QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
(Address of principal executive offices) |
(Zip Code) |
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
Non-accelerated filer |
☒ | Smaller reporting company | ||||
Emerging growth company |
• | we have incurred significant operating losses since our inception and anticipate we will incur continued losses for the foreseeable future; |
• | we will need additional funding to advance YTX-7739 through clinical development, which funding may not be available on acceptable terms, or at all. Failure to obtain this necessary capital when needed may force us to delay, limit, or terminate our product development efforts or other operations; |
• | we have concentrated our research and development efforts on the treatment of neurodegenerative diseases, a field that has seen limited success in drug development. Further, our product candidates are based on new approaches and novel technology, which makes it difficult to predict the time and cost of product candidate development and subsequently obtaining regulatory approval; |
• | we depend on our collaboration with Merck and may in the future depend on other collaborations with third parties for the research, development and commercialization of certain of the product candidates we may develop. If any such collaborations are not successful, we may not be able to realize the market potential of those product candidates; |
• | we may encounter difficulties in enrolling subjects in our clinical trials, thereby delaying or preventing development of our product candidates; |
• | our clinical trials may fail to demonstrate adequate safety and efficacy of our product candidates, which would prevent, delay, or limit the scope of regulatory approval and commercialization; |
• | our product candidates may cause serious adverse events or other undesirable side effects that could delay or prevent their regulatory approval, limit the commercial profile of an approved label, or result in significant negative consequences following marketing approval, if any; |
• | we face significant competition in an environment of rapid technological and scientific change, and there is a possibility that our competitors may achieve regulatory approval before we do or develop therapies that are safer, more advanced, or more effective, which may negatively impact our ability to successfully market or commercialize any product candidates we may develop and ultimately harm our financial condition; |
• | the current pandemic of COVID-19 and the future outbreak of other highly infectious or contagious diseases could seriously harm our research, development and potential future commercialization efforts, increase our costs and expenses and have a material adverse effect on our business, financial condition and results of operations; |
• | the regulatory approval processes of the FDA and comparable foreign regulatory authorities are lengthy, time-consuming, and inherently unpredictable. If we are ultimately unable to obtain regulatory approval for our product candidates, we will be unable to generate product revenue and our business will be substantially harmed; and |
• | we may not seek to protect our intellectual property rights in all jurisdictions throughout the world and we may not be able to adequately enforce our intellectual property rights even in the jurisdictions where we seek protection. |
• | the timing, progress and results of preclinical studies and clinical trials for our programs and product candidates, including statements regarding the timing of initiation and completion of studies or trials and related preparatory work, the period during which the results of the trials will become available and our research and development programs; |
• | our ability to recruit and enroll suitable patients in our clinical trials; |
• | the potential attributes and benefits of our product candidates; |
• | our ability to develop and advance product candidates into, and successfully complete, clinical studies; |
• | the timing, scope or likelihood of regulatory filings and approvals; |
• | our ability to obtain and maintain regulatory approval for our product candidates, and any related restrictions, limitations or warnings in the label of an approved product candidate; |
• | the implementation of our business model and our strategic plans for our business, product candidates, technology and our discovery engine; |
• | our commercialization, marketing and manufacturing capabilities and strategy; |
• | the pricing and reimbursement of our product candidates, if approved; |
• | the rate and degree of market acceptance of our product candidates, if approved; |
• | our ability to establish or maintain collaborations or strategic relationships or obtain additional funding; |
• | our ability to contract with and rely on third parties to assist in conducting our clinical trials and manufacturing our product candidates; |
• | the size and growth potential of the markets for our product candidates, and our ability to serve those markets, either alone or in partnership with others; |
• | our ability to obtain funding for our operations, including funding necessary to complete further development, approval and, if approved, commercialization of our product candidates; |
• | the period over which we anticipate our existing cash and cash equivalents will be sufficient to fund our operating expenses and capital expenditure requirements; |
• | the potential for our business development efforts to maximize the potential value of our portfolio; |
• | our ability to compete with other companies currently marketing or engaged in the development of treatments for the indications that we are pursuing for our product candidates; |
• | our expectations regarding our ability to obtain and maintain intellectual property protection for our product candidates; |
• | our financial performance; |
• | our ability to retain the continued service of our key professionals and to identify, hire and retain additional qualified professionals; |
• | our expectations related to the use of our cash reserves; |
• | our estimates regarding expenses, future revenue, capital requirements and needs for additional financing; |
• | the impact of laws and regulations, including without limitation recently enacted tax reform legislation; |
• | our expectations regarding the time during which we are an emerging growth company under the JOBS Act; |
• | the effect of COVID-19 on the foregoing; and |
• | other risks and uncertainties, including those listed under the caption “Risk Factors” in Part II, Item 1A. |
Page |
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PART I. |
1 | |||||
Item 1. | 1 | |||||
1 | ||||||
2 | ||||||
3 | ||||||
4 | ||||||
5 | ||||||
6 | ||||||
Item 2. | 19 | |||||
Item 3. | 31 | |||||
Item 4. | 31 | |||||
PART II. |
32 | |||||
Item 1. | 32 | |||||
Item 1A. | 32 | |||||
Item 2. | 73 | |||||
Item 3. | 73 | |||||
Item 4. | 73 | |||||
Item 5. | 73 | |||||
Item 6. | 74 | |||||
Signatures | 75 |
June 30, 2021 |
December 31, 2020 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
$ | $ | ||||||
Marketable securities |
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Prepaid expenses and other current assets |
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Total current assets |
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Property and equipment, net |
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Operating lease right-of-use |
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Deposits |
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Restricted cash |
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Assets held-for-sale |
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Total assets |
$ | $ | ||||||
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Liabilities and Stockholders’ Equity |
||||||||
Current liabilities: |
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Accounts payable |
$ | $ | ||||||
Accrued expenses and other current liabilities |
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Current portion of long-term debt |
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Operating lease liabilities |
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Current portion of finance lease obligation |
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Deferred revenue |
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Total current liabilities |
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Long-term debt, net of discount and current portion |
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Operating lease liabilities, net of current portion |
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Finance lease obligation, net of current portion |
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Other liabilities |
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Total liabilities |
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Commitments and contingencies (Note 10) |
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Stockholders’ equity: |
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Common stock, $ |
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Additional paid-in capital |
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Accumulated deficit |
( |
) | ( |
) | ||||
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity |
$ | $ | ||||||
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Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2021 |
2020 |
2021 |
2020 |
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Collaboration revenue |
$ | $ | — | $ | $ | — | ||||||||||
Operating expenses: |
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Research and development |
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General and administrative |
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Total operating expenses |
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Loss from operations |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Other income (expense): |
||||||||||||||||
Change in fair value of preferred unit warrant liability |
— | — | ||||||||||||||
Interest expense |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Interest income and other income (expense), net |
( |
) | — |
( |
) | |||||||||||
Gain on debt extinguishment |
— | — | ||||||||||||||
Total other income (expense), net |
( |
) | ( |
) | ( |
) | ||||||||||
Net loss |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
Gain on extinguishment of Class B preferred units |
— |
— |
||||||||||||||
Net loss applicable to common shareholders |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Net loss per share/unit, basic and diluted |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
Weighted average common shares/units outstanding, basic and diluted |
||||||||||||||||
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2021 |
2020 |
2021 |
2020 |
|||||||||||||
Net loss |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
Other comprehensive income: |
||||||||||||||||
Unrealized gains on marketable securities, net of tax of $ |
— | — | ||||||||||||||
|
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|||||||||
Comprehensive loss |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
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|
|
|
Preferred Units |
Common Units |
Defaulting Class B Preferred Units |
Common Stock |
Additional Paid-in |
Accumulated Other Comprehensive |
Accumulated |
Total Stockholders’ Equity/ Members’ |
|||||||||||||||||||||||||||||||||||||||||
Units |
Amount |
Units |
Amount |
Shares |
Amount |
Shares |
Amount |
Capital |
Gain (Loss) |
Deficit |
(Deficit) |
|||||||||||||||||||||||||||||||||||||
Balances at December 31, 2020 |
— | $ | — | — | $ | — | — | $ | — | $ | $ | $ | — | $ | ( |
) | $ | |||||||||||||||||||||||||||||||
Stock/equity-based compensation expense |
— | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||
Net loss |
— | — | — | — | — | — | — | — | — | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||||
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Balances at March 31, 2021 |
— | — | — | — | — | — | $ | $ | $ | $ | ( |
) | $ | |||||||||||||||||||||||||||||||||||
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Issuance of common stock from at the market offering, net of issuance costs |
— | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Exercises of common stock options |
— | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Stock/equity-based compensation expense |
— | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||
Net loss |
— | — | — | — | — | — | — | — | — | — | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||
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|||||||||||||||||||||||||
Balances at June 30, 2021 |
— | $ | — | — | $ | — | — | $ | — | $ | $ | — | $ | ( |
) | $ | ||||||||||||||||||||||||||||||||
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Preferred Units |
Common Units |
Defaulting Class B Preferred Units |
Common Stock |
Additional Paid-in |
Accumulated Other Comprehensive |
Accumulated |
Total Stockholders’ Equity/ Members’ |
|||||||||||||||||||||||||||||||||||||||||
Units |
Amount |
Units |
Amount |
Units |
Amount |
Shares |
Amount |
Capital |
Gain (Loss) |
Deficit |
(Deficit) |
|||||||||||||||||||||||||||||||||||||
Balances at December 31, 2019 |
$ | $ | — | $ | — | — | $ | — | $ | — | $ | $ | ( |
) | $ | ( |
) | |||||||||||||||||||||||||||||||
Stock/equity-based compensation expense |
— | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||
Net loss |
— | — | — | — | — | — | — | — | — | — | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||
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|||||||||||||||||||||||||
Balances at March 31, 2020 |
$ | — | $ | — | — | $ | — | $ | — | $ | — | $ | ( |
) | $ | ( |
) | |||||||||||||||||||||||||||||||
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Issuance of Class C preferred units, net of issuance costs of $388 |
$ | $ | — | |||||||||||||||||||||||||||||||||||||||||||||
Exchange of Class B preferred units for Defaulting Class B preferred units |
( |
) | ( |
) | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Gain on extinguishment of Class B preferred units |
— | ( |
) | — | — | — | — | — | — | — | — | $ | ||||||||||||||||||||||||||||||||||||
Forfeiture of unvested incentive units |
— | — | ( |
) | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
Stock/equity-based compensation expense |
— | — | ||||||||||||||||||||||||||||||||||||||||||||||
Net loss |
— | — | — | — | — | — | — | — | — | — | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||
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|||||||||||||||||||||||||
Balances at June 30, 2020 |
$ | $ | $ | — | $ | — | — | $ | — | $ | ( |
) | $ | ( |
) | |||||||||||||||||||||||||||||||||
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Six Months Ended June 30, |
||||||||
2021 |
2020 |
|||||||
Cash flows from operating activities: |
||||||||
Net loss |
( |
) | ( |
) | ||||
Adjustments to reconcile net loss to net cash used in operating activities: |
||||||||
Net amortization of premiums (accretion of discounts) on marketable securities |
( |
) | ( |
) | ||||
Depreciation and amortization expense |
||||||||
Non-cash lease expense |
||||||||
Stock/equity-based compensation expense |
||||||||
Other non-cash expense |
— | |||||||
Non-cash interest expense |
||||||||
Gain on debt extinguishment |
( |
) | — | |||||
Change in fair value of preferred unit warrant liability |
— | ( |
) | |||||
Loss (gain) on sale of property and equipment |
( |
) | ||||||
Changes in operating assets and liabilities: |
||||||||
Accounts receivable |
— | ( |
) | |||||
Prepaid expenses and other current assets |
( |
) | ( |
) | ||||
Deposits |
— | ( |
) | |||||
Operating lease liabilities |
( |
) | ( |
) | ||||
Accounts payable |
( |
) | ( |
) | ||||
Accrued expenses and other current liabilities |
( |
) | ( |
) | ||||
Deferred revenue |
( |
) | ||||||
|
|
|
|
|||||
Net cash used in operating activities |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Cash flows from investing activities: |
||||||||
Purchases of marketable securities |
( |
) | — | |||||
Proceeds from sales and maturities of marketable securities |
||||||||
Purchases of property and equipment |
( |
) | ( |
) | ||||
Proceeds from sale of property and equipment |
— | |||||||
|
|
|
|
|||||
Net cash (used in) provided by investing activities |
( |
) | ||||||
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|
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|
|||||
Cash flows from financing activities: |
||||||||
Proceeds from issuance of Class C preferred units, net of offering costs paid |
— | |||||||
Proceeds from Paycheck Protection Program loan |
— | |||||||
Proceeds from at the market offering, net of issuance costs |
— | |||||||
Proceeds from exercise of stock options |
— | |||||||
Payments of debt issuance costs related to long-term debt |
( |
) | ( |
) | ||||
Payments of finance lease obligations |
( |
) | ( |
) | ||||
|
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|
|||||
Net cash provided by financing activities |
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|||||
Net (decrease) increase in cash, cash equivalents and restricted cash |
( |
) | ||||||
Cash, cash equivalents and restricted cash at beginning of period |
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Cash, cash equivalents and restricted cash at end of period |
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Supplemental cash flow information: |
||||||||
Cash paid for interest |
$ | $ | ||||||
Supplemental disclosure of noncash investing and financing activities: |
||||||||
Deferred financing costs included in accounts payable |
$ | — | $ | |||||
Operating lease liabilities arising from obtaining right-of-use |
$ | — | $ |
• | Level 1 — Quoted prices in active markets for identical assets or liabilities. |
• |
Level 2 — Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data. |
• |
Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques. |
Fair Value Measurements at June 30, 2021 Using: |
||||||||||||||||
Level 1 |
Level 2 |
Level 3 |
Total |
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Assets: |
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Cash equivalents: |
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Money market funds |
$ | $ | $ | |||||||||||||
Marketable securities: |
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Commercial paper |
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$ |
$ |
$ |
$ |
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Fair Value Measurements at December 31, 2020 Using: |
||||||||||||||||
Level 1 |
Level 2 |
Level 3 |
Total |
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Assets: |
||||||||||||||||
Cash equivalents: |
||||||||||||||||
Money market funds |
$ | $ | $ | $ | ||||||||||||
Commercial paper |
||||||||||||||||
Marketable securities: |
||||||||||||||||
Commercial paper |
||||||||||||||||
|
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|
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|
|
|||||||||
$ |
$ |
$ |
$ |
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|
June 30, 2021 |
||||||||||||||||
Amortized Cost |
Gross Unrealized Gains |
Gross Unrealized Losses |
Fair Value |
|||||||||||||
Commercial paper |
$ | $ | $ | $ | ||||||||||||
|
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|
|||||||||
$ |
$ |
$ |
$ |
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|||||||||
December 31, 2020 |
||||||||||||||||
Amortized Cost |
Gross Unrealized Gains |
Gross Unrealized Losses |
Fair Value |
|||||||||||||
Commercial paper |
$ | $ | $ | $ | ||||||||||||
|
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|
|
|
|||||||||
$ |
$ |
$ |
$ |
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|
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|
|
|
|
|
|
June 30, 2021 |
December 31, 2020 |
|||||||
Accrued employee compensation and benefits |
$ | $ | ||||||
Accrued external research and development expenses |
||||||||
Accrued professional fees |
||||||||
Other |
||||||||
|
|
|
|
|||||
$ | $ | |||||||
|
|
|
|
June 30, 2021 |
December 31, 2020 |
|||||||
Principal amount of long-term debt |
$ | $ | ||||||
Less: Current portion of long-term debt |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Long-term debt, net of current portion |
||||||||
Debt discount, net of accretion |
( |
) | ( |
) | ||||
Accrued end-of-term |
||||||||
|
|
|
|
|||||
Long-term debt, net of discount and current portion |
$ | $ | ||||||
|
|
|
|
Year |
Aggregate Minimum Payments |
|||
2021 |
$ | |||
2022 |
||||
2023 |
||||
2024 |
||||
2025 |
||||
|
|
|||
$ | ||||
|
|
Units |
Weighted Average Grant Date Fair Value |
|||||||
Unvested balance at December 31, 2020 |
$ | |||||||
Issued |
$ | |||||||
Vested |
$ | |||||||
Forfeited |
( |
) | $ | |||||
Unvested balance at June 30, 2021 |
$ |
Number of Shares/ Units |
Weighted Average Exercise Price |
Weighted Average Remaining Contractual Term |
Aggregate Intrinsic Value |
|||||||||||||
(in years) |
(in thousands) |
|||||||||||||||
Outstanding as of December 31, 2020 |
$ | |||||||||||||||
Granted |
$ | |||||||||||||||
Exercised |
( |
) | ||||||||||||||
Forfeited |
( |
) | $ | — | ||||||||||||
Outstanding as of June 30, 2021 |
$ | |||||||||||||||
Vested and expected to vest as of June 30, 2021 |
$ |
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2021 |
2020 |
2021 |
2020 |
|||||||||||||
Research and development expenses |
$ | $ | $ | $ | ||||||||||||
General and administrative expenses |
||||||||||||||||
$ | $ | $ | $ | |||||||||||||
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2021 |
2020 |
2021 |
2020 |
|||||||||||||
Numerator: |
||||||||||||||||
Net los s |
$ |
( |
) |
$ |
( |
) |
( |
) |
( |
) | ||||||
Gain on extinguishment of Class B preferred unit s |
— |
— |
||||||||||||||
Net loss applicable to common shareholders |
$ | ( |
) | $ | ( |
) | $ |
( |
) | $ |
( |
) | ||||
Denominator: |
||||||||||||||||
Weighted average common shares/units outstanding, basic and diluted |
||||||||||||||||
Net loss per share/unit, basic and diluted |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
As of June 30, |
||||||||
2021 |
2020 |
|||||||
Options to purchase common stock |
||||||||
Warrants to purchase common stock or shares convertible into common stock |
||||||||
Six Months Ended June 30, |
||||||||
2021 |
2020 |
|||||||
Operating lease cost |
$ | $ | ||||||
Short-term lease cost |
||||||||
Variable lease cost |
||||||||
Finance lease cost: |
||||||||
Amortization of lease assets |
||||||||
Interest on lease liabilities |
||||||||
|
|
|
|
|||||
Total finance lease cost |
$ | $ | ||||||
|
|
|
|
Six Months Ended June 30, |
||||||||
2021 |
2020 |
|||||||
Cash paid for amounts included in the measurement of operating lease liabilities (operating cash flows) |
$ | $ | ||||||
Cash paid for amounts included in the measurement of finance lease liabilities |
$ | $ | ||||||
Cash paid for amounts included in the measurement of finance lease liabilities |
$ | $ | ||||||
Operating lease liabilities arising from obtaining right-of-use |
$ | — | $ | |||||
Finance lease liabilities arising from obtaining right-of-use assets |
$ | $ |
As of June 30, |
||||||||
2021 |
2020 |
|||||||
Weighted-average remaining lease term (in years) used for: |
||||||||
Operating leases |
||||||||
Finance leases |
||||||||
Weighted-average discount rate used for: |
||||||||
Operating leases |
% | % | ||||||
Finance leases |
% | % |
Year |
Operating Leases |
Finance Leases |
||||||
2021 |
$ | $ | ||||||
2022 |
||||||||
2023 |
||||||||
2024 |
||||||||
2025 |
||||||||
Thereafter |
||||||||
|
|
|
|
|||||
Total future lease payments |
||||||||
Less: Imputed interest |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Total lease liabilities |
$ | $ | ||||||
|
|
|
|
Leases |
Condensed Consolidated Balance Sheet Classification |
Amount |
||||
Assets: |
||||||
Operating lease assets |
Operating lease right-of-use assets |
$ | ||||
Finance lease assets |
Property and equipment, net |
|||||
|
|
|||||
Total leased assets |
$ | |||||
|
|
|||||
Liabilities: |
||||||
Current: |
||||||
Operating lease liabilities |
Operating lease liabilities |
$ | ||||
Finance lease liabilities |
Current portion of finance lease obligation |
|||||
Non-current: |
||||||
Operating lease liabilities |
Operating lease liabilities, net of current portion |
|||||
Finance lease liabilities |
Finance lease obligation, net of current portion |
|||||
|
|
|||||
Total lease liabilities |
$ | |||||
|
|
• | successfully complete preclinical and clinical development of our product candidates; |
• | successfully submit investigational new drug, or IND, applications or comparable applications, for our product candidates; |
• | identify, assess or develop new product candidates from our discovery engine platform; |
• | develop a sustainable and scalable manufacturing process for our product candidates, as well as establish and maintain commercially viable supply relationships with third parties that can provide adequate products and services to support clinical activities and commercial demand for our product candidates; |
• | negotiate favorable terms in any collaboration, licensing, or other arrangements into which we may enter; |
• | obtain regulatory approvals for product candidates for which we successfully complete clinical development; |
• | launch and successfully commercialize product candidates for which we obtain regulatory approval, either by establishing a sales, marketing, and distribution infrastructure or collaborating with a partner; |
• | negotiate and maintain an adequate price for our product candidates, both in the United States and in foreign countries where our products are commercialized; |
• | obtain market acceptance of our product candidates as viable treatment options; |
• | build out new facilities or expand existing facilities to support our ongoing development activity; |
• | address any competing technological and market developments; |
• | maintain, protect, expand, and enforce our portfolio of intellectual property rights, including patents, trade secrets, and know-how; and |
• | attract, hire and retain qualified personnel. |
• | salaries, benefits, stock/equity-based compensation, consultants and other related costs for individuals involved in research and development activities; |
• | external research and development expenses incurred under agreements with contract research organizations (“CROs”), investigative sites and other scientific development services; |
• | costs incurred under agreements with contract development and manufacturing organizations (“CDMOs”) for developing and manufacturing material for preclinical studies and clinical trials; |
• | licensing agreements and associated milestones; |
• | costs related to compliance with regulatory requirements; |
• | lab supplies and other lab related expenses; and |
• | facilities, depreciation and other allocated expenses, which include direct and allocated expenses for rent, insurance and other operating costs. |
• | the timing and progress of preclinical and clinical development activities; |
• | the number and scope of preclinical and clinical programs we decide to pursue; |
• | the ability to maintain current research and development programs and to establish new ones; |
• | establishing an appropriate safety profile with IND-enabling or foreign equivalent studies; |
• | successful patient enrollment in, and the initiation and completion of, clinical trials; |
• | the successful completion of clinical trials with safety, tolerability and efficacy profiles that are satisfactory to the FDA or any comparable foreign regulatory authority; |
• | the receipt of regulatory approvals from applicable regulatory authorities; |
• | the timing, receipt and terms of any marketing approvals from applicable regulatory authorities; |
• | our ability to establish new licensing or collaboration arrangements; |
• | the performance of our future collaborators, if any; |
• | establishing commercial manufacturing capabilities or making arrangements with third-party manufacturers; |
• | development and timely delivery of commercial-grade drug formulations that can be used in our planned clinical trials and for commercial launch; |
• | obtaining, maintaining, defending and enforcing patent claims and other intellectual property rights; |
• | launching commercial sales of product candidates, if approved, whether alone or in collaboration with others; and |
• | maintaining a continued acceptable safety profile of the product candidates following approval. |
Three Months Ended June 30, |
||||||||||||
2021 |
2020 |
Change |
||||||||||
(in thousands) |
||||||||||||
Collaboration revenue |
$ | 2,114 | $ | — | $ | 2,114 | ||||||
Operating expenses: |
||||||||||||
Research and development |
7,327 | 3,939 | 3,388 | |||||||||
General and administrative |
4,712 | 2,599 | 2,113 | |||||||||
|
|
|
|
|
|
|||||||
Total operating expenses |
12,039 | 6,538 | 5,501 | |||||||||
|
|
|
|
|
|
|||||||
Loss from operations |
(9,925 | ) | (6,538 | ) | (3,387 | ) | ||||||
|
|
|
|
|
|
|||||||
Other income (expense): |
||||||||||||
Change in fair value of preferred unit warrant liability |
— | 21 | (21 | ) | ||||||||
Interest expense |
(463 | ) | (455 | ) | (8 | ) | ||||||
Interest income and other income (expense), net |
(66 | ) | — | (66 | ) | |||||||
Loss on debt extinguishment |
— | — | — | |||||||||
|
|
|
|
|
|
|||||||
Total other expense, net |
(529 | ) | (434 | ) | (95 | ) | ||||||
|
|
|
|
|
|
|||||||
Net loss |
$ | (10,454 | ) | $ | (6,972 | ) | $ | (3,482 | ) | |||
|
|
|
|
|
|
Three Months Ended June 30, |
||||||||||||
2021 |
2020 |
Change |
||||||||||
(in thousands) |
||||||||||||
Direct research and development expenses by program: |
||||||||||||
YTX-7739 |
$ | 2,397 | $ | 804 | 1,593 | |||||||
YTX-9184 |
642 | (9 | ) | 651 | ||||||||
Platform, research and discovery, and unallocated expenses: |
— | |||||||||||
Platform and other early stage research external costs |
731 | 117 | 614 | |||||||||
Personnel related (including equity-based compensation) |
2,126 | 1,896 | 230 | |||||||||
Facility related and other |
1,431 | 1,131 | 300 | |||||||||
|
|
|
|
|
|
|||||||
Total research and development expenses |
$ | 7,327 | $ | 3,939 | $ | 3,388 | ||||||
|
|
|
|
|
|
Three Months Ended June 30, |
||||||||||||
2021 |
2020 |
Change |
||||||||||
(in thousands) |
||||||||||||
Personnel related (including equity-based compensation) |
$ | 2,138 | $ | 1,172 | 966 | |||||||
Professional and consultant fees |
1,403 | 1,094 | 309 | |||||||||
Facility related and other |
1,171 | 333 | 838 | |||||||||
|
|
|
|
|
|
|||||||
Total general and administrative expenses |
$ | 4,712 | $ | 2,599 | $ | 2,113 | ||||||
|
|
|
|
|
|
Six Months Ended June 30, |
||||||||||||
2021 |
2020 |
Change |
||||||||||
(in thousands) |
||||||||||||
Collaboration revenue |
$ | 5,646 | $ | — | $ | 5,646 | ||||||
Operating expenses: |
||||||||||||
Research and development |
14,106 | 8,968 | 5,138 | |||||||||
General and administrative |
10,764 | 4,631 | 6,133 | |||||||||
|
|
|
|
|
|
|||||||
Total operating expenses |
24,870 | 13,599 | 11,271 | |||||||||
|
|
|
|
|
|
|||||||
Loss from operations |
(19,224 | ) | (13,599 | ) | (5,625 | ) | ||||||
|
|
|
|
|
|
|||||||
Other income (expense): |
||||||||||||
Change in fair value of preferred unit warrant liability |
— | 26 | (26 | ) | ||||||||
Interest expense |
(951 | ) | (909 | ) | (42 | ) | ||||||
Interest income and other income (expense), net |
(95 | ) | 45 | (140 | ) | |||||||
Loss on debt extinguishment |
1,134 | — | 1,134 | |||||||||
|
|
|
|
|
|
|||||||
Total other expense, net |
88 | (838 | ) | 926 | ||||||||
|
|
|
|
|
|
|||||||
Net loss |
$ | (19,136 | ) | $ | (14,437 | ) | $ | (4,699 | ) | |||
|
|
|
|
|
|
Six Months Ended June 30, |
||||||||||||
2021 |
2020 |
Change |
||||||||||
(in thousands) |
||||||||||||
Direct research and development expenses by program: |
||||||||||||
YTX-7739 |
$ | 4,118 | $ | 1,598 | $ | 2,520 | ||||||
YTX-9184 |
1,145 | 306 | 839 | |||||||||
Platform, research and discovery, and unallocated expenses: |
||||||||||||
Platform and other early stage research external costs |
1,801 | 832 | 969 | |||||||||
Personnel related (including equity-based compensation) |
4,154 | 4,168 | (14 | ) | ||||||||
Facility related and other |
2,888 | 2,064 | 824 | |||||||||
|
|
|
|
|
|
|||||||
Total research and development expenses |
$ | 14,106 | $ | 8,968 | $ | 5,138 | ||||||
|
|
|
|
|
|
Six Months Ended June 30, |
||||||||||||
2021 |
2020 |
Change |
||||||||||
(in thousands) |
||||||||||||
Personnel related (including equity-based compensation) |
$ | 4,407 | $ | 2,423 | 1,984 | |||||||
Professional and consultant fees |
3,488 | 1,743 | 1,745 | |||||||||
Facility related and other |
2,869 | 465 | 2,404 | |||||||||
|
|
|
|
|
|
|||||||
Total general and administrative expenses |
$ | 10,764 | $ | 4,631 | $ | 6,133 | ||||||
|
|
|
|
|
|
Six Months Ended June 30, |
||||||||
2021 |
2020 |
|||||||
(in thousands) |
||||||||
Cash used in operating activities |
$ | (31,903 | ) | $ | (14,304 | ) | ||
Cash (used in) provided by investing activities |
(3,884 | ) | 1,193 | |||||
Cash provided by financing activities |
1,159 | 22,295 | ||||||
|
|
|
|
|||||
Net (decrease) increase in cash, cash equivalents, and restricted cash |
$ | (34,628 | ) | $ | 9,184 | |||
|
|
|
|
• | the scope, number, initiation, progress, timing, costs, design, duration, any potential delays and results of clinical trials and nonclinical studies for our current or future product candidates; |
• | the clinical development plans we establish for these product candidates; |
• | the number and characteristics of product candidates and programs that we develop or may in-license; |
• | the outcome, timing and cost of regulatory reviews, approvals or other actions to meet regulatory requirements established by the FDA and comparable foreign regulatory authorities, including the potential for the FDA or comparable foreign regulatory authorities to require that we perform more studies for our product candidates than those that we currently expect; |
• | our ability to obtain marketing approval for our product candidates; |
• | the cost of filing, prosecuting, defending and enforcing our patent claims and other intellectual property rights covering our product candidates; |
• | our ability to maintain, expand and defend the scope of our intellectual property portfolio, including the cost of defending intellectual property disputes, including patent infringement actions brought by third parties against us or our product candidates; |
• | the cost and timing of completion of commercial-scale outsourced manufacturing activities with respect to our product candidates; |
• | our ability to establish and maintain licensing, collaboration or similar arrangements on favorable terms and whether and to what extent we retain development or commercialization responsibilities under any new licensing, collaboration or similar arrangement; |
• | the cost of establishing sales, marketing and distribution capabilities for any product candidates for which we may receive regulatory approval in regions where we choose to commercialize our products on our own; |
• | the success of any other business, product or technology that we acquire or in which we invest; |
• | the costs of acquiring, licensing or investing in businesses, product candidates and technologies; |
• | our need and ability to hire additional management and scientific and medical personnel; |
• | the costs to operate as a public company in the U.S. including the need to implement additional financial and reporting systems and other internal systems and infrastructure for our business; |
• | market acceptance of our product candidates, to the extent any are approved for commercial sale; and |
• | the effect of competing technological and market developments. |
• | successfully completing preclinical and clinical development of our product candidates; |
• | successfully submitting investigational new drug, or IND, applications or comparable applications, for our product candidates; |
• | identifying, assessing, and/or developing new product candidates from our discovery engine platform; |
• | developing a sustainable and scalable manufacturing process for our product candidates, as well as establishing and maintaining commercially viable supply relationships with third parties that can provide adequate products and services to support clinical activities and commercial demand for our product candidates; |
• | the prevalence, duration and severity of potential side effects or other safety issues experienced with our product candidates or future product candidates, if any; |
• | negotiating favorable terms in any collaboration, licensing, or other arrangements into which we may enter; |
• | obtaining regulatory approvals for product candidates for which we successfully complete clinical development; |
• | launching and successfully commercializing product candidates for which we obtain regulatory approval, either by establishing a sales, marketing, and distribution infrastructure or collaborating with a partner; |
• | negotiating and maintaining an adequate price for our product candidates, both in the United States and in foreign countries where our products are commercialized; |
• | obtaining market acceptance of our product candidates as viable treatment options; |
• | building out new facilities or expanding existing facilities to support our ongoing development activity; |
• | addressing any competing technological and market developments; |
• | maintaining, protecting, expanding, and enforcing our portfolio of intellectual property rights, including patents, trade secrets, and know-how; and |
• | attracting, hiring, and retaining qualified personnel. |
• | our product candidates may not successfully complete preclinical studies or clinical trials; |
• | a product candidate may, upon further study, be shown to have harmful side effects or other characteristics that indicate it is unlikely to be effective or otherwise does not meet applicable regulatory criteria; |
• | our competitors may develop therapeutics that render our product candidates obsolete or less attractive; |
• | our competitors may develop platform technologies that render our platform technology obsolete or less attractive; |
• | the product candidates that we develop and our discovery engine platform may not be sufficiently covered by intellectual property for which we hold exclusive rights; |
• | the market for a product candidate may change so that the continued development of that product candidate is no longer reasonable or commercially attractive; |
• | a product candidate may not be capable of being produced in commercial quantities at an acceptable cost, or at all; |
• | we may not be able to establish manufacturing capabilities or arrangements with third-party manufacturers for clinical and, if approved, commercial study; |
• | even if a product candidate obtains regulatory approval, we may be unable to establish sales and marketing capabilities, or successfully market such approved product candidate, to gain market acceptance; and |
• | a product candidate may not be accepted as safe or effective by patients, the medical community or third-party payors, if applicable. |
• | the subject eligibility criteria defined in the protocol, including biomarker-driven identification and/or certain highly-specific criteria related to stage of disease progression, which may limit the patient populations eligible for our clinical trials to a greater extent than competing clinical trials for the same indication that do not have biomarker-driven patient eligibility criteria; |
• | eligibility requirements mandated by regulatory agencies which may limit the number of eligible patients in a given disorder; |
• | the size of the study population required for analysis of the study’s primary endpoints; |
• | the proximity of subjects to a study site; |
• | the design of the study; |
• | our use of academic sites, which may be less accustomed to running clinical trials and managing enrollment; |
• | public perception of drug safety issues; |
• | our ability to recruit clinical study investigators with the appropriate competencies and experience; |
• | competing clinical trials for similar therapies or targeting patient populations meeting our patient eligibility criteria; |
• | clinicians’ and patients’ perceptions as to the potential advantages and side effects of the product candidate being studied in relation to other available therapies and product candidates; |
• | our ability to obtain and maintain patient consents; |
• | the risk that subjects enrolled in clinical trials will not complete such studies, for any reason; and |
• | the impact of the COVID-19 pandemic on patient enrollment and retention and clinical trial site initiation. |
• | regulatory authorities may suspend, withdraw, or limit their approval of such product candidates; |
• | regulatory authorities may require the addition of labeling statements, such as a “boxed” warning or a contraindication; |
• | we may be required to change the way such products are distributed or administered; |
• | we may be required to conduct additional post-marketing studies and surveillance; |
• | we may be required to implement a risk evaluation and mitigation strategy (“REMS”), or create a medication guide outlining the risks of such side effects for distribution to patients; |
• | we may be subject to regulatory investigations and government enforcement actions; |
• | subjects in a clinical study may experience severe or unexpected drug-related side effects; |
• | we may decide, or regulatory authorities may require it, to conduct additional clinical trials or abandon product development programs; |
• | we may decide to remove such products from the marketplace; |
• | we could be sued and held liable for injury caused to individuals exposed to or taking our products; |
• | the product may become less competitive; and |
• | our reputation may suffer. |
• | the FDA or other regulatory bodies may not authorize us or our investigators to commence our planned clinical trials or any other clinical trials we may initiate, or may suspend our clinical trials, for example, through imposition of a clinical hold; |
• | delays in filing or receiving approvals of additional investigational new drug (“IND”) applications that may be required; |
• | lack of adequate funding to continue our clinical trials and preclinical studies; |
• | negative results from our preclinical studies and clinical trials; |
• | delays in reaching or failing to reach agreement on acceptable terms with prospective contract research organizations (“CROs”) and clinical study sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and study sites; |
• | inadequate quantity or quality of a product candidate or other materials necessary to conduct clinical trials, for example delays in the manufacturing of sufficient supply of finished drug product; |
• | difficulties obtaining ethics committee or Institutional Review Board (“IRB”) approval to conduct a clinical study at a prospective site or sites; |
• | challenges in recruiting and enrolling subjects to participate in clinical trials, the proximity of subjects to study sites, eligibility criteria for the clinical study, the nature of the clinical study protocol, the availability of approved effective treatments for the relevant disease, and competition from other clinical study programs for similar indications; |
• | severe or unexpected drug-related side effects experienced by subjects in a clinical study; |
• | we may decide, or regulatory authorities may require it, to conduct additional clinical trials or abandon product development programs; |
• | delays in validating, or inability to validate, any endpoints utilized in a clinical study, if necessary; |
• | the FDA may disagree with our clinical study design and our interpretation of data from clinical trials, or may change the requirements for approval even after it has reviewed and commented on the design for our clinical trials; |
• | reports from preclinical or clinical testing of other alpha-synuclein-dependent therapies that raise safety or efficacy concerns; and |
• | difficulties retaining subjects who have enrolled in a clinical study but may be prone to withdraw due to rigors of the clinical trial, lack of efficacy, side effects, personal issues, or loss of interest. |
• | failure to conduct the clinical study in accordance with regulatory requirements or our clinical protocols; |
• | inspection of the clinical study operations or study sites by the FDA or other regulatory authorities that reveals deficiencies or violations that require us to undertake corrective action, including in response to the imposition of a clinical hold; |
• | unforeseen safety issues, including any that could be identified in our preclinical studies or clinical trials, adverse side effects or lack of effectiveness; |
• | changes in government regulations or administrative actions; |
• | problems with clinical supply materials; and |
• | lack of adequate funding to continue clinical trials. |
• | the safety, efficacy, and other potential advantages of our approved product candidates compared to other available therapies; |
• | limitations or warnings contained in the labeling approved for our product candidates by the FDA or other applicable regulatory authorities; |
• | any restrictions on the use of our products together with other medications; |
• | the prevalence and severity of any adverse effects associated with our products; |
• | inability of certain types of patients to take our products; |
• | the clinical indications for which our product candidates are approved; |
• | availability of alternative treatments already approved or expected to be commercially launched in the near future; |
• | the potential and perceived advantages of our approved product candidates over current treatment options or alternative treatments, including future alternative treatments; |
• | the size of the target patient population, and the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies; |
• | the strength of marketing and distribution support and timing of market introduction of competitive products; |
• | publicity concerning our products or competing products and treatments; |
• | pricing and cost effectiveness; |
• | the effectiveness of our sales and marketing strategies; |
• | our ability to increase awareness of our products through sales and marketing efforts; |
• | our ability to obtain sufficient third-party payor coverage or reimbursement; or |
• | the willingness of patients to pay out-of-pocket |
• | the FDA or comparable foreign regulatory authorities may disagree with the design, implementation, or results of our clinical trials; |
• | the FDA or comparable foreign regulatory authorities may determine that our product candidates are not safe and effective for the proposed indication, or have undesirable or unintended side effects, toxicities, or other characteristics that preclude us obtaining marketing approval or prevent or limit commercial use; |
• | the population studied in the clinical program may not be sufficiently broad or representative to assure efficacy and safety in the full population for which we seek approval; |
• | the FDA or comparable foreign regulatory authorities may disagree with our interpretation of data from preclinical studies or clinical trials; |
• | the data collected from clinical trials of our product candidates may not be sufficient to support the submission of an NDA or other submission, or to obtain regulatory approval in the United States or elsewhere; |
• | we may be unable to demonstrate to the FDA or comparable foreign regulatory authorities that a product candidate’s risk-benefit ratio for our proposed indication is acceptable; |
• | the FDA or comparable foreign regulatory authorities may find deficiencies with or fail to approve the manufacturing processes, test procedures and specifications, or facilities of third-party manufacturers with which we contract for clinical and commercial supplies; and |
• | the approval policies or regulations of the FDA or comparable foreign regulatory authorities may significantly change in a manner rendering our clinical data insufficient for approval. |
• | issue warning or untitled letters that would result in adverse publicity; |
• | impose civil or criminal penalties; |
• | suspend or withdraw regulatory approvals; |
• | suspend or impose a clinical hold on any of our ongoing clinical trials; |
• | refuse to approve pending applications or supplements to approved applications submitted by us; |
• | impose restrictions on our operations; |
• | require the conduct of additional post-market clinical trials to assess the safety of the product; |
• | seize or detain products; or |
• | request that we initiate a product recall. |
• | the federal Anti-Kickback Statute (“AKS”) prohibits, among other things, persons and entities from knowingly and willfully soliciting, offering, receiving, or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward either the referral of an individual for, or the purchase, order, or recommendation of, any good or service, for which payment may be made under federal healthcare programs such as Medicare and Medicaid. The term “remuneration” has been broadly interpreted to include anything of value. Although there are a number of statutory exceptions and regulatory safe harbors protecting some common activities from prosecution, the exceptions and safe harbors are drawn narrowly. Practices that involve remuneration that may be alleged to be intended to induce prescribing, purchases or recommendations may be subject to scrutiny if they do not qualify for an exception or safe harbor. A person or entity does not need to have actual knowledge of the federal AKS or specific intent to violate it to have committed a violation. The AKS has been interpreted to apply to arrangements between biopharmaceutical manufacturers on the one hand and prescribers, purchasers, and formulary managers, among others, on the other; |
• | the federal False Claims Act imposes criminal and civil penalties, including those from civil whistleblower or qui tam actions, against individuals or entities for knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false or fraudulent or making a false statement to avoid, decrease, or conceal an obligation to pay money to the federal government. Manufacturers can be held liable under the False Claims Act even when they do not submit claims directly to government payors if they are deemed to “cause” the submission of false or fraudulent claims. When an entity is determined to have violated the False Claims Act, the government may impose civil fines and penalties for each false claim, plus treble damages, and exclude the entity from participation in Medicare, Medicaid and other federal healthcare programs; |
• | the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, imposes criminal and civil liability for, among other things, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program or making false or fraudulent statements relating to healthcare matters; similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it to have committed a violation; |
• | HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, or HITECH, and their implementing regulations, which also impose obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security, and transmission of individually identifiable health information on health plans, healthcare clearing houses, and certain healthcare providers and their business associates, defined as independent contractors or agents of covered entities that create, receive or obtain protected health information in connection with providing a service for or on behalf of a covered entity. HITECH also created new tiers of civil monetary penalties, amended HIPAA to make civil and criminal penalties directly applicable to business associates, and gave state attorneys general new authority to file civil actions for damages or injunctions in federal courts to enforce the federal HIPAA laws and seek attorneys’ fees and costs associated with pursuing federal civil actions. In addition, there may be additional federal, state and non-U.S. laws which govern the privacy and security of health and other personal information in certain circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts; |
• | the federal false statements statute prohibits knowingly and willfully falsifying, concealing or covering up a material fact, or making any materially false statement in connection with the delivery of or payment for healthcare benefits, items, or services; |
• | federal government price reporting laws, which require us to calculate and report complex pricing metrics in an accurate and timely manner to government programs; |
• | federal consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harm consumers; |
• | the federal transparency requirements, sometimes referred to as the “Sunshine Act,” under the Patient Protection and Affordable Care Act (the “ACA”) require manufacturers of drugs, devices, biologics, and medical supplies that are reimbursable under Medicare, Medicaid, or the Children’s Health Insurance Program to report annually to the Centers for Medicare and Medicaid Services (“CMS”) information related to payments and other transfers of value to physicians ( as defined by the law), physician assistants, nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists and teaching hospitals, as well as physician ownership and investment interests, and requires applicable manufacturers and group purchasing organizations to report annually the ownership and investment interests held by such physicians and their immediate family members and payments or other “transfers of value” to such physician owners; Such information is subsequently made publicly available in a searchable format on a CMS website, effective January 1, 2022, these reporting obligations will extend to include transfers of value made to certain non-physician assistants and nurse practitioners; and |
• | analogous state laws and regulations, such as state anti-kickback and false claims laws and transparency laws, may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers, and some state laws require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government in addition to requiring drug manufacturers to report information related to payments to physicians and other healthcare providers or marketing expenditures and drug pricing. Several states also impose other marketing restrictions or require pharmaceutical companies to make marketing or price disclosures to the state and require the registration of pharmaceutical sales. |
• | a covered benefit under our health plan; |
• | safe, effective and medically necessary; |
• | appropriate for the specific patient; |
• | cost-effective; and |
• | neither experimental nor investigational. |
• | an annual, nondeductible fee on any entity that manufactures or imports certain branded prescription drugs and biological products, apportioned among these entities according to their market share in certain government healthcare programs; |
• | a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are inhaled, infused, instilled, implanted, or injected; |
• | an increase in the statutory minimum rebates a manufacturer must pay under the Medicaid Drug Rebate Program to 23.1% and 13.0% of the average manufacturer price for branded and generic drugs, respectively; |
• | expansion of healthcare fraud and abuse laws, including the False Claims Act and the AKS, which include, among other things, new government investigative powers and enhanced penalties for non-compliance; |
• | a new Medicare Part D coverage gap discount program, in which manufacturers must agree to offer 50% (increased to 70% in 2019 pursuant to subsequent legislation) point-of-sale |
• | extension of manufacturers’ Medicaid rebate liability to covered drugs dispensed to individuals who are enrolled in Medicaid managed care organizations; |
• | expansion of eligibility criteria for Medicaid programs by, among other things, allowing states to offer Medicaid coverage to additional individuals, thereby potentially increasing manufacturers’ Medicaid rebate liability; |
• | expansion of the entities eligible for discounts under the Public Health Service pharmaceutical pricing program; |
• | the requirements under the federal open payments program and its implementing regulations; |
• | a requirement to annually report drug samples that manufacturers and distributors provide to physicians; and |
• | a Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research. |
• | our customers’ ability to obtain reimbursement for our product candidates in foreign markets; |
• | our inability to directly control commercial activities because we are relying on third parties; |
• | the burden of complying with complex and changing foreign regulatory, tax, accounting, and legal requirements; |
• | different medical practices and customs in foreign countries affecting acceptance in the marketplace; |
• | import or export licensing requirements; |
• | longer accounts receivable collection times; |
• | longer lead times for shipping; |
• | language barriers for technical training; |
• | reduced protection of intellectual property rights in some foreign countries; |
• | the existence of additional potentially relevant third-party intellectual property rights; |
• | foreign currency exchange rate fluctuations; and |
• | the interpretation of contractual provisions governed by foreign laws in the event of a contract dispute. |
• | collaborators generally have significant discretion in determining the efforts and resources that they will apply to these collaborations; |
• | collaborators may not properly obtain, maintain, enforce, or defend intellectual property or proprietary rights relating to our product candidates or research programs or may use our proprietary information in such a way as to expose us to potential litigation or other intellectual property related proceedings, including proceedings challenging the scope, ownership, validity and enforceability of our intellectual property; |
• | collaborators may own or co-own intellectual property covering our product candidates or research programs that results from our collaboration with them, and in such cases, we may not have the exclusive right to commercialize such intellectual property or such product candidates or research programs; |
• | we may need the cooperation of our collaborators to enforce or defend any intellectual property we contribute to or that arises out of our collaborations, which may not be provided to us; |
• | disputes may arise between the collaborators and us that result in the delay or termination of the research, development, or commercialization of our product candidates or research programs or that result in costly litigation or arbitration that diverts management attention and resources; |
• | collaborators may decide to not pursue development and commercialization of any product candidates we develop or may elect not to continue or renew development or commercialization programs based on clinical trial results, changes in the collaborator’s strategic focus or available funding or external factors such as an acquisition that diverts resources or creates competing priorities; |
• | collaborators may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial or abandon a product candidate, repeat or conduct new clinical trials, or require a new formulation of a product candidate for clinical testing; |
• | collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our product candidates or research programs if the collaborators believe that competitive products are more likely to be successfully developed or can be commercialized under terms that are more economically attractive than ours; |
• | collaborators with marketing and distribution rights to one or more product candidates may not commit sufficient resources to the marketing and distribution of such product candidates; |
• | we may lose certain valuable rights under circumstances identified in our collaborations, including if we undergo a change of control; |
• | collaborators may undergo a change of control and the new owners may decide to take the collaboration in a direction which is not in our best interest; |
• | collaborators may become bankrupt, which may significantly delay our research or development programs, or may cause us to lose access to valuable technology, know-how or intellectual property of the collaborator relating to our products, product candidates or research programs; |
• | key personnel at our collaborators may leave, which could negatively impact our ability to productively work with our collaborators; |
• | collaborations may require us to incur short and long-term expenditures, issue securities that dilute our stockholders, or disrupt our management and business; |
• | collaborations may be terminated and, if terminated, may result in a need for additional capital to pursue further development or commercialization of the applicable product candidates or our discovery engine platform; and |
• | collaboration agreements may not lead to development or commercialization of product candidates in the most efficient manner or at all. If a present or future collaborator of ours were to be involved in a business combination, the continued pursuit and emphasis on our development or commercialization program under such collaboration could be delayed, diminished, or terminated. |
• | have staffing difficulties; |
• | fail to comply with contractual obligations; |
• | experience regulatory compliance issues; |
• | undergo changes in priorities or become financially distressed; or |
• | form relationships with other entities, some of which may be our competitors. |
• | any of our pending patent applications, if issued, will include claims having a scope sufficient to protect our product candidates or any other products or product candidates; |
• | any of our pending patent applications will issue as patents at all; |
• | we will be able to successfully commercialize our product candidates, if approved, before our relevant patents expire; |
• | we will be the first to make the inventions covered by each of our patents and pending patent applications; |
• | we will be the first to file patent applications for these inventions; |
• | others will not develop similar or alternative technologies that do not infringe our patents; |
• | others will not use pre-existing technology to effectively compete against it; |
• | any of our patents, if issued, will be found to ultimately be valid and enforceable; |
• | any patents issued to us will provide a basis for an exclusive market for our commercially viable products, will provide us with any competitive advantages or will not be challenged by third parties; |
• | we will develop additional proprietary technologies or product candidates that are separately patentable; or |
• | that our commercial activities or products will not infringe upon the patents or proprietary rights of others. |
• | the scope of rights granted under the license agreement and other interpretation-related issues; |
• | the extent to which our technology and processes infringe on intellectual property of the licensor that is not subject to the licensing agreement; |
• | the sublicensing of patent and other rights under our collaborative development relationships; |
• | our diligence obligations under the license agreement and what activities satisfy those diligence obligations; |
• | the inventorship and ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our licensors and us and our partners; and |
• | the priority of invention of patented technology. |
• | cease developing, selling or otherwise commercializing our product candidates; |
• | pay substantial damages for past use of the asserted intellectual property; |
• | obtain a license from the holder of the asserted intellectual property, which license may not be available on reasonable terms, if at all; and |
• | in the case of trademark claims, redesign, or rename, some or all of our product candidates to avoid infringing the intellectual property rights of third parties, which may not be possible and, even if possible, could be costly and time-consuming. |
• | others may be able to make products that are similar to our product candidates or utilize similar technology but that are not covered by the claims of the patents that we license or may own; |
• | we, or our current or future licensors or collaborators, might not have been the first to make the inventions covered by the issued patent or pending patent application that we license or own now or in the future; |
• | we, or our current or future licensors or collaborators, might not have been the first to file patent applications covering certain of our or their inventions; |
• | others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our owned or licensed intellectual property rights; |
• | it is possible that our current or future pending owned or licensed patent applications will not lead to issued patents; |
• | issued patents that we hold rights to may be held invalid or unenforceable, including as a result of legal challenges by our competitors or other third parties; |
• | our competitors or other third parties might conduct research and development activities in countries where we do not have patent rights and then use the information learned from such activities to develop competitive products for sale in our major commercial markets; |
• | we may not develop additional proprietary technologies that are patentable; |
• | the patents of others may harm our business; and |
• | we may choose not to file a patent in order to maintain certain trade secrets or know-how, and a third party may subsequently file a patent covering such intellectual property. |
• | we will need to repay our indebtedness by making payments of interest and principal, which will reduce the amount of money available to finance our operations, our research and development efforts and other general corporate activities; and |
• | our failure to comply with the restrictive covenants in the Term Loan could result in an event of default that, if not cured or waived, would accelerate our obligation to repay this indebtedness, and Hercules could seek to enforce our security interest in the assets securing such indebtedness. |
• | dispose of certain assets; |
• | engage in mergers or acquisitions; |
• | encumber our intellectual property; |
• | incur indebtedness or liens; |
• | pay dividends; |
• | make certain investments; and |
• | engage in certain other business transactions. |
• | withdrawal of subjects from our clinical trials; |
• | substantial monetary awards to patients or other claimants; |
• | decreased demand for our product candidates or any future product candidates following marketing approval, if obtained; |
• | damage to our reputation and exposure to adverse publicity; |
• | increased FDA warnings on product labels; |
• | litigation costs; |
• | distraction of management’s attention from our primary business; |
• | loss of revenue; and |
• | the inability to successfully commercialize our product candidates or any future product candidates, if approved. |
* | The certifications furnished in Exhibit 32.1 hereto are deemed to accompany this Quarterly Report on Form 10-Q and will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended. Such certifications will not be deemed to be incorporated by reference into any filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that the Registrant specifically incorporates it by reference. |
Company Name | ||||||
Date: August 12, 2021 |
By: |
/s/ Richard Peters | ||||
Richard Peters | ||||||
President, Chief Executive Officer and Principal Executive Officer | ||||||
Date: August 12, 2021 |
By: |
/s/ Paulash Mohsen | ||||
Paulash Mohsen | ||||||
Chief Business Officer and Principal Financial Officer |