, may require us to modify our data processing practices and policies, divert resources from other initiatives and projects, and could restrict the way products and services involving data are offered, all of which could significantly harm our business, financial condition, results of operations and prospects.
−Removed: Further, certain state laws may be more stringent or broader in scope, or offer greater individual rights, with respect to confidential, sensitive and personal information than federal, international or other state laws, and such laws may differ from each other, which may complicate compliance efforts.
−Removed: Given the breadth and depth of changes in data protection obligations, preparing for and complying with such requirements is rigorous and time intensive and requires significant resources and a review of our technologies, systems and practices, as well as those of any third-party collaborators, service providers, contractors or consultants that process or transfer personal data.
−Removed: The GDPR and other changes in laws or regulations associated with the enhanced protection of certain types of sensitive data, such as healthcare data or other personal information from our clinical trials, could require us to change our business practices and put in place additional compliance mechanisms, may interrupt or delay our development, regulatory and commercialization activities and increase our cost of doing business, and could lead to government
−Removed: enforcement actions, private litigation and significant fines and penalties against us and could have a material adverse effect on our business, financial condition or results of operations.
+Added: We are subject to stringent privacy laws, information security laws, regulations, policies and contractual obligations related to data privacy and security and changes in such laws, regulations, policies, contractual obligations and failure to comply with such requirements could subject us to significant fines and penalties, which may have a material adverse effect on our business, financial condition or results of operations.
+Added: We are subject to data privacy and protection laws and regulations that apply to the collection, transmission, storage and use of personally identifiable information, which among other things, impose certain requirements relating to the privacy, security and transmission of personal information, including comprehensive regulatory systems in the U.S., EU and U.K.
+Added: The legislative and regulatory landscape for privacy and data protection continues to evolve in jurisdictions worldwide, and there has been an increasing focus on privacy and data protection issues with the potential to affect our business.
+Added: Failure to comply with any of these laws and regulations could result in enforcement action against us, including fines, claims for damages by affected individuals, damage to our reputation and loss of goodwill, any of which could have a material adverse effect on our business, financial condition, results of operations or prospects.
+Added: There are numerous U.S.
+Added: federal and state laws and regulations related to the privacy and security of personal information.
+Added: In particular, regulations promulgated pursuant to HIPAA establish privacy and security standards that limit the use and disclosure of individually identifiable health information, or protected health information, and require the implementation of administrative, physical and technological safeguards to protect the privacy of protected health information and ensure the confidentiality, integrity and availability of electronic protected health information.
+Added: Determining whether protected health information has been handled in compliance with applicable privacy standards and our contractual obligations can be complex and may be subject to changing interpretation.
+Added: These obligations may be applicable to some or all of our business activities now or in the future.
+Added: If we are unable to properly protect the privacy and security of protected health information, we could be found to have breached our contracts.
+Added: Further, if we fail to comply with applicable privacy laws, including applicable HIPAA privacy and security standards, we could face civil and criminal penalties.
+Added: HHS enforcement activity can result in financial liability and reputational harm, and responses to such enforcement activity can consume significant internal resources.
+Added: In addition, state attorneys general are authorized to bring civil actions seeking either injunctions or damages in response to violations that threaten the privacy of state residents.
+Added: We cannot be sure how these regulations will be interpreted, enforced or applied to our operations.
+Added: In addition to the risks associated with enforcement activities and potential contractual liabilities, our ongoing efforts to comply with evolving laws and regulations at the federal and state level may be costly and require ongoing modifications to our policies, procedures and systems.
+Added: In 2018, California passed into law the California Consumer Privacy Act, or the CCPA, which took effect on January 1, 2020 and imposed many requirements on businesses that process the personal information of California residents.
+Added: Many of the CCPA’s requirements are similar to those found in the General Data Protection Regulation, or the GDPR, including requiring businesses to provide notice to data subjects regarding the information collected about them and how such information is used and shared, and providing data subjects the right to request access to such personal information and, in certain cases, request the erasure of such personal information.
+Added: The CCPA also affords California residents the right to
+Added: opt-out of “sales” of their personal information.
+Added: The CCPA contains significant penalties for companies that violate its requirements.
+Added: In November 2020, California voters passed a ballot initiative for the California Privacy Rights Act, or the CPRA, which went into effect on January 1, 2023 and significantly expanded the CCPA to incorporate additional GDPR-like provisions including requiring that the use, retention, and sharing of personal information of California residents be reasonably necessary and proportionate to the purposes of collection or processing, granting additional protections for sensitive personal information, and requiring greater disclosures related to notice to residents regarding retention of information.
+Added: The CPRA also created a new enforcement agency – the California Privacy Protection Agency – whose sole responsibility is to enforce the CPRA, which will further increase compliance risk.
+Added: The provisions in the CPRA may apply to some of our business activities.
+Added: In addition, other states, including Virginia, Colorado, Utah, and Connecticut have also passed state privacy laws.
+Added: Virginia’s privacy law also went into effect on January 1, 2023, and the laws in the other three states will go into effect later in the year.
+Added: Other states will be considering these laws in the future, and Congress has also been debating passing a federal privacy law.
+Added: These laws may impact our business activities, including our identification of research subjects, relationships with business partners and ultimately the marketing and distribution of our products.
+Added: Similar to the laws in the U.S., there are significant privacy and data security laws that apply in Europe and other countries.
+Added: The collection, use, disclosure, transfer, or other processing of personal data, including personal health data, regarding individuals who are located in the European Economic Area, or the EEA, and the processing of personal data that takes place in the EEA, is regulated by the GDPR, which went into effect in May 2018 and which imposes obligations on companies that operate in our industry with respect to the processing of personal data and the cross-border transfer of such data.
+Added: The GDPR imposes onerous accountability obligations requiring data controllers and processors to maintain a record of their data processing and policies.
+Added: If our or our partners’ or service providers’ privacy or data security measures fail to comply with the GDPR requirements, we may be subject to litigation, regulatory investigations, enforcement notices requiring us to change the way we use personal data and/or fines of up to 20 million Euros or up to 4% of the total worldwide annual turnover of the preceding financial year, whichever is higher, as well as compensation claims by affected individuals, negative publicity, reputational harm and a potential loss of business and goodwill.
+Added: The GDPR places restrictions on the cross-border transfer of personal data from the EU to countries that have not been found by the EC to offer adequate data protection legislation, such as the U.S.
+Added: There are ongoing concerns about the ability of companies to transfer personal data from the EU to other countries.
+Added: In July 2020, the Court of Justice of the European Union, or the CJEU, invalidated the EU-U.S.
+Added: Privacy Shield, one of the mechanisms used to legitimize the transfer of personal data from the EEA to the U.S.
+Added: The CJEU decision also drew into question the long-term viability of an alternative means of data transfer, the standard contractual clauses, for transfers of personal data from the EEA to the U.S.
+Added: While we were not self-certified under the Privacy Shield, this CJEU decision may lead to increased scrutiny on data transfers from the EEA to the U.S.
+Added: generally and increase our costs of compliance with data privacy legislation, as well as our costs of negotiating appropriate privacy and security agreements with our vendors and business partners.
+Added: Additionally, in October 2022, President Biden signed an executive order to implement the EU-U.S.
+Added: Data Privacy Framework, which would serve as a replacement to the EU-US Privacy Shield.
+Added: The EC initiated the process to adopt an adequacy decision for the EU-US Data Privacy Framework in December 2022.
+Added: It is unclear if and when the framework will be finalized and whether it will be challenged in court.
+Added: The uncertainty around this issue may further impact our business operations in the EU.
+Added: Following the withdrawal of the U.K.
+Added: from the EU, the U.K.
+Added: Data Protection Act 2018 applies to the processing of personal data that takes place in the U.K.
+Added: and includes parallel obligations to those set forth by GDPR.
+Added: In relation to data transfers, both the U.K.
+Added: and the EU have determined, through separate “adequacy” decisions, that data transfers between the two jurisdictions are in compliance with the U.K.
+Added: Data Protection Act 2018 and the GDPR, respectively.
+Added: Any changes or updates to these adequacy decisions have the potential to impact our business.
+Added: Beyond GDPR, there are privacy and data security laws in a growing number of countries around the world.
+Added: While many loosely follow GDPR as a model, other laws contain different or conflicting provisions.
+Added: These laws will impact our ability to conduct our business activities, including both our clinical trials and the sale and distribution of commercial products, through increased compliance costs, costs associated with contracting and potential enforcement actions.
+Added: While we continue to address the implications of the recent changes to data privacy regulations, data privacy remains an evolving landscape at both the domestic and international level, with new regulations coming into effect and continued legal challenges, and our efforts to comply with the evolving data protection rules may be unsuccessful.
+Added: It is possible that these laws may be interpreted and applied in a manner that is inconsistent with our practices.
+Added: We must devote significant resources to understanding and complying with this changing landscape.
+Added: Failure to comply with laws regarding data protection would expose us to risk of enforcement actions taken by data protection authorities in the EEA and elsewhere and carries with it the potential for significant penalties if we are found to be non-compliant.
+Added: Similarly, failure to comply with federal and state laws in the U.S.
+Added: regarding privacy and security of personal information could expose us to penalties under such laws.
+Added: Any such failure to comply with data protection and privacy laws could result in government-imposed fines or orders requiring that we change our practices, claims for damages or other liabilities, regulatory investigations and enforcement action, litigation and significant costs for remediation, any of which could adversely affect our business.
+Added: Even if we are not determined to have violated these laws, government investigations into these issues typically require the expenditure of significant resources and generate negative publicity, which could harm our business, financial condition, results of operations or prospects.
We are subject to U.S.
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exporters to go through more procedures before exporting goods to such entities.
−Removed: It is unknown whether and to what extent new tariffs, export controls, or other new laws or regulations will be adopted, or the effect that any such actions would have on us or our industry, and it is unclear whether the Biden administration will work to reverse these measures or pursue similar policy initiatives.
−Removed: While we have not started commercialization of drug candidates, any unfavorable government policies on international trade, such as export controls, capital controls or tariffs, may affect the demand for our drug products, the competitive position of our product candidates, and import or export of raw materials and finished product candidate used in our preclinical studies and clinical trials, particularly with respect to our manufactured product candidates that we import from China, including pursuant to our manufacturing arrangements and license agreement with WuXi Biologics (Hong Kong) Limited.
+Added: It is unknown whether and to what extent
+Added: new tariffs, export controls, or other new laws or regulations will be adopted, or the effect that any such actions would have on us or our industry, and it is unclear whether the Biden administration will work to reverse these measures or pursue similar policy initiatives.
+Added: While we have not started commercialization of drug candidates, any unfavorable government policies on international trade, such as export controls, capital controls or tariffs, may affect the demand for our drug products, the competitive position of our product candidates, and import or export of raw materials and finished product candidate used in our preclinical studies and clinical trials, particularly with respect to our manufactured product candidates that we import from China, including pursuant to our manufacturing arrangements and license agreement with WuXi Biologics.
If any new tariffs, export controls, legislation and/or regulations are implemented, or if existing trade agreements are renegotiated or, in particular, if the U.S.
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We are exposed to the risk of fraud or other misconduct by our employees, independent contractors, CROs, consultants, commercial partners, vendors and, if we commence clinical trials, our principal investigators.
−Removed: Misconduct by these parties could include intentional failures to comply with FDA regulations or the regulations applicable in the EU and other jurisdictions, provide accurate information to the FDA, the European Commission and other regulatory authorities, comply with healthcare fraud and abuse laws and regulations in the United States and abroad, report financial information or data accurately, or disclose unauthorized activities to us.
+Added: Misconduct by these parties could include intentional failures to comply with FDA regulations or the regulations applicable in the EU and other jurisdictions, provide accurate information to the FDA, the EC and other regulatory authorities, comply with healthcare fraud and abuse laws and regulations in the United States and abroad, report financial information or data accurately, or disclose unauthorized activities to us.
In particular, sales, marketing and business arrangements in the healthcare industry are subject to extensive laws and regulations intended to prevent fraud, misconduct, kickbacks, self-dealing and other abusive practices.
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Even with appropriate policies and procedures, it is not always possible to identify and deter misconduct, and the precautions we take to detect and prevent such activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from government investigations or other actions or lawsuits stemming from a failure to comply with these laws or regulations.
−Removed: If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, financial condition, results of operations and prospects, including the imposition of significant fines or other sanctions.
+Added: If any such actions are instituted against us, and we are not successful in defending
+Added: ourselves or asserting our rights, those actions could have a significant impact on our business, financial condition, results of operations and prospects, including the imposition of significant fines or other sanctions.
Risks Related to Our Business Operations, Employee Matters and Managing Growth
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Although we have employment offer letters which outline the terms of employment with each of our executive officers, each of them may terminate their employment with us at any time.
−Removed: As such, these employment offer letters do not guarantee our retention of
−Removed: our executive officers for any period of time.
+Added: As such, these employment offer letters do not guarantee our retention of our executive officers for any period of time.
In addition, insurance coverage is increasingly expensive, including with respect to directors’ and officers’ liability insurance, or D&O insurance.
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If we are unable to continue to attract and retain high quality personnel, our ability to pursue our growth strategy will be limited and could adversely affect our business, prospects, financial condition and results of operations.
−Removed: We expect to grow our organization, and as a result, we may encounter difficulties in managing our growth, which could disrupt our operations.
−Removed: We expect to experience significant growth in the number of our employees and the scope of our operations, particularly in the areas of clinical development, regulatory affairs, finance and, if any of our product candidates receive marketing approval, sales, marketing and distribution.
+Added: Subject to the results of current or future clinical trials, we expect to grow our organization, and as a result, we may encounter difficulties in managing our growth, which could disrupt our operations.
+Added: As of April 30, 2023, we had 89 full-time employees.
+Added: Subject to the results of current or future clinical trials, we expect to experience significant growth in the number of our employees and the scope of our operations, particularly in the areas of clinical development, regulatory and medical affairs, and, if any of our product candidates receive marketing approval, sales, marketing and distribution.
Our management may need to divert a disproportionate amount of its attention away from our day-to-day activities to devote time to managing these growth activities.
−Removed: To manage these growth activities, we must continue to implement and improve our managerial, operational and financial systems, expand our facilities and continue to recruit and train additional qualified personnel.
−Removed: Due to our limited financial resources and the limited experience of our management team in managing a company with such anticipated growth, we may not be able to effectively manage the expansion of our operations or recruit and train additional qualified personnel.
−Removed: The expansion of our operations may lead to significant costs and may divert our management and business development resources.
−Removed: Our inability to effectively manage the expansion of our operations may result in weaknesses in our infrastructure, and could give rise to operational mistakes, loss of business opportunities, loss of employees and reduced productivity among remaining employees.
−Removed: Our expected growth could require significant capital expenditures and may divert financial resources from other projects, such as the development of additional product candidates.
−Removed: If our management is unable to effectively manage our expected growth, our expenses may increase more than expected, our potential ability to generate revenue could be reduced and we may not be able to implement our business strategy.
+Added: To manage these growth activities, we would need to continue to implement and improve our managerial, operational and financial systems, expand our facilities and continue to recruit and train additional qualified personnel.
+Added: Due to our limited financial resources and the limited experience of our management team in managing a company with such anticipated growth, we may not be able to effectively manage any such expansion of our operations or recruit and train additional qualified personnel.
+Added: The expansion of our operations could also lead to significant costs and could divert our management and business development resources.
+Added: Our inability to effectively manage the expansion of our operations could result in weaknesses in our infrastructure or give rise to operational mistakes, loss of business opportunities, loss of employees and reduced productivity among remaining
+Added: In addition, growth in our number of employees or scope of our operations could require significant capital expenditures and may divert financial resources from other projects, such as the development of additional product candidates.
+Added: If our management is unable to effectively manage any future growth, our expenses may increase more than expected, our potential ability to generate revenue could be reduced and we may not be able to implement our business strategy.
We depend on our information technology systems and associated third-party service providers, and any failure of these systems could harm our business.
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We collect and maintain information in digital and other forms that is necessary to conduct our business, and we are increasingly dependent on information technology systems and infrastructure to operate our business.
−Removed: In the ordinary course of our business, we collect, store and transmit large amounts of confidential information, including intellectual
−Removed: property, proprietary business information and personal information.
+Added: In the ordinary course of our business, we collect, store and transmit large amounts of confidential information, including intellectual property, proprietary business information and personal information.
It is critical that we do so in a secure manner to maintain the privacy, security, confidentiality, availability and integrity of such confidential information.
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These transactions may not be successful and may require significant time and attention of management.
−Removed: In addition, the integration of any business that we may acquire in the future may disrupt our existing business and may be a complex, risky and costly endeavor for which we may never realize any or all potential benefits of the acquisition.
+Added: In addition, the integration of any business
+Added: that we may acquire in the future may disrupt our existing business and may be a complex, risky and costly endeavor for which we may never realize any or all potential benefits of the acquisition.
Accordingly, although there can be no assurance that we will undertake or successfully complete any additional transactions of the nature described above, any additional transactions that we do complete could have a material adverse effect on our business, results of operations, financial condition and prospects.
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Therefore, the future progression of the outbreak and its effects on our business and operations continue to be uncertain.
−Removed: We and our CMOs and CROs may face disruptions in the future that affect our ability to initiate and complete preclinical studies or clinical trials,
−Removed: including recruitment and retention of critical employees, and disruptions or delays in completing manufacturing activities or in procuring items that are essential for our research and development activities, such as raw materials used in the manufacture of any product candidates we may develop, laboratory supplies used in our preclinical studies, or animals that are used for preclinical testing for which there are shortages because of ongoing efforts to address the outbreak.
+Added: We and our CMOs and CROs may face disruptions in the future that affect our ability to initiate and complete preclinical studies or clinical trials, including recruitment and retention of critical employees, and disruptions or delays in completing manufacturing activities or in procuring items that are essential for our research and development activities, such as raw materials used in the manufacture of any product candidates we may develop, laboratory supplies used in our preclinical studies, or animals that are used for preclinical testing for which there are shortages because of ongoing efforts to address the outbreak.
For example, in 2020, we experienced a temporary shortage of raw material used in the manufacturing process for one of our product candidates.
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In addition, we may face impediments to regulatory meetings and approvals due to measures intended to limit in-person interactions.
−Removed: The COVID-19 pandemic has in the past caused significant disruptions in the financial markets, and may cause such disruptions, which could impact our ability to raise additional funds through the capital markets and may also impact the volatility of our stock price and trading in our stock.
+Added: The COVID-19 pandemic has in the past caused significant disruptions in the financial markets, and may cause such disruptions in the future, which could impact our ability to raise additional funds through the capital markets and may also impact the volatility of our stock price and trading in our stock.
In addition, a recession, depression, inflation or other sustained adverse market event resulting from the COVID-19 pandemic, directly or indirectly, could materially and adversely affect our business and the value of our common stock.
−Removed: We cannot be certain what the overall impact of the ongoing COVID-19 pandemic will be on our business, and it has the potential to adversely affect our business, financial condition, results of operations and prospects.
+Added: We cannot be certain what the overall impact of the COVID-19 pandemic will be on our business, and it has the potential to adversely affect our business, financial condition, results of operations and prospects.
Our operations or those of the third parties upon whom we depend might be affected by the occurrence of a catastrophic event, such as a terrorist attack, war or other armed conflict, geopolitical tensions or trade wars, pandemic or natural disaster.
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Long-term disruptions in the infrastructure caused by these types of events, such as natural disasters, which are increasing in frequency due to the impacts of climate change, the outbreak of wars or other armed conflicts (such as Russia’s invasion of Ukraine), the escalation of hostilities, geopolitical tensions or trade wars, acts of terrorism or “acts of God,” particularly involving geographies in which we or third parties on whom we depend have offices, manufacturing or clinical trial sites, could adversely affect our businesses.
−Removed: Although we carry business interruption insurance policies and typically have provisions in our contracts that protect us in certain events, our coverage might not include or be adequate to compensate us for all losses that may occur.
+Added: Although we carry business interruption insurance policies and typically have provisions in our contracts that protect us
+Added: in certain events, our coverage might not include or be adequate to compensate us for all losses that may occur.
Any catastrophic event affecting us, our CMOs, our CROs, regulatory agencies or other parties with which we are engaged could have a material adverse effect on our operations and financial performance.
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The market price of our common stock may fluctuate significantly in response to numerous factors, many of which are beyond our control.
−Removed: The stock market in general and the market for biotechnology and pharmaceutical companies in particular have experienced extreme volatility that has often been unrelated to the operating performance of particular
+Added: The stock market in general and the market for biotechnology and pharmaceutical companies in particular have experienced extreme volatility that has often been unrelated to the operating performance of particular companies.
As a result of this volatility, investors may not be able to sell their common stock at or above the price paid for the shares.
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● any delay in our regulatory filings for our product candidates and any adverse development or perceived adverse development with respect to the applicable regulatory authority’s review of such filings, including without limitation the FDA’s issuance of a “refusal to file” letter or a request for additional information;
−Removed: ● the public’s response to press releases or other public announcements by us or third parties, including our filings with the Securities and Exchange Commission and announcements relating to acquisitions, strategic transactions, licenses, joint ventures, collaborations, capital commitments, intellectual property, litigation or other disputes impacting us or our business;
+Added: ● the public’s response to press releases or other public announcements by us or third parties, including our filings with the U.S.
+Added: Securities and Exchange Commission, or SEC, and announcements relating to acquisitions, strategic transactions, licenses, joint ventures, collaborations, capital commitments, intellectual property, litigation or other disputes impacting us or our business;
● lower than expected market acceptance of our product candidates, if approved;
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● other events or factors, many of which are beyond our control.
−Removed: In November 2022, we entered into a sales agreement with Cowen and Company LLC through which we may, from time to time, issue and sell shares of our common stock having an aggregate offering price of up to $75.0 million, subject to the terms and conditions of the sales agreement.
In addition, in the past, stockholders have initiated class action lawsuits against pharmaceutical and biotechnology companies following periods of volatility in the market prices of these companies’ stock.
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Unfavorable global economic conditions could adversely affect our business, financial condition, stock price and results of operations.
−Removed: Our results of operations could be adversely affected by general conditions in the global economy and in the global financial markets.
−Removed: For example, the 2008 global financial crisis caused extreme volatility and disruptions in the capital and credit markets.
−Removed: A severe or prolonged economic downturn, such as the 2008 global financial crisis, could result in a variety of risks to our business, including, weakened demand for any product candidates we may develop and our ability to raise additional capital when needed on acceptable terms, if at all.
−Removed: A weak or declining economy could also strain our suppliers, possibly resulting in supply disruption.
−Removed: If the current equity and credit markets deteriorate, it may make any necessary debt or equity capital more difficult, more costly, and more dilutive.
−Removed: Failure to secure any necessary capital in a timely manner and on favorable terms could have a material adverse effect on our growth strategy, financial performance and stock price and could require us to delay or abandon clinical development plans.
+Added: General economic conditions, both inside and outside the U.S., including without limitation heightened inflation, capital market volatility, interest rate and currency rate fluctuations, any potential economic slowdown or recession, banking disruptions, the COVID-19 pandemic (including variants of COVID-19) and geopolitical events, including trade wars or civil or political unrest (such as the ongoing war between Ukraine and Russia), have resulted in a significant disruption of global financial markets.
+Added: If the disruption persists or deepens, we could experience an inability to raise additional capital.
+Added: In addition, market volatility, high levels of inflation and interest rate fluctuations may increase our cost of financing or restrict our access to potential sources of future capital.
+Added: For example, the prime rate has recently exceeded the interest rate floor of 4.75% under our loan and security agreement with PacWest, which has increased the amount of cash needed to service our outstanding indebtedness.
+Added: Adequate additional financing may not be available to us on acceptable terms, or at all.
+Added: If we are unable to raise additional capital, on attractive terms or at all, our business, financial condition, stock price and results of operations could be adversely affected, and we could be forced to delay, reduce or altogether terminate one or more current or future research and development programs.
In addition, there is a risk that one or more of our current service providers, manufacturers and other partners may not survive such difficult economic times, which could directly affect our ability to attain our operating goals on schedule and on budget.
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Our principal stockholders and management own a significant percentage of our common stock and exert significant control over matters subject to stockholder approval.
−Removed: As of November 1, 2022, our executive officers, directors, holders of 5% or more of our common stock and their respective affiliates beneficially owned shares in the aggregate representing a majority of our outstanding common stock.
+Added: As of April 30, 2023, our executive officers, directors, holders of 5% or more of our common stock and their respective affiliates beneficially owned shares in the aggregate representing a majority of our outstanding common stock.
As a result of their share ownership, these stockholders, if they act together, would have the ability to influence our management and policies and would be able to significantly affect the outcome of matters requiring stockholder approval such as elections of directors, amendments of our organizational documents or approvals of any merger, sale of assets or other major corporate transaction.
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We also would cease to be an EGC if we issue more than $1.0 billion of non-convertible debt over a three-year period.
−Removed: For so long as we remain an EGC, we are permitted and intend to rely on exemptions from certain disclosure requirements that are applicable to other public companies that are not EGCs.
+Added: as we remain an EGC, we are permitted and intend to rely on exemptions from certain disclosure requirements that are applicable to other public companies that are not EGCs.
These exemptions include:
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If notwithstanding our efforts to comply with new laws, regulations and standards, we fail to comply, regulatory authorities may initiate legal proceedings against us and our business may be materially adversely effected.
−Removed: Pursuant to Section 404, in our second annual report due to be filed with the Securities and Exchange Commission, or SEC, after becoming a public company, we will be required to furnish a report by our management on our internal control over financial reporting.
+Added: Pursuant to Section 404, we are required to furnish a report by our management on our internal control over financial reporting.
However, while we remain an EGC or a smaller reporting company with less than $100 million in annual revenue, we will not be required to include an attestation report on internal control over financial reporting issued by our independent registered public accounting firm.
−Removed: To achieve compliance with Section 404 within the prescribed period, we are engaged in a process to document and evaluate our internal control over financial reporting, which is both costly and challenging.
+Added: To comply with Section 404, we are engaged in a process to document and evaluate our internal control over financial reporting, which is both costly and challenging.
In this regard, we will need to continue to dedicate internal resources, including through hiring additional financial and accounting personnel, potentially engage outside consultants and adopt a detailed work plan to assess and document the adequacy of internal control over financial reporting, continue steps to improve control processes as appropriate, validate through testing that controls are functioning as documented and implement a continuous reporting and improvement process for internal control over financial reporting.
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Inferior internal controls could also subject us to regulatory scrutiny and sanctions, impair our ability to raise revenue and cause investors to lose confidence in our reported financial information, which could harm our business and have a negative effect on the trading price of our common stock and adversely affect our results of operations and financial condition.
−Removed: We will be required to disclose changes made in our internal controls and procedures on a quarterly basis and our management will be required to assess the effectiveness of these controls annually.
+Added: We are required to disclose changes made in our internal controls and procedures on a quarterly basis and our management is required to assess the effectiveness of these controls annually.
However, for as long as we are an EGC or a smaller reporting company with less than $100 million in annual revenue, our independent registered public accounting firm will not be required to attest to the effectiveness of our internal control over financial reporting pursuant to Section 404.
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As a public company, we are subject to certain reporting requirements of the Securities Exchange Act of 1934, as amended, or the Exchange Act.
−Removed: Our disclosure controls and procedures are designed to reasonably assure that information required to be disclosed by us in reports we file or submit under the Exchange Act is accumulated and communicated to management, recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC.
+Added: Our disclosure controls and procedures are designed to reasonably assure that information required to be disclosed by us in reports we file or submit under the Exchange Act is accumulated and communicated to
+Added: management, recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC.
We believe that any disclosure controls and procedures or internal control over financial reporting, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.
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In addition to the CARES Act, as part of Congress’s response to the COVID-19 pandemic, additional legislation has been enacted in 2020 and 2021 containing tax provisions.
−Removed: Regulatory guidance under the Tax Act, CARES Act, and such additional legislation is and continues to be
+Added: Regulatory guidance under the Tax Act, the CARES Act, and such additional legislation is and continues to be forthcoming.
Such guidance could ultimately increase or lessen the impact of these laws on our business and financial condition.
34 unchanged sentences
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.