text
stringlengths 1.03k
343k
|
|---|
Acquisitions involve numerous risks, including the following: • Difficulties in integrating the operations, systems, technologies, products, and personnel of the acquired companies, particularly companies with large and widespread operations and/or complex products, such as Scientific-Atlanta • Diversion of management’s attention from normal daily operations of the business and the challenges of managing larger and more widespread operations resulting from acquisitions • Potential difficulties in completing projects associated with in-process research and development • Difficulties in entering markets in which we have no or limited direct prior experience and where competitors in such markets have stronger market positions • Initial dependence on unfamiliar supply chains or relatively small supply partners • Insufficient revenue to offset increased expenses associated with acquisitions • The potential loss of key employees, customers, distributors, vendors and other business partners of the companies we acquire following and continuing after announcement of acquisition plans Acquisitions may also cause us to: • Issue common stock that would dilute our current shareholders’ percentage ownership • Use a substantial portion of our cash resources or incur debt as we did recently when we issued and sold $6.5 billion in senior unsecured notes to fund our acquisition of Scientific-Atlanta • Significantly increase our interest expense, leverage and debt service requirements if we incur additional debt to pay for an acquisition • Assume liabilities • Record goodwill and nonamortizable intangible assets that are subject to impairment testing on a regular basis and potential periodic impairment charges • Incur amortization expenses related to certain intangible assets • Incur large and immediate write-offs and restructuring and other related expenses • Become subject to intellectual property or other litigation Mergers and acquisitions of high-technology companies are inherently risky and subject to many factors outside of our control, and no assurance can be given that our previous or future acquisitions will be successful and will not materially adversely affect our business, operating results, or financial condition. |
These factors include: • Fluctuations in demand for our products and services, especially with respect to Internet businesses and telecommunications service providers, in part due to the changing global economic environment • Changes in sales and implementation cycles for our products and reduced visibility into our customers’ spending plans and associated revenue • Our ability to maintain appropriate inventory levels and purchase commitments • Price and product competition in the communications and networking industries, which can change rapidly due to technological innovation • The overall movement toward industry consolidation among both our competitors and our customers • The introduction and market acceptance of new technologies and products and our success in new markets, including advanced technologies, as well as the adoption of new networking standards • Variations in sales channels, product costs, or mix of products sold • The timing, size, and mix of orders from customers • Manufacturing and customer lead times • Fluctuations in our gross margins, and the factors that contribute to this as described below • Our ability to achieve targeted cost reductions • The ability of our customers, channel partners, and suppliers to obtain financing or to fund capital expenditures • The timing and amount of employer payroll tax to be paid on our employees’ gains on stock options exercised • Actual events, circumstances, outcomes, and amounts differing from judgments, assumptions, and estimates used in determining the values of certain assets (including the amounts of related valuation allowances), liabilities, and other items reflected in our Consolidated Financial Statements • How well we execute on our strategy and operating plans • Benefits anticipated from our investments in engineering and sales activities • Changes in accounting rules, such as recording expenses for employee stock option grants and changes in tax accounting principles As a consequence, operating results for a particular future period are difficult to predict, and, therefore, prior results are not necessarily indicative of results to be expected in future periods. |
WE EXPECT GROSS MARGIN TO VARY OVER TIME, AND OUR RECENT LEVEL OF PRODUCT GROSS MARGIN MAY NOT BE SUSTAINABLE Our recent level of product gross margins may not be sustainable and may continue to be adversely affected by numerous factors, including: • Changes in customer, geographic, or product mix, including mix of configurations within each product group • Introduction of new products, including products with price-performance advantages • Our ability to reduce production costs • Entry into new markets, including markets with different pricing and cost structures • Sales discounts • Increases in material or labor costs • Excess inventory and inventory holding charges • Obsolescence charges • Changes in shipment volume • Loss of cost savings due to changes in component pricing or charges incurred due to inventory holding periods if parts ordering does not correctly anticipate product demand • Lower than expected benefits from value engineering • Increased price competition, including competitors from Asia, especially China • Changes in distribution channels • Increased warranty costs • How well we execute on our strategy and operating plans Changes in service gross margin may result from various factors such as changes in the mix between technical support services and advanced services, as well as the timing of technical support service contract initiations and renewals and the addition of personnel and other resources to support higher levels of service business in future periods. |
Acquisitions involve numerous risks, including the following: • Difficulties in integrating the operations, technologies, products, and personnel of the acquired companies • Diversion of management’s attention from normal daily operations of the business • Potential difficulties in completing projects associated with in-process research and development • Difficulties in entering markets in which we have no or limited direct prior experience and where competitors in such markets have stronger market positions • Initial dependence on unfamiliar supply chains or relatively small supply partners • Insufficient revenue to offset increased expenses associated with acquisitions • The potential loss of key employees of the acquired companies Acquisitions may also cause us to: • Issue common stock that would dilute our current shareholders’ percentage ownership • Assume liabilities • Record goodwill and nonamortizable intangible assets that will be subject to impairment testing on a regular basis and potential periodic impairment charges • Incur amortization expenses related to certain intangible assets • Incur large and immediate write-offs and restructuring and other related expenses • Become subject to intellectual property or other litigation Mergers and acquisitions of high-technology companies are inherently risky, and no assurance can be given that our previous or future acquisitions will be successful and will not materially adversely affect our business, operating results, or financial condition. |
These factors include: • Fluctuations in demand for our products and services, especially with respect to Internet businesses and telecommunications service providers • Changes in sales and implementation cycles for our products and reduced visibility into our customers’ spending plans and associated revenue • Our ability to maintain appropriate inventory levels and purchase commitments • Price and product competition in the communications and networking industries, which can change rapidly due to technological innovation • The overall movement toward industry consolidation among both our competitors and our customers • The introduction and market acceptance of new technologies and products and our success in new markets, as well as the adoption of new networking standards • Variations in sales channels, product costs, or mix of products sold • The timing, size, and mix of orders from customers • Manufacturing lead times • Fluctuations in our gross margins, and the factors that contribute to this as described below • Our ability to achieve targeted cost reductions • The ability of our customers, channel partners, and suppliers to obtain financing or to fund capital expenditures • The timing and amount of employer payroll tax to be paid on employees’ gains on stock options exercised • Actual events, circumstances, outcomes, and amounts differing from judgments, assumptions, and estimates used in determining the values of certain assets (including the amounts of related valuation allowances), liabilities, and other items reflected in our Consolidated Financial Statements • How well we execute on our strategy and operating plans • Changes in accounting rules, such as recording expenses for employee stock option grants As a consequence, operating results for a particular future period are difficult to predict, and, therefore, prior results are not necessarily indicative of results to be expected in future periods. |
WE EXPECT GROSS MARGIN TO VARY OVER TIME AND OUR RECENT LEVEL OF PRODUCT GROSS MARGIN MAY NOT BE SUSTAINABLE Our recent level of product gross margins may not be sustainable and may be adversely affected in the future by numerous factors, including: • Changes in customer, geographic, or product mix, including mix of configurations within each product group • Increases in material or labor costs • Excess inventory • Obsolescence charges • Changes in shipment volume • Loss of cost savings due to changes in component pricing or charges incurred due to inventory holding periods if parts ordering does not correctly anticipate product demand • Increased price competition • Changes in distribution channels • Increased warranty costs • How well we execute on our strategy and operating plans • Introduction of new products or entering new markets and different pricing and cost structures of new markets Changes in service gross margin may result from various factors such as changes in the mix between technical support services and advanced services, as well as the timing of technical support service contract initiations and renewals. |
Some factors could result in disruption of or changes in our distribution model or customer base, which could harm our sales and margins, including the following: • We compete with some of our channel partners through our direct sales, which may lead these channel partners to use other suppliers that do not directly sell their own products • Some of our channel partners may demand that we absorb a greater share of the risks that their customers may ask them to bear • Some of our channel partners may have insufficient financial resources and may not be able to withstand changes in business conditions • As we develop more solution-oriented products, enterprise customers may demand rigorous acceptance testing or prime contracting similar to the requirements of our service provider customers OUR INVENTORY MANAGEMENT RELATING TO OUR SALES TO OUR TWO-TIER DISTRIBUTION CHANNEL IS COMPLEX, AND EXCESS INVENTORY MAY HARM OUR GROSS MARGINS We must manage our inventory relating to sales to our distributors and retail partners effectively, because inventory held by them could affect our results of operations. |
Acquisitions involve numerous risks, including the following: • Difficulties in integrating the operations, technologies, products, and personnel of the acquired companies • Diversion of management’s attention from normal daily operations of the business • Potential difficulties in completing projects associated with in-process research and development • Difficulties in entering markets in which we have no or limited direct prior experience and where competitors in such markets have stronger market positions • Initial dependence on unfamiliar supply chains or relatively small supply partners • Insufficient revenues to offset increased expenses associated with acquisitions • The potential loss of key employees of the acquired companies Acquisitions may also cause us to: • Issue common stock that would dilute our current shareholders’ percentage ownership • Assume liabilities • Record goodwill and nonamortizable intangible assets that will be subject to impairment testing on a regular basis and potential periodic impairment charges • Incur amortization expenses related to certain intangible assets • Incur large and immediate write-offs and restructuring and other related expenses • Become subject to intellectual property or other litigation Mergers and acquisitions of high-technology companies are inherently risky, and no assurance can be given that our previous or future acquisitions will be successful and will not materially adversely affect our business, operating results, or financial condition. |
These factors include: • Fluctuations in demand for our products and services, such as has occurred in the last three years, especially with respect to Internet businesses and telecommunications service providers; • Changes in sales and implementation cycles for our products and reduced visibility into our customers’ spending plans and associated revenue; • Our ability to maintain appropriate inventory levels and purchase commitments; • Price and product competition in the communications and networking industries, which can change rapidly due to technological innovation; • The overall trend toward industry consolidation both among our competitors and our customers; • The introduction and market acceptance of new technologies and products and our success in new markets, as well as the adoption of new networking standards; • Variations in sales channels, product costs, or mix of products sold; • The timing and size of orders from customers; • Manufacturing lead times; • Fluctuations in our gross margins, and the factors that contribute to this as described below; • Our ability to achieve targeted cost reductions; • The ability of our customers, channel partners and suppliers to obtain financing or to fund capital expenditures; • The timing and amount of employer payroll tax to be paid on employees’ gains on stock options exercised; • Actual events, circumstances, outcomes, and amounts differing from judgments, assumptions, and estimates used in determining the values of certain assets (including the amounts of related valuation allowances), liabilities and other items reflected in our Consolidated Financial Statements; • How well we execute on our strategy and operating plans; and • Changes in accounting rules, such as recording expenses for employee stock option grants. |
These factors include: • Fluctuations in demand for our products and services, such as has occurred in the last two fiscal years, especially with respect to Internet businesses and telecommunications service providers; • Changes in sales and implementation cycles for our products and the reduced visibility into our customers’ spending plans and associated revenue; • Our ability to maintain appropriate inventory levels and purchase commitments; • Price and product competition in the communications and networking industries which can change rapidly due to technological innovation; • The overall trend toward industry consolidation both among our competitors and our customers; • The introduction and market acceptance of new technologies and products, as well as the adoption of new networking standards; • Variations in sales channels, product costs, or mix of products sold; • The timing and size of orders from customers; • Manufacturing lead times; • Fluctuations in our gross margins; • Our ability to achieve targeted cost reductions; • The ability of our customers and suppliers to obtain financing or to fund capital expenditures; • The timing and amount of employer payroll tax to be paid on employees’ gains on stock options exercised; • Actual events, circumstances, outcomes, and amounts differing from judgments, assumptions, and estimates used in determining the values of certain assets (including the amounts of related valuation allowances), liabilities and other items reflected in our financial statements; and • Changes in accounting rules, such as recording expenses for employee stock option grants. |
These factors include: - Overall information technology spending - Changes in general economic conditions and specific market conditions in the communications and networking industries - Fluctuations in demand for our products and services - The long sales and implementation cycle for our products and the reduced visibility into our customers' spending plans and associated revenue - Inventory levels exceeding our requirements based upon future demand forecasts - Existing network capacity, sharing of existing network capacity, and network capacity utilization rates of our customers - Price and product competition in the networking industry - The overall trend toward industry consolidation - The introduction and market acceptance of new technologies and products, as well as the adoption of new networking standards - Variations in sales channels, product costs, or mix of products sold - The timing of orders, timing of shipments, and the ability to satisfy all contractual obligations in customer contracts - Manufacturing lead times - The impact of acquired businesses and technologies - The geographical mix of our revenue and the associated impact on gross margin - Our ability to achieve targeted cost reductions - Adverse changes in the public and private equity and debt markets - The ability of our customers and suppliers to obtain financing or to fund capital expenditures - The trend toward sales of integrated network solutions - The timing and amount of employer payroll tax to be paid on employees' gains on stock options exercised As a consequence, operating results for a particular future period are difficult to predict, especially in recent periods. |
Exhibit Number Exhibit Table ------ ------------- 2.01** Agreement and Plan of Reorganization dated as of September 20, 1993 among the Company, Crescendo Communications Inc., and Co Acquisition Corporation 2.02** Agreement of Merger among the Company, Crescendo Communications Inc., and Co Acquisition Corporation 2.03# Agreement and Plan of Reorganization dated as of July 11, 1994 among the Company, Newport Systems Solutions, Inc. and New Acquisition Corporation 2.04@ Agreement and Plan of Reorganization dated as of October 21, 1994 among the Company, Kalpana, Inc. and Pan Acquisition Corporation 2.05@@ Asset Purchase Agreement dated as of December 8, 1994 among the Company and LightStream Corporation 2.06& Agreement and Plan of Reorganization by and among the Company, Jet Acquisition Corporation, and StrataCom, Inc., dated as of April 21, 1996 3.01* The Company's Restated Articles of Incorporation, as currently in effect 3.02* The Company's Bylaws, as currently in effect 4.01## The Company's 1987 Stock Option Plan, as currently in effect 4.02* Form of Incentive Stock Option Agreement for granting incentive stock options under the Company's 1987 Stock Option Plan 4.03* Series A Preferred Stock Purchase Agreement between the Company and certain investors dated December 22, 1987, as amended 10.05* Form of Restricted Stock Purchase Agreement for sales of Common Stock to employees, officers, directors and consultants 10.10* License Agreement between the Company and Network Equipment Technologies Inc dated February 14, 1989 10.12* License Agreement between the Company and The Board of Trustees of Leland Stanford Junior University dated April 15, 1987, as amended 10.13* 1989 Employee Stock Purchase Plan 10.14 Fiscal Year 1996 Management Incentive Plan 10.16* Agreement between the Company and American Telephone and Telegraph Company dated February 1, 1990 10.19* Letter of Employment between the Company and John T. Chambers dated January 9, 1991 10.20* Letter of Employment between the Company and John P. Morgridge dated October 17, 1988 10.21* Letter of Employment between the Company and Donald A. LeBeau dated July 15, 1992 10.22* Letter of Employment between the Company and Frank J. Marshall dated March 31, 1992 10.23* Lease Agreement between the Company and SGA Development Partnership, Ltd., dated February 19, 1993, for the Company's site in San Jose, California 10.24* Lease Agreement between the Company and Sumitomo Bank Leasing and Finance, Inc., dated May 13, 1993 for the Company's facilities in San Jose, California 10.25* Lease Agreement between the Company and SGA Development Partnership, Ltd., dated February 19, 1993, for the Company's site in San Jose, California 10.26* Lease Agreement between the Company and the State of California Public Employees' Retirement System dated March 11, 1993, for the Company's facilities at 3100 Smoketree Court 10.27* Lease Agreement between the Company and Sumitomo Bank Leasing and Finance, Inc., dated July 11, 1994 for the Company's site in Wake County, North Carolina 10.28* Lease Agreement between the Company and Sumitomo Bank Leasing and Finance, Inc., dated August 12, 1994 for the Company's facilities in Wake County, North Carolina Exhibit Number Exhibit Table ------ ------------- 10.29&& Lease (Buildings "I" and "J") by and between Sumitomo Bank of New York Trust Company ("SBNYTC"), as trustee under that certain Trust Agreement dated May 22, 1995 between Sumitomo Bank Leasing and Finance, Inc. and SBNYTC ("SB Trust"), as Landlord, and the Company, as tenant, dated May 22, 1995 10.30&& First Amendment to Lease (Buildings "I" and "J") between SB Trust and the Company, dated July 18, 1995 10.31&& Lease (Buildings "K" and "L") by and between SB Trust and the Company, dated May 22, 1995 10.32&& First Amendment to Lease (Buildings "K" and "L") between SB Trust and the Company, dated July 18, 1995 10.33&& Lease (Improvements Phase "C") by and between SB Trust and the Company, dated May 22, 1995 10.34&& First Amendment to Lease (Improvements Phase "C") between SB Trust and the Company, dated July 18, 1995 10.35&& Ground Lease (Parcel 2 and Lot 54) by and between Irish Leasing Corporation ("Irish"), as Landlord, and the Company, as Tenant, dated February 28, 1995 for the Company's site in San Jose, California 10.36&& First Amendment to Lease (Parcel 2 and Lot 54) by and between Irish and the Company dated as of May 1, 1995 10.37&& Second Amendment to Lease (Parcel 2 and Lot 54) by and between Irish and the Company dated as of May 22, 1995 10.38&& Ground Lease (Lots 58 and 59) by and between Irish and the Company dated February 28, 1995 for the Company's site in San Jose, California 10.39&& First Amendment to Lease (Lots 58 and 59) by and between Irish and the Company dated as of May 1, 1995 10.40&& Second Amendment to Lease (Lots 58 and 59) by and between Irish and the Company dated as of May 22, 1995 10.41&& Ground Lease (Tasman Phase C) by and between Irish and the Company dated April 12, 1995 for the Company's site in San Jose, California 10.42&& First Amendment to Lease (Tasman Phase C) by and between Irish and the Company dated as of May 1, 1995 10.43&& Second Amendment to Lease (Tasman Phase C) by and between Irish and the Company dated as of May 22, 1995 10.44&& Credit Agreement between the Company, the Banks Listed Herein, Bank of America National Trust and Savings Association, as Administrative Agent, Morgan Guaranty Trust Company of New York, as Documentation Agent and Bank of America National Trust and Savings Association, as Issuing Bank dated as of May 22, 1995 11.01 Statement Regarding Computation of Net Income Per Share 21.01 Subsidiaries of the Company 23.02 Consent of Independent Accountants 27 Financial Data Schedule (b) The following financial statement schedules are filed herewith Schedule -------- II Valuation and qualifying accounts - ---------- * Previously filed with registrant's registration statements (File #33-32778) ** Previously filed with registrant's Form 8-K dated October 8, @ Previously filed with registrant's Form 8-K dated December 9, @@ Previously filed with registrant's Form 8-K dated January 25, # Previously filed with registrant's Form 8-K dated August 19, ## Previously filed with registrant's Proxy statement dated October 2, 1995 & Previously filed with registrant's Form S-4 dated June 7, && Previously filed with registrant's Form 10-K dated October 26, 1995 |
An applicant seeking approval to market and distribute a new drug product in the United States must typically undertake the following: ●completion of preclinical laboratory tests, animal studies and formulation studies in compliance with the FDA’s good laboratory practice (“GLP”) regulations; ●submission to the FDA of an IND, which must take effect before human clinical trials may begin in the United States; ●approval by an independent institutional review board (“IRB”), representing each clinical site before each clinical trial may be initiated; ●performance of adequate and well-controlled human clinical trials in accordance with good clinical practices (“GCP”) to establish the safety and efficacy of the proposed drug product for each indication; ●preparation and submission to the FDA of a new drug application (“NDA”); ●review of the product candidate by an FDA advisory committee, where appropriate or if applicable; ●satisfactory completion of one or more FDA inspections of the manufacturing facility or facilities at which the product, or components thereof, are produced to assess compliance with cGMP requirements and to assure that the facilities, methods and controls are adequate to preserve the product’s identity, strength, quality and purity; ●satisfactory completion of FDA audits of clinical trial sites to assure compliance with GCPs and the integrity of the clinical data; ●payment of user fees and securing FDA approval of the NDA; and ●compliance with any post-approval requirements, including Risk Evaluation and Mitigation Strategies (“REMS”) where applicable, and post-approval studies required by the FDA. |
Such restrictions under applicable federal and state healthcare laws and regulations, include the following: ●the federal Anti-Kickback Statute prohibits, among other things, persons 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, in whole or in part, under a federal healthcare program such as Medicare and Medicaid; ●the federal False Claims Act imposes civil penalties, and provides for 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, with potential liability including mandatory treble damages and significant per-claim penalties, currently set at $5,500 to $11,000 per false claim; ●the federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), imposes criminal and civil liability for executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters; ●HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act and their respective implementing regulations, including the Final Omnibus Rule published in January 2013, also imposes obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information; ●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; ●the federal transparency requirements under the Health Care Reform Law, known as the federal Physician Payments Sunshine Act, require manufacturers of drugs, devices, biologics and medical supplies to report to the Centers for Medicare & Medicaid Services (“CMS”) within the Department of Health and Human Services information related to payments and other transfers of value to physicians and teaching hospitals and physician ownership and investment interests held by physicians and their immediate family members; and ●analogous state and foreign laws and regulations, such as state anti-kickback and false claims 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. |
Among the provisions of the PPACA of importance to potential drug candidates are: ●an annual, nondeductible fee on any entity that manufactures or imports specified branded prescription drugs and biologic agents, apportioned among these entities according to their market share in certain government healthcare programs, although this fee would not apply to sales of certain products approved exclusively for orphan indications; ●expansion of eligibility criteria for Medicaid programs by, among other things, allowing states to offer Medicaid coverage to certain individuals with income at or below 133% of the federal poverty level, thereby potentially increasing a manufacturer’s Medicaid rebate liability; ●expanded manufacturers’ rebate liability under the Medicaid Drug Rebate Program by increasing the minimum rebate for both branded and generic drugs and revising the definition of “average manufacturer price” (“AMP”) for calculating and reporting Medicaid drug rebates on outpatient prescription drug prices and extending rebate liability to prescriptions for individuals enrolled in Medicare Advantage plans; ●addressed 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; ●expanded the types of entities eligible for the 340B drug discount program; ●established the Medicare Part D coverage gap discount program by requiring manufacturers to provide a point-of-sale-discount off the negotiated price of applicable brand drugs to eligible beneficiaries during their coverage gap period as a condition for the manufacturers’ outpatient drugs to be covered under Medicare Part D; ●established a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research; ●established the Independent Payment Advisory Board (“IPAB”) which has authority to recommend certain changes to the Medicare program to reduce expenditures by the program that could result in reduced payments for prescription drugs. |
Other events that could delay or inhibit conduct of our clinical trials include: (i) nonclinical or clinical data may not be readily interpreted, which may lead to delays and/or misinterpretation; (ii) our nonclinical tests, including toxicology studies, or clinical trials may produce negative or inconclusive results; (iii) we might have to suspend or terminate our clinical trials if the participating subjects experience serious adverse events or undesirable side effects or are exposed to unacceptable health risks; (iv) regulators or IRBs may hold, suspend or terminate clinical research for various reasons, including noncompliance with regulatory requirements, issues identified through inspections of manufacturing or clinical trial operations or clinical trial sites; (v) we, along with our collaborators and subcontractors, may not employ, in any capacity, persons who have been debarred under the FDA's Application Integrity Policy, or similar policy under foreign regulatory authorities; (vi) we or our contract manufacturers may be unable to manufacture sufficient quantities of our drug candidates for use in clinical trials; (vii) the cost of our clinical trials may be greater than we currently anticipate making continuation and/or completion improbable; and (viii) our drug candidates may not cause the desired effects or may cause undesirable side effects or our drug candidates may have other unexpected characteristics. |
In addition, later discovery of previously unknown adverse events or other problems with our drugs or their manufacturers or manufacturing processes, or failure to comply with regulatory requirements, may yield various results, including: (i) litigation involving patients taking our drug; (ii) restrictions on such drugs, manufacturers or manufacturing processes; (iii) restrictions on the labeling or marketing of a drug; (iv) restrictions on drug distribution or use; (v) requirements to conduct post-marketing studies or clinical trials; (vi) warning letters or untitled letters; (vii) withdrawal of the drugs from the market; (viii) refusal to approve pending applications or supplements to approved applications that we submit; (ix) recall of drugs; (x) fines, restitution or disgorgement of profits or revenues; (xi) suspension or withdrawal of marketing approvals; (xii) damage to relationships with any potential collaborators; (xiii) unfavorable press coverage and damage to our reputation; (xiv) refusal to permit the import or export of drugs; (xv) drug seizure; or (xvi) injunctions or the imposition of civil or criminal penalties. |
Our existing collaborations and any potential future collaborations have risks, including the following: (i) our collaborators may control the development (and timing thereof) of the drug candidates being developed with our technologies and compounds and/or the companion diagnostic to be developed for use in conjunction with our drug candidates; (ii) our collaborators may control the public release of information regarding the developments; (iii) disputes may arise in the future with respect to the ownership of or right to use technology and intellectual property developed with our collaborators; (iv) disagreements with our collaborators could delay or terminate the development of our products, or result in litigation or arbitration; (v) we may have difficulty enforcing the contracts if any of our collaborators fail to perform; (vi) our collaborators may terminate their collaborations with us, which could make it difficult for us to attract new collaborators or adversely affect the perception of us in the business or financial communities; (vii) our collaboration agreements are likely to be for fixed terms and subject to termination by our collaborators in the event of a material breach or lack of scientific progress by us; (viii) our collaborators may challenge our intellectual property rights or utilize our intellectual property rights in such a way as to invite litigation that could jeopardize or invalidate our intellectual property rights or expose us to potential liability; (ix) our collaborators may not comply with all applicable regulatory requirements; (x) our collaborators may under fund or not commit sufficient resources to the testing or development of our drug candidates; and (xi) our collaborators may develop alternative products either on their own or in collaboration with others, or encounter conflicts of interest or changes in business strategy or other business issues. |
Even if tilsotolimod were successful in clinical development and receive regulatory approvals, it may never reach or remain on the market, be successfully developed into commercial products or gain market acceptance among physicians, patients, healthcare payors or the medical community for a number of reasons including: (i) it may be found ineffective or cause harmful side effects; (ii) it may be difficult to manufacture on a scale necessary for commercialization; (iii) it may experience excessive product loss due to contamination, equipment failure, inadequate transportation or storage, improper installation or operation of equipment, vendor or operator error, natural disasters or other catastrophic events, inconsistency in yields or variability in product characteristics; (iv) it may be uneconomical to produce; (v) the timing of market introduction of tilsotolimod and other compounds we may develop and competitive products may be inopportune; (vi) political and legislative changes may make the commercialization of tilsotolimod, or any other product candidates we may develop in the future, more difficult; (vii) we may fail to obtain reimbursement approvals or pricing that is cost effective for patients as compared to other available forms of treatment or that covers the cost of production and other expenses; (viii) they may not compete effectively with existing or future alternatives; (ix) we may be unable to develop commercial operations and to sell marketing rights; (x) it may fail to achieve market acceptance; or (xi) we may be precluded from commercialization of a product due to proprietary rights of third parties. |
This funding is solely at the discretion of the investors and consists of: (i)the December 2019 Securities Purchase Agreement, under which we received $10.1 million in gross proceeds in December 2019 and provides for up to $87.6 million additional aggregate gross proceeds at the sole discretion of Baker Brothers in connection with additional sales of securities and warrant exercises; (ii)the April 2020 Securities Purchase Agreement, under which we received $5.0 million gross proceeds in April 2020 and $5.0 million gross proceeds in December 2020 and provides for up to $10.7 million additional aggregate gross proceeds at the sole discretion of entities affiliated with Pillar in connection with the exercise of outstanding warrants; and (iii)the July 2020 Securities Purchase Agreement, under which we received $5.1 million gross proceeds in July 2020 and provides for up to $14.9 million additional aggregate gross proceeds at the sole discretion of entities affiliated with Pillar in connection with sales of additional securities and warrant exercises. |
We believe that the key factors that will affect our ability to obtain funding are: (i)the results of our clinical development activities in our tilsotolimod program or any other drug candidates we develop on the timelines anticipated; (ii)the cost, timing, and outcome of regulatory reviews; (iii)competitive and potentially competitive products and technologies and investors' receptivity to tilsotolimod or any other drug candidates we develop and the technology underlying them in light of competitive products and technologies; (iv)the receptivity of the capital markets to financings by biotechnology companies generally and companies with drug candidates and technologies similar to ours specifically; (v)the receptivity of the capital markets to any in-licensing, product acquisition or other transaction we may enter into; (vi)our ability to enter into additional collaborations with biotechnology and pharmaceutical companies and the success of such collaborations; and (vii)the impact of the novel coronavirus disease, COVID-19, to global economy and capital markets, and to our business and our financial results. |
Net cash provided by financing activities primarily consisted of the following amounts raised in connection with the following transactions: ●for the year ended December 31, 2020, aggregate net proceeds of $28.8 million from financing arrangements consisting of $14.8 million received pursuant to the April 2020 and July 2020 Securities Purchase Agreements, $1.7 million received pursuant to the LPC Purchase Agreement and $12.3 million received under the ATM Agreement, plus an additional $0.1 million in proceeds from employee stock purchases under our 2017 Employee Stock Purchase Plan (“2017 ESPP”), partially offset by $0.2 million in payments related to our short-term insurance premium financing arrangement; and ●for the year ended December 31, 2019, $15.5 million in aggregate net proceeds from financing arrangements consisting of $10.1 million received pursuant to the December 2019 Securities Purchase Agreement, $3.7 million received pursuant to the LPC Purchase Agreement and $1.6 million received under the ATM Agreement, plus an additional $0.1 million in proceeds from employee stock purchases under our 2017 ESPP. |
Internal control over financial reporting is defined in Rule 13a-15(f) and 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, the Company’s principal executive and principal financial officers and effected by the Company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that: ●Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company; ●Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and ●Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements. |
An applicant seeking approval to market and distribute a new drug product in the United States must typically undertake the following: · completion of preclinical laboratory tests, animal studies and formulation studies in compliance with the FDA’s good laboratory practice (“GLP”) regulations; · submission to the FDA of an IND, which must take effect before human clinical trials may begin in the United States; · approval by an independent institutional review board (“IRB”), representing each clinical site before each clinical trial may be initiated; · performance of adequate and well-controlled human clinical trials in accordance with good clinical practices (“GCP”) to establish the safety and efficacy of the proposed drug product for each indication; · preparation and submission to the FDA of a new drug application (“NDA”); · review of the product candidate by an FDA advisory committee, where appropriate or if applicable; · satisfactory completion of one or more FDA inspections of the manufacturing facility or facilities at which the product, or components thereof, are produced to assess compliance with cGMP requirements and to assure that the facilities, methods and controls are adequate to preserve the product’s identity, strength, quality and purity; · satisfactory completion of FDA audits of clinical trial sites to assure compliance with GCPs and the integrity of the clinical data; · payment of user fees and securing FDA approval of the NDA; and · compliance with any post-approval requirements, including Risk Evaluation and Mitigation Strategies (“REMS”) where applicable, and post-approval studies required by the FDA. |
Such restrictions under applicable federal and state healthcare laws and regulations, include the following: · the federal Anti-Kickback Statute prohibits, among other things, persons 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, in whole or in part, under a federal healthcare program such as Medicare and Medicaid; · the federal False Claims Act imposes civil penalties, and provides for 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, with potential liability including mandatory treble damages and significant per-claim penalties, currently set at $5,500 to $11,000 per false claim; · the federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), imposes criminal and civil liability for executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters; · HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act and their respective implementing regulations, including the Final Omnibus Rule published in January 2013, also imposes obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information; · 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; · the federal transparency requirements under the Health Care Reform Law, known as the federal Physician Payments Sunshine Act, require manufacturers of drugs, devices, biologics and medical supplies to report to the Centers for Medicare & Medicaid Services (“CMS”) within the Department of Health and Human Services information related to payments and other transfers of value to physicians and teaching hospitals and physician ownership and investment interests held by physicians and their immediate family members; and · analogous state and foreign laws and regulations, such as state anti-kickback and false claims 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. |
Among the provisions of the PPACA of importance to potential drug candidates are: · an annual, nondeductible fee on any entity that manufactures or imports specified branded prescription drugs and biologic agents, apportioned among these entities according to their market share in certain government healthcare programs, although this fee would not apply to sales of certain products approved exclusively for orphan indications; · expansion of eligibility criteria for Medicaid programs by, among other things, allowing states to offer Medicaid coverage to certain individuals with income at or below 133% of the federal poverty level, thereby potentially increasing a manufacturer’s Medicaid rebate liability; · expanded manufacturers’ rebate liability under the Medicaid Drug Rebate Program by increasing the minimum rebate for both branded and generic drugs and revising the definition of “average manufacturer price” (“AMP”) for calculating and reporting Medicaid drug rebates on outpatient prescription drug prices and extending rebate liability to prescriptions for individuals enrolled in Medicare Advantage plans; · addressed 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; · expanded the types of entities eligible for the 340B drug discount program; · established the Medicare Part D coverage gap discount program by requiring manufacturers to provide a point-of-sale-discount off the negotiated price of applicable brand drugs to eligible beneficiaries during their coverage gap period as a condition for the manufacturers’ outpatient drugs to be covered under Medicare Part D; · established a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research; · established the Independent Payment Advisory Board (“IPAB”) which has authority to recommend certain changes to the Medicare program to reduce expenditures by the program that could result in reduced payments for prescription drugs. |
Specifically, we believe our available funds will be sufficient to enable us to perform the following: (i) Complete and disclose results from: a) our Phase 1/2 clinical trial of tilsotolimod in combination with ipilimumab and pembrolizumab in anti-PD1 refractory melanoma (ILLUMINATE-204); and b) the Phase 1b monotherapy clinical trial of tilsotolimod in multiple refractory tumor types (ILLUMINATE-101); (ii) continue to execute on our ongoing Phase 3 clinical trial of tilsotolimod in combination with ipilimumab for the treatment of anti-PD1 refractory metastatic melanoma (ILLUMINATE-301), including announcement of top-line ORR and other preliminary data; (iii) initiate and complete enrollment in the signal-finding stage of Part I of our Phase 2 study of tilsotolimod in combination with nivolumab and ipilimumab for the treatment of MSS-CRC (ILLUMINATE-206), pending results from the initial group of ten patients enrolled to evaluate safety; (iv) fund certain investigator initiated clinical trials of tilsotolimod; and (v) maintain our current level of general and administrative expenses in order to support the business. |
Our ability to successfully develop and commercialize potential drug candidates will depend on our ability to overcome these recent challenges and on several factors, including the following: · the drug candidates demonstrating activity in clinical trials; · the drug candidates demonstrating an acceptable safety profile in nonclinical toxicology studies and during clinical trials; · timely enrollment in clinical trials of drug candidates, which may be slower than anticipated, potentially resulting in significant delays; · satisfying conditions imposed on us and/or our collaborators by the FDA or equivalent foreign regulatory authorities regarding the scope or design of clinical trials; · the ability to demonstrate to the satisfaction of the FDA, or equivalent foreign regulatory authorities, the safety and efficacy of the drug candidates through current and future clinical trials; · timely receipt of necessary marketing approvals from the FDA and equivalent foreign regulatory authorities; · the ability to combine our drug candidates and the drug candidates being developed by our collaborators and any other collaborators safely and successfully with other therapeutic agents; · achieving and maintaining compliance with all regulatory requirements applicable to the products; · establishment of commercial manufacturing arrangements with third-party manufacturers; · the ability to secure orphan drug exclusivity for our drug candidates either alone or in combination with other products; · the successful commercial launch of the drug candidates, assuming FDA approval is obtained, whether alone or in combination with other products; · acceptance of the products as safe and effective by patients, the medical community, and third-party payors; · competition from other companies and their therapies; · changes in treatment regimens; · favorable market conditions in which to raise additional capital; · the strength of our intellectual property portfolio in the United States and abroad; and · a continued acceptable safety and efficacy profile of the drug candidates following marketing approval. |
Other events that could delay or inhibit conduct of our clinical trials include: · regulators or IRBs may not authorize us to commence a clinical trial or conduct a clinical trial at a prospective trial site; · nonclinical or clinical data may not be readily interpreted, which may lead to delays and/or misinterpretation; · our nonclinical tests, including toxicology studies, or clinical trials may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional nonclinical testing or clinical trials or we may abandon projects that we expect may not be promising; · the rate of enrollment or retention of patients in our clinical trials may be lower than we expect; · we might have to suspend or terminate our clinical trials if the participating subjects experience serious adverse events or undesirable side effects or are exposed to unacceptable health risks; · regulators or IRBs may hold, suspend or terminate clinical research for various reasons, including noncompliance with regulatory requirements, issues identified through inspections of manufacturing or clinical trial operations or clinical trial sites, or if, in their opinion, the participating subjects are being exposed to unacceptable health risks; · regulators may hold or suspend our clinical trials while collecting supplemental information on, or clarification of, our clinical trials or other clinical trials, including trials conducted in other countries or trials conducted by other companies; · we, along with our collaborators and subcontractors, may not employ, in any capacity, persons who have been debarred under the FDA's Application Integrity Policy, or similar policy under foreign regulatory authorities. |
In addition, later discovery of previously unknown adverse events or other problems with our drugs or their manufacturers or manufacturing processes, or failure to comply with regulatory requirements, may yield various results, including: · litigation involving patients taking our drug; · restrictions on such drugs, manufacturers or manufacturing processes; · restrictions on the labeling or marketing of a drug; · restrictions on drug distribution or use; · requirements to conduct post-marketing studies or clinical trials; · warning letters or untitled letters; · withdrawal of the drugs from the market; · refusal to approve pending applications or supplements to approved applications that we submit; · recall of drugs; · fines, restitution or disgorgement of profits or revenues; · suspension or withdrawal of marketing approvals; · damage to relationships with any potential collaborators; · unfavorable press coverage and damage to our reputation; · refusal to permit the import or export of drugs; · drug seizure; or · injunctions or the imposition of civil or criminal penalties. |
These include the following: · Anti-Kickback Statute-the federal healthcare anti-kickback statute prohibits, among other things, persons from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward, or in return for, either the referral of an individual for, or the purchase, order or recommendation or arranging of, any good or service, for which payment may be made under a federal healthcare program such as Medicare and Medicaid; · False Claims Act-the federal False Claims Act imposes criminal and civil penalties, including through civil whistleblower or qui tam actions, against individuals or entities for, among other things, knowingly presenting, or causing to be presented false or fraudulent claims for payment by a federal healthcare program or making a false statement or record material to payment of a false claim or avoiding, decreasing or concealing an obligation to pay money to the federal government, with potential liability including mandatory treble damages and significant per-claim penalties, currently set at $5,500 to $11,000 per false claim; · Privacy laws such as HIPAA-the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, imposes criminal and civil liability for executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters, and, as amended by the Health Information Technology for Economic and Clinical Health Act and its implementing regulations, also imposes obligations, including mandatory contractual terms and technical safeguards, with respect to maintaining the privacy, security and transmission of individually identifiable health information; · Transparency Requirements-federal laws require applicable manufacturers of covered drugs to report payments and other transfers of value to physicians and teaching hospitals; and · Analogous State and Foreign Laws-analogous state and foreign fraud and abuse laws and regulations, such as state anti-kickback and false claims laws, can apply to sales or marketing arrangements and claims involving healthcare items or services and are generally broad and are enforced by many different federal and state agencies as well as through private actions. |
Among the provisions of the PPACA of potential importance to our business and our drug candidates are the following: · an annual, non-deductible fee on any entity that manufactures or imports specified branded prescription drugs and biologic agents; · an increase in the statutory minimum rebates a manufacturer must pay under the Medicaid Drug Rebate Program; · expansion of healthcare fraud and abuse laws, including the civil False Claims Act and the federal Anti-Kickback Statute, new government investigative powers and enhanced penalties for noncompliance; · a Medicare Part D coverage gap discount program, in which manufacturers must agree to offer point-of-sale discounts off negotiated prices; · extension of manufacturers’ Medicaid rebate liability; · expansion of eligibility criteria for Medicaid programs; · expansion of the entities eligible for discounts under the Public Health Service pharmaceutical pricing program; · new requirements to report certain financial arrangements with physicians and teaching hospitals; · a new requirement to annually report drug samples that manufacturers and distributors provide to physicians; and · a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research. |
Our existing collaborations and any potential future collaborations have risks, including the following: · our collaborators may control the development of the drug candidates being developed with our technologies and compounds including the timing of development; · our collaborators may control the development of the companion diagnostic to be developed for use in conjunction with our drug candidates including the timing of development; · our collaborators may control the public release of information regarding the developments, and we may not be able to make announcements or data presentations on a schedule favorable to us; · disputes may arise in the future with respect to the ownership of or right to use technology and intellectual property developed with our collaborators; · disagreements with our collaborators could delay or terminate the research, development or commercialization of products, or result in litigation or arbitration; · we may have difficulty enforcing the contracts if any of our collaborators fail to perform; · our collaborators may terminate their collaborations with us, which could make it difficult for us to attract new collaborators or adversely affect the perception of us in the business or financial communities; · our collaboration agreements are likely to be for fixed terms and subject to termination by our collaborators in the event of a material breach or lack of scientific progress by us; · our collaborators may have the first right to maintain or defend our intellectual property rights and, although we would likely have the right to assume the maintenance and defense of our intellectual property rights if our collaborators do not, our ability to do so may be compromised by our collaborators' acts or omissions; · our collaborators may challenge our intellectual property rights or utilize our intellectual property rights in such a way as to invite litigation that could jeopardize or invalidate our intellectual property rights or expose us to potential liability; · our collaborators may not comply with all applicable regulatory requirements, or may fail to report safety data in accordance with all applicable regulatory requirements; · our collaborators may change the focus of their development and commercialization efforts. |
The market price for our common stock may be influenced by many factors, including: · our cash resources; · timing and results of nonclinical studies and clinical trials of our drug candidates or those of our competitors; · the regulatory status of our drug candidates; · failure of any of our drug candidates, if approved, to achieve commercial success; · the success of competitive products or technologies; · regulatory developments in the United States and foreign countries; · our success in entering into collaborative agreements; · developments or disputes concerning patents or other proprietary rights; · the departure of key personnel; · our ability to maintain the listing of our common stock on The Nasdaq Capital Market (“Nasdaq”) or an alternative national securities exchange; · variations in our financial results or those of companies that are perceived to be similar to us; · the terms of any financing consummated by us; · changes in the structure of healthcare payment systems; · market conditions in the pharmaceutical and biotechnology sectors and issuance of new or changed securities analysts' reports or recommendations; and · general economic, industry, and market conditions. |
In addition, we agreed to issue and sell the following securities in future tranches: (i) tranche 2 consists of 98,685 shares of Series B2 preferred stock, at a purchase price of $152 per share and a conversion price of $1.52 per share, and related warrants to purchase up to 9,868,500 shares of common stock (or, if the holder elects to exercise the warrants for shares of Series B1 preferred stock, 98,685 shares of Series B1 preferred stock), at an exercise price of $1.52 per share (or, if the holder elects to exercise the warrants for Series B1 preferred stock, $152 per Series B1 preferred share); (ii) tranche 3 consists of 82,418 shares of Series B3 preferred stock, at a purchase price of $182 per share and a conversion price of $1.82 per share, and related warrants to purchase up to 6,593,440 shares of common stock (or, if the holder elects to exercise the warrants for shares of Series B1 preferred stock, 65,934 shares of Series B1 preferred stock), at an exercise price of $1.82 per share (or, if the holder elects to exercise the warrants for Series B1 preferred stock, $182 per Series B1 preferred share); and (iii) tranche 4 consists of 82,418 shares of Series B4 preferred stock, at a purchase price of $182 per share and a conversion price of $1.82 per share, and related warrants to purchase up to 6,593,440 shares of common stock (or, if the holder elects to exercise the warrants for shares of Series B1 preferred stock, 65,934 shares of Series B1 preferred stock), at an exercise price of $1.82 per share (or, if the holder elects to exercise the warrants for Series B1 preferred stock, $182 per Series B1 preferred share), for additional gross proceeds of up to $87.6 million, each tranche to occur at such investors’ discretion. |
We commenced clinical development of tilsotolimod as part of our immuno-oncology program in July 2015 and from July 2015 through December 31, 2019 we incurred approximately $65.2 million in tilsotolimod external development expenses as part of our immuno-oncology program, including costs associated with the preparation for and conduct of the ongoing Phase 1/2 clinical trial to assess the safety and efficacy of tilsotolimod in combination with ipilimumab and with pembrolizumab in patients with metastatic melanoma (ILLUMINATE-204), the preparation and conduct of our ongoing Phase 1b clinical trial of tilsotolimod monotherapy in patients with refractory solid tumors (ILLUMINATE-101), the preparation for, initiation and conduct of our ongoing Phase 3 clinical trial of tilsotolimod in combination with ipilimumab in patients with metastatic melanoma (ILLUMINATE-301), the preparation for our Phase 2 clinical trial of tilsotolimod in combination with nivolumab and ipilimumab for the treatment of solid tumor (ILLUMINATE-206), and the manufacture of additional drug substance for use in our clinical trials and additional nonclinical studies. |
Specifically, we believe our available funds will be sufficient to enable us to perform the following: (i) Complete and disclose results from: a) our Phase 1/2 clinical trial of tilsotolimod in combination with ipilimumab and pembrolizumab in anti-PD1 refractory melanoma (ILLUMINATE-204); and b) the Phase 1b monotherapy clinical trial of tilsotolimod in multiple refractory tumor types (ILLUMINATE-101); (ii) continue to execute on our ongoing Phase 3 clinical trial of tilsotolimod in combination with ipilimumab for the treatment of anti-PD1 refractory metastatic melanoma (ILLUMINATE-301), including announcement of top-line ORR and other preliminary data; (iii) initiate and complete enrollment in the signal-finding stage of Part I of our Phase 2 study of tilsotolimod in combination with nivolumab and ipilimumab for the treatment of MSS-CRC (ILLUMINATE-206), pending results from the initial group of ten patients enrolled to evaluate safety; (iv) fund certain investigator initiated clinical trials of tilsotolimod; and (v) maintain our current level of general and administrative expenses in order to support the business. |
Cash provided by financing activities primarily consisted of the following amounts raised in connection with the following transactions: · for the year ended December 31, 2019, $15.4 million in aggregate net proceeds from financing arrangements consisting of $10.1 million received pursuant to the December 2019 Securities Purchase Agreement, $3.7 million received pursuant to the LPC Purchase Agreement and $1.6 million received under the ATM Agreement, plus an additional $0.1 million in proceeds from employee stock purchases under our 2017 Employee Stock Purchase Plan (“2017 ESPP”); · for the year ended December 31, 2018, $10.2 million in aggregate proceeds from the exercise of common stock options and warrants and $0.2 million in proceeds from employee stock purchases under our 2017 ESPP, partially offset by $0.2 million in payments made on our previously outstanding note payable; and · for the year ended December 31, 2017, net proceeds of $53.8 million from our follow-on underwritten public offering of our common stock in October 2017, excluding less than $0.1 million of costs that were unpaid at December 31, 2017, and $5.7 million in aggregate net proceeds from employee stock purchases under our 2017 ESPP and the exercise of common stock options and warrants. |
Internal control over financial reporting is defined in Rule 13a-15(f) and 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, the Company’s principal executive and principal financial officers and effected by the Company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that: · Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company; · Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and · Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements. |
/S/ MAXINE GOWEN Director March 11, 2020 Maxine Gowen, Ph.D. /S/ HOWARD H. PIEN Director March 11, 2020 Howard H. Pien /S/ CAROL A. SCHAFER Director March 11, 2020 Carol A. Schafer IDERA PHARMACEUTICALS, INC. December 31, 2019 Page Report of Independent Registered Public Accounting Firm Balance Sheets Statements of Operations and Comprehensive Loss Statements of Redeemable Preferred Stock and Stockholders’ Equity (Deficit) Statements of Cash Flows Notes to Financial Statements REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and the Board of Directors of Idera Pharmaceuticals, Inc. Opinion on the Financial Statements We have audited the accompanying balance sheets of Idera Pharmaceuticals, Inc. (the Company) as of December 31, 2019 and 2018, and the related statements of operations and comprehensive loss, redeemable preferred stock and stockholders’ equity (deficit) and cash flows for each of the three years in the period ended December 31, 2019, and the related notes (collectively referred to as the “financial statements”). |
An applicant seeking approval to market and distribute a new drug product in the United States must typically undertake the following: · completion of preclinical laboratory tests, animal studies and formulation studies in compliance with the FDA’s good laboratory practice, or GLP, regulations; · submission to the FDA of an IND, which must take effect before human clinical trials may begin in the United States; · approval by an independent institutional review board, or IRB, representing each clinical site before each clinical trial may be initiated; · performance of adequate and well-controlled human clinical trials in accordance with good clinical practices, or GCP, to establish the safety and efficacy of the proposed drug product for each indication; · preparation and submission to the FDA of a new drug application, or NDA; · review of the product candidate by an FDA advisory committee, where appropriate or if applicable; · satisfactory completion of one or more FDA inspections of the manufacturing facility or facilities at which the product, or components thereof, are produced to assess compliance with cGMP requirements and to assure that the facilities, methods and controls are adequate to preserve the product’s identity, strength, quality and purity; · satisfactory completion of FDA audits of clinical trial sites to assure compliance with GCPs and the integrity of the clinical data; · payment of user fees and securing FDA approval of the NDA; and · compliance with any post-approval requirements, including Risk Evaluation and Mitigation Strategies, or REMS, where applicable, and post-approval studies required by the FDA. |
Such restrictions under applicable federal and state healthcare laws and regulations, include the following: · the federal Anti-Kickback Statute prohibits, among other things, persons 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, in whole or in part, under a federal healthcare program such as Medicare and Medicaid; · the federal False Claims Act imposes civil penalties, and provides for 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, with potential liability including mandatory treble damages and significant per-claim penalties, currently set at $5,500 to $11,000 per false claim; · the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, imposes criminal and civil liability for executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters; · HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act and their respective implementing regulations, including the Final Omnibus Rule published in January 2013, also imposes obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information; · 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; · the federal transparency requirements under the Health Care Reform Law, known as the federal Physician Payments Sunshine Act, require manufacturers of drugs, devices, biologics and medical supplies to report to the Centers for Medicare & Medicaid Services, or CMS, within the Department of Health and Human Services information related to payments and other transfers of value to physicians and teaching hospitals and physician ownership and investment interests held by physicians and their immediate family members; and · analogous state and foreign laws and regulations, such as state anti-kickback and false claims 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. |
Among the provisions of the PPACA of importance to potential drug candidates are: · an annual, nondeductible fee on any entity that manufactures or imports specified branded prescription drugs and biologic agents, apportioned among these entities according to their market share in certain government healthcare programs, although this fee would not apply to sales of certain products approved exclusively for orphan indications; · expansion of eligibility criteria for Medicaid programs by, among other things, allowing states to offer Medicaid coverage to certain individuals with income at or below 133% of the federal poverty level, thereby potentially increasing a manufacturer’s Medicaid rebate liability; · expanded manufacturers’ rebate liability under the Medicaid Drug Rebate Program by increasing the minimum rebate for both branded and generic drugs and revising the definition of “average manufacturer price,” or AMP, for calculating and reporting Medicaid drug rebates on outpatient prescription drug prices and extending rebate liability to prescriptions for individuals enrolled in Medicare Advantage plans; · addressed 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; · expanded the types of entities eligible for the 340B drug discount program; · established the Medicare Part D coverage gap discount program by requiring manufacturers to provide a 50% (increasing to 70% in 2019) point-of-sale-discount off the negotiated price of applicable brand drugs to eligible beneficiaries during their coverage gap period as a condition for the manufacturers’ outpatient drugs to be covered under Medicare Part D; · established a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research; · established the Independent Payment Advisory Board, or IPAB, which has authority to recommend certain changes to the Medicare program to reduce expenditures by the program that could result in reduced payments for prescription drugs. |
Specifically, we believe that our available funds will be sufficient to enable us to perform the following during this one-year period: (i) complete enrollment and continue to execute on: a) the Phase 1 portion of our ongoing Phase 1/2 clinical trial of tilsotolimod in combination with pembrolizumab in anti-PD1 refractory melanoma (ILLUMINATE-204); b) the Phase 2 portion of our ongoing Phase 1/2 clinical trial of tilsotolimod in combination with ipilimumab in anti-PD1 refractory melanoma (ILLUMINATE-204); c) the Phase 3 clinical trial of tilsotolimod in combination with ipilimumab for the treatment of anti-PD1 refractory metastatic melanoma (ILLUMINATE-301); and d) the Phase 1b monotherapy clinical trial of tilsotolimod in multiple refractory tumor types (ILLUMINATE-101); (ii) initiate our Phase 2 study of tilsotolimod in combination with nivolumab and ipilimumab for the treatment of certain solid tumors (ILLUMINATE-206); (iii) fund certain investigator initiated clinical trials of tilsotolimod; and (iv) maintain our current level of general and administrative expenses in order to support the business. |
Our ability to successfully develop and commercialize potential drug candidates will depend on our ability to overcome these recent challenges and on several factors, including the following: · the drug candidates demonstrating activity in clinical trials; · the drug candidates demonstrating an acceptable safety profile in nonclinical toxicology studies and during clinical trials; · timely enrollment in clinical trials of drug candidates, which may be slower than anticipated, potentially resulting in significant delays; · satisfying conditions imposed on us and/or our collaborators by the FDA or equivalent foreign regulatory authorities regarding the scope or design of clinical trials; · the ability to demonstrate to the satisfaction of the FDA, or equivalent foreign regulatory authorities, the safety and efficacy of the drug candidates through current and future clinical trials; · timely receipt of necessary marketing approvals from the FDA and equivalent foreign regulatory authorities; · the ability to combine our drug candidates and the drug candidates being developed by our collaborators and any other collaborators safely and successfully with other therapeutic agents; · achieving and maintaining compliance with all regulatory requirements applicable to the products; · establishment of commercial manufacturing arrangements with third-party manufacturers; · the ability to secure orphan drug exclusivity for our drug candidates either alone or in combination with other products; · the successful commercial launch of the drug candidates, assuming FDA approval is obtained, whether alone or in combination with other products; · acceptance of the products as safe and effective by patients, the medical community, and third-party payors; · competition from other companies and their therapies; · changes in treatment regimens; · favorable market conditions in which to raise additional capital; · the strength of our intellectual property portfolio in the United States and abroad; and · a continued acceptable safety and efficacy profile of the drug candidates following marketing approval. |
Other events that could delay or inhibit conduct of our clinical trials include: · regulators or IRBs may not authorize us to commence a clinical trial or conduct a clinical trial at a prospective trial site; · nonclinical or clinical data may not be readily interpreted, which may lead to delays and/or misinterpretation; · our nonclinical tests, including toxicology studies, or clinical trials may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional nonclinical testing or clinical trials or we may abandon projects that we expect may not be promising; · the rate of enrollment or retention of patients in our clinical trials may be lower than we expect; · we might have to suspend or terminate our clinical trials if the participating subjects experience serious adverse events or undesirable side effects or are exposed to unacceptable health risks; · regulators or IRBs may hold, suspend or terminate clinical research for various reasons, including noncompliance with regulatory requirements, issues identified through inspections of manufacturing or clinical trial operations or clinical trial sites, or if, in their opinion, the participating subjects are being exposed to unacceptable health risks; · regulators may hold or suspend our clinical trials while collecting supplemental information on, or clarification of, our clinical trials or other clinical trials, including trials conducted in other countries or trials conducted by other companies; · we, along with our collaborators and subcontractors, may not employ, in any capacity, persons who have been debarred under the FDA's Application Integrity Policy, or similar policy under foreign regulatory authorities. |
In addition, later discovery of previously unknown adverse events or other problems with our drugs or their manufacturers or manufacturing processes, or failure to comply with regulatory requirements, may yield various results, including: •litigation involving patients taking our drug; • restrictions on such drugs, manufacturers or manufacturing processes; • restrictions on the labeling or marketing of a drug; •restrictions on drug distribution or use; • requirements to conduct post-marketing studies or clinical trials; • warning letters or untitled letters; •withdrawal of the drugs from the market; • refusal to approve pending applications or supplements to approved applications that we submit; • recall of drugs; •fines, restitution or disgorgement of profits or revenues; • suspension or withdrawal of marketing approvals; •damage to relationships with any potential collaborators; • unfavorable press coverage and damage to our reputation; •refusal to permit the import or export of drugs; • drug seizure; or •injunctions or the imposition of civil or criminal penalties. |
These include the following: · Anti-Kickback Statute-the federal healthcare anti-kickback statute prohibits, among other things, persons from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward, or in return for, either the referral of an individual for, or the purchase, order or recommendation or arranging of, any good or service, for which payment may be made under a federal healthcare program such as Medicare and Medicaid; · False Claims Act-the federal False Claims Act imposes criminal and civil penalties, including through civil whistleblower or qui tam actions, against individuals or entities for, among other things, knowingly presenting, or causing to be presented false or fraudulent claims for payment by a federal healthcare program or making a false statement or record material to payment of a false claim or avoiding, decreasing or concealing an obligation to pay money to the federal government, with potential liability including mandatory treble damages and significant per-claim penalties, currently set at $5,500 to $11,000 per false claim; · HIPAA-the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, imposes criminal and civil liability for executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters, and, as amended by the Health Information Technology for Economic and Clinical Health Act and its implementing regulations, also imposes obligations, including mandatory contractual terms and technical safeguards, with respect to maintaining the privacy, security and transmission of individually identifiable health information; · Transparency Requirements-federal laws require applicable manufacturers of covered drugs to report payments and other transfers of value to physicians and teaching hospitals; and · Analogous State and Foreign Laws-analogous state and foreign fraud and abuse laws and regulations, such as state anti-kickback and false claims laws, can apply to sales or marketing arrangements and claims involving healthcare items or services and are generally broad and are enforced by many different federal and state agencies as well as through private actions. |
Among the provisions of the PPACA of potential importance to our business and our drug candidates are the following: · an annual, non-deductible fee on any entity that manufactures or imports specified branded prescription drugs and biologic agents; · an increase in the statutory minimum rebates a manufacturer must pay under the Medicaid Drug Rebate Program; · expansion of healthcare fraud and abuse laws, including the civil False Claims Act and the federal Anti-Kickback Statute, new government investigative powers and enhanced penalties for noncompliance; · a new Medicare Part D coverage gap discount program, in which manufacturers must agree to offer 50% point-of-sale discounts off negotiated prices; · extension of manufacturers’ Medicaid rebate liability; · expansion of eligibility criteria for Medicaid programs; · expansion of the entities eligible for discounts under the Public Health Service pharmaceutical pricing program; · new requirements to report certain financial arrangements with physicians and teaching hospitals; · a new requirement to annually report drug samples that manufacturers and distributors provide to physicians; and · a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research. |
Our existing collaborations and any potential future collaborations have risks, including the following: · our collaborators may control the development of the drug candidates being developed with our technologies and compounds including the timing of development; · our collaborators may control the development of the companion diagnostic to be developed for use in conjunction with our drug candidates including the timing of development; · our collaborators may control the public release of information regarding the developments, and we may not be able to make announcements or data presentations on a schedule favorable to us; · disputes may arise in the future with respect to the ownership of or right to use technology and intellectual property developed with our collaborators; · disagreements with our collaborators could delay or terminate the research, development or commercialization of products, or result in litigation or arbitration; · we may have difficulty enforcing the contracts if any of our collaborators fail to perform; · our collaborators may terminate their collaborations with us, which could make it difficult for us to attract new collaborators or adversely affect the perception of us in the business or financial communities; · our collaboration agreements are likely to be for fixed terms and subject to termination by our collaborators in the event of a material breach or lack of scientific progress by us; · our collaborators may have the first right to maintain or defend our intellectual property rights and, although we would likely have the right to assume the maintenance and defense of our intellectual property rights if our collaborators do not, our ability to do so may be compromised by our collaborators' acts or omissions; · our collaborators may challenge our intellectual property rights or utilize our intellectual property rights in such a way as to invite litigation that could jeopardize or invalidate our intellectual property rights or expose us to potential liability; · our collaborators may not comply with all applicable regulatory requirements, or may fail to report safety data in accordance with all applicable regulatory requirements; · our collaborators may change the focus of their development and commercialization efforts. |
The market price for our common stock may be influenced by many factors, including: · our cash resources; · timing and results of nonclinical studies and clinical trials of our drug candidates or those of our competitors; · the regulatory status of our drug candidates; · failure of any of our drug candidates, if approved, to achieve commercial success; · the success of competitive products or technologies; · regulatory developments in the United States and foreign countries; · our success in entering into collaborative agreements; · developments or disputes concerning patents or other proprietary rights; · the departure of key personnel; · our ability to maintain the listing of our common stock on The Nasdaq Capital Market or an alternative national securities exchange; · variations in our financial results or those of companies that are perceived to be similar to us; · the terms of any financing consummated by us; · changes in the structure of healthcare payment systems; · market conditions in the pharmaceutical and biotechnology sectors and issuance of new or changed securities analysts' reports or recommendations; and · general economic, industry, and market conditions. |
Specifically, we believe that our available funds will be sufficient to enable us to perform the following during this one-year period: (i) complete enrollment and continue to execute on: a) the Phase 1 portion of our ongoing Phase 1/2 clinical trial of tilsotolimod in combination with pembrolizumab in anti-PD1 refractory melanoma (ILLUMINATE-204); b) the Phase 2 portion of our ongoing Phase 1/2 clinical trial of tilsotolimod in combination with ipilimumab in anti-PD1 refractory melanoma (ILLUMINATE-204); c) the Phase 3 clinical trial of tilsotolimod in combination with ipilimumab for the treatment of anti-PD1 refractory metastatic melanoma (ILLUMINATE-301); and d) the Phase 1b monotherapy clinical trial of tilsotolimod in multiple refractory tumor types (ILLUMINATE-101); (ii) initiate our Phase 2 study of tilsotolimod in combination with nivolumab and ipilimumab for the treatment of certain solid tumors (ILLUMINATE-206); (iii) fund certain investigator initiated clinical trials of tilsotolimod; and (iv) maintain our current level of general and administrative expenses in order to support the business. |
Cash provided by financing activities primarily consisted of the following amounts raised in connection with issuances of equity instruments: · for the year ended December 31, 2018, $10.2 million in aggregate proceeds from the exercise of common stock options and warrants and $0.2 million in proceeds from employee stock purchases under our 2017 Employee Stock Purchase Plan, partially offset by $0.2 million in payments made on our previously outstanding note payable; · for the year ended December 31, 2017, net proceeds of $53.8 million from our follow-on underwritten public offering of our common stock in October 2017, excluding less than $0.1 million of costs that were unpaid at December 31, 2017, and $5.7 million in aggregate net proceeds from employee stock purchases under our 2017 Employee Stock Purchase Plan, or 2017 ESPP, and the exercise of common stock options and warrants; and · for the year ended December 31, 2016, net proceeds of $49.0 million from our follow-on underwritten public offering of our common stock in October 2016, excluding the $0.2 million of costs that were unpaid at December 31, 2016, and $2.2 million in aggregate net proceeds from employee stock purchases under our 1995 Employee Stock Purchase Plan, or 1995 ESPP, and the exercise of common stock warrants. |
Internal control over financial reporting is defined in Rule 13a-15(f) and 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, the Company’s principal executive and principal financial officers and effected by the Company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that: · Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company; · Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and · Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements. |
To achieve these objectives, the compensation committee: · sets short- and long-term compensation at levels the compensation committee believes are competitive with those of other companies in our industry and our region that compete with us for executive talent; · ties a substantial portion of each executive officer’s overall cash compensation to key strategic, financial, research, and operational goals such as clinical trial and regulatory progress, intellectual property portfolio development, establishment and maintenance of key strategic relationships, and exploration of business development opportunities, as well as our financial and operational performance; and · provides a portion of our executive compensation in the form of stock options that vest over time from the date of grant of the option awards and from the time of achievement of performance milestones when applicable, which we believe helps to retain our executives and align their interests with those of our stockholders by allowing them to participate in the longer term success of our company as reflected in stock price appreciation. |
In assessing each named executive officer’s individual performance score, the compensation committee determined: · Mr. Milano’s overall score would be equivalent to the corporate performance score of 50%; · Mr. Fletcher’s individual performance score, recognizing his achievement against his personal objectives, including his role in business development along with his general leadership contributions, would be 115%, resulting in an overall bonus equal to 58% of his bonus target; · Dr. Horobin’s individual performance score, recognizing her achievement against her personal objectives, including her role in achievements against our tilsotolimod (IMO-2125) clinical program goals along with her general leadership contributions, would be 85%, resulting in an overall bonus equal to 43% of her bonus target; · Mr. Kirby’s individual performance score, recognizing his achievement against his personal objectives, including his role as principal financial and accounting officer, and general leadership contributions, would be 120%. |
Pursuant to the agreement, we provided Mr. Arcudi the following separation benefits in exchange for him agreeing to a release of claims and complying with certain other continuing obligations contained therein (including compliance with the restrictive covenants in his employment agreement): · We paid Mr. Arcudi a pro-rated 2018 bonus payment of $103,182, less all applicable taxes and withholdings; · We have agreed that, commencing on the first regular payroll date following his separation date until October 31, 2019, we will pay Mr. Arcudi with severance pay in the total gross amount of $525,115, payable in equal installments in accordance with our regular payroll practices; · Mr. Arcudi is eligible to receive health and dental benefits through reimbursement of COBRA premiums from his separation date through no later than October 31, 2019; and · Any stock options or other equity incentive awards previously granted to Mr. Arcudi and held by Mr. Arcudi on his separation date shall continue to remain exercisable until the earlier of (i) twelve months from the end of the quarter in which Mr. Arcudi terminates services from the with us, or (ii) the original expiration date of such option. |
Pursuant to the Severance and Change of Control Agreements, during such period: (i) the executive's position and duties for the company will be commensurate with the most significant of the duties and positions held by the executive during the 90 day period preceding the date of the consummation of the change of control; (ii) the executive's annual base salary will equal at least 12 times the highest monthly base salary paid to the executive during the 12 months prior to the date of the change of control; (iii) the executive will be entitled to an annual bonus equal to at least the greatest of (a) the average bonus paid to the executive in respect of the three years immediately preceding the year in which the change of control occurs, (b) the annual bonus paid for the year immediately preceding the year in which the change of control occurs and (c) 100% of the target bonus for (1) the year immediately preceding the year in which the change of control occurs, (2) the year in which the change of control occurs or (3) any year following the year in which the change of control occurs and prior to the then-current year, whichever is highest; and (iv) the executive will be entitled to certain other benefits as are consistent with the benefits paid to the executive during the year prior to the change of control. |
The Severance and Change of Control Agreements also provide that if an executive is terminated without “cause” or resigns for “good reason” (as such terms are defined in the Severance and Change of Control Agreements) in either case, within 24 months following a change of control, subject to the executive’s timely execution and non-revocation of a general release of claims in a form provided by us and the executive’s continued compliance with the invention, non-disclosure and non-competition agreement previously entered into in connection with the commencement of executive’s employment, executives would receive a lump sum cash payment payable within 30 days after the date of termination equal to: (i) the executive's target bonus for the year of termination prorated for the portion of the year worked; (ii) 150% of the sum of (a) such executive's annual base salary for the year immediately preceding the year of termination and (b) the greatest of (1) the average bonus paid or earned and accrued, but unpaid to the executive in respect of the three years immediately preceding the year of termination, (2) the annual bonus paid for the year immediately preceding the year of termination and (3) the target bonus for the year of termination; and (iii) 150% of the Company’s share of the annual premium for group medical and/or dental insurance coverage that was in place for the executive immediately prior to the date of termination. |
If the executive is terminated without “cause” or resigns for “good reason,” prior to the date of a change of control, such executive will be entitled to the following under the Severance and Change of Control Agreement, subject to the executive’s timely execution and non-revocation of a general release of claims in a form provided by us and the executive’s continued compliance with the invention, non-disclosure and non-competition agreement previously entered into in connection with the commencement of executive’s employment: (i) a lump sum cash payment payable within 30 days after the date of termination in an amount equal to the greater of (x) the average bonus paid or earned and accrued, but unpaid to the executive in respect of the three years immediately preceding the year of termination, and (y) the annual bonus paid for the year immediately preceding the year of termination prorated for the portion of the year worked; (ii) continued payment of the executive's base salary payable in accordance with our standard payroll practices over the one-year period following termination; and (iii) if the executive elects to continue receiving group medical and/or dental insurance under COBRA (to the extent the executive previously participated in such group insurance plans immediately prior to the date of termination), payment by us of our share of the premium for such coverage that we pay for active and similarly-situated employees who receive the same type of coverage for the one-year period following termination. |
Agreement and Plan of Merger As further described in Note 17 to the financial statements appearing elsewhere in this Annual Report on Form 10-K, on January 21, 2018, we entered into an Agreement and Plan of Merger, or the Merger Agreement, with BioCryst Pharmaceuticals, Inc., a Delaware corporation, or BioCryst, Nautilus Holdco, Inc., a Delaware corporation and a direct, wholly owned subsidiary of BioCryst, or Holdco, Island Merger Sub, Inc., a Delaware corporation and a direct, wholly owned subsidiary of Holdco, or Merger Sub A, and Boat Merger Sub, Inc., a Delaware corporation and a direct, wholly owned subsidiary of Holdco, or Merger Sub B. Pursuant to the Merger Agreement, and subject to the satisfaction or waiver of the conditions specified therein, (a) Merger Sub A will be merged with and into us, or the Idera Merger, with us surviving as a wholly owned subsidiary of Holdco, and (b) Merger Sub B will be merged with and into BioCryst, or the BioCryst Merger, which we refer to together with the Idera Merger as the Mergers, with BioCryst surviving as a wholly owned subsidiary of Holdco. |
An applicant seeking approval to market and distribute a new drug product in the United States must typically undertake the following: · completion of preclinical laboratory tests, animal studies and formulation studies in compliance with the FDA’s good laboratory practice, or GLP, regulations; · submission to the FDA of an IND, which must take effect before human clinical trials may begin in the United States; · approval by an independent institutional review board, or IRB, representing each clinical site before each clinical trial may be initiated; · performance of adequate and well-controlled human clinical trials in accordance with good clinical practices, or GCP, to establish the safety and efficacy of the proposed drug product for each indication; · preparation and submission to the FDA of a new drug application, or NDA; · review of the product candidate by an FDA advisory committee, where appropriate or if applicable; · satisfactory completion of one or more FDA inspections of the manufacturing facility or facilities at which the product, or components thereof, are produced to assess compliance with cGMP requirements and to assure that the facilities, methods and controls are adequate to preserve the product’s identity, strength, quality and purity; · satisfactory completion of FDA audits of clinical trial sites to assure compliance with GCPs and the integrity of the clinical data; · payment of user fees and securing FDA approval of the NDA; and · compliance with any post-approval requirements, including Risk Evaluation and Mitigation Strategies, or REMS, where applicable, and post-approval studies required by the FDA. |
Such restrictions under applicable federal and state healthcare laws and regulations, include the following: · the federal Anti-Kickback Statute prohibits, among other things, persons 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, in whole or in part, under a federal healthcare program such as Medicare and Medicaid; · the federal False Claims Act imposes civil penalties, and provides for 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, with potential liability including mandatory treble damages and significant per-claim penalties, currently set at $5,500 to $11,000 per false claim; · the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, imposes criminal and civil liability for executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters; · HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act and their respective implementing regulations, including the Final Omnibus Rule published in January 2013, also imposes obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information; · 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; · the federal transparency requirements under the Health Care Reform Law, known as the federal Physician Payments Sunshine Act, require manufacturers of drugs, devices, biologics and medical supplies to report to the Centers for Medicare & Medicaid Services, or CMS, within the Department of Health and Human Services information related to payments and other transfers of value to physicians and teaching hospitals and physician ownership and investment interests held by physicians and their immediate family members; and · analogous state and foreign laws and regulations, such as state anti-kickback and false claims 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. |
Among the provisions of the PPACA of importance to potential drug candidates are: •an annual, nondeductible fee on any entity that manufactures or imports specified branded prescription drugs and biologic agents, apportioned among these entities according to their market share in certain government healthcare programs, although this fee would not apply to sales of certain products approved exclusively for orphan indications; •expansion of eligibility criteria for Medicaid programs by, among other things, allowing states to offer Medicaid coverage to certain individuals with income at or below 133% of the federal poverty level, thereby potentially increasing a manufacturer’s Medicaid rebate liability; •expanded manufacturers’ rebate liability under the Medicaid Drug Rebate Program by increasing the minimum rebate for both branded and generic drugs and revising the definition of “average manufacturer price,” or AMP, for calculating and reporting Medicaid drug rebates on outpatient prescription drug prices and extending rebate liability to prescriptions for individuals enrolled in Medicare Advantage plans; •addressed 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; •expanded the types of entities eligible for the 340B drug discount program; •established the Medicare Part D coverage gap discount program by requiring manufacturers to provide a 50% point-of-sale-discount off the negotiated price of applicable brand drugs to eligible beneficiaries during their coverage gap period as a condition for the manufacturers’ outpatient drugs to be covered under Medicare Part D; •established a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research; •established the Independent Payment Advisory Board, or IPAB, which has authority to recommend certain changes to the Medicare program to reduce expenditures by the program that could result in reduced payments for prescription drugs. |
The consummation of the Mergers is subject to customary closing conditions, including (i) the adoption of the Merger Agreement by the affirmative vote of the holders of a majority of all outstanding shares of our capital stock entitled to vote thereon, (ii) the adoption of the Merger Agreement by the affirmative vote of the holders of a majority of all outstanding shares of BioCryst common stock entitled to vote thereon, (iii) the absence of any adverse law or order promulgated, entered, enforced, enacted or issued by any governmental entity that prohibits, restrains or makes illegal the consummation of the Mergers, (iv) the shares of Holdco common stock to be issued in the Mergers being approved for listing on the Nasdaq Global Select Market, (v) the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and other material government approvals, (vi) the SEC having declared effective the Form S-4 Registration Statement of Holdco which will contain the joint proxy statement/prospectus of the parties in connection with the Mergers, (vii) subject to certain materiality exceptions, the accuracy of certain representations and warranties of us and BioCryst, respectively, contained in the Merger Agreement and the compliance by each party with the covenants contained in the Merger Agreement, (viii) the receipt of certain opinions from legal counsel regarding the intended tax treatment of the Mergers and (ix) the absence of a material adverse effect with respect to us and BioCryst, respectively. |
Our ability to successfully develop and commercialize these drug candidates, or other potential drug candidates, will depend on our ability to overcome these recent challenges and on several factors, including the following: · the drug candidates demonstrating activity in clinical trials; · the drug candidates demonstrating an acceptable safety profile in nonclinical toxicology studies and during clinical trials; · timely enrollment in clinical trials of IMO-8400, IMO-2125 and other drug candidates, which may be slower than anticipated, potentially resulting in significant delays; · satisfying conditions imposed on us and/or our collaborators by the FDA or equivalent foreign regulatory authorities regarding the scope or design of clinical trials; · the ability to demonstrate to the satisfaction of the FDA, or equivalent foreign regulatory authorities, the safety and efficacy of the drug candidates through current and future clinical trials; · timely receipt of necessary marketing approvals from the FDA and equivalent foreign regulatory authorities; · the ability to combine our drug candidates and the drug candidates being developed by our collaborators and any other collaborators safely and successfully with other therapeutic agents; · achieving and maintaining compliance with all regulatory requirements applicable to the products; · establishment of commercial manufacturing arrangements with third-party manufacturers; · the ability to secure orphan drug exclusivity for our drug candidates either alone or in combination with other products; · the successful commercial launch of the drug candidates, assuming FDA approval is obtained, whether alone or in combination with other products; · acceptance of the products as safe and effective by patients, the medical community, and third-party payors; · competition from other companies and their therapies; · changes in treatment regimens; · favorable market conditions in which to raise additional capital; · the strength of our intellectual property portfolio in the United States and abroad; and · a continued acceptable safety and efficacy profile of the drug candidates following marketing approval. |
Other events that could delay or inhibit conduct of our clinical trials include: · regulators or IRBs may not authorize us to commence a clinical trial or conduct a clinical trial at a prospective trial site; · nonclinical or clinical data may not be readily interpreted, which may lead to delays and/or misinterpretation; · our nonclinical tests, including toxicology studies, or clinical trials may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional nonclinical testing or clinical trials or we may abandon projects that we expect may not be promising; · the rate of enrollment or retention of patients in our clinical trials may be lower than we expect; · we might have to suspend or terminate our clinical trials if the participating subjects experience serious adverse events or undesirable side effects or are exposed to unacceptable health risks; · regulators or IRBs may hold, suspend or terminate clinical research for various reasons, including noncompliance with regulatory requirements, issues identified through inspections of manufacturing or clinical trial operations or clinical trial sites, or if, in their opinion, the participating subjects are being exposed to unacceptable health risks; · regulators may hold or suspend our clinical trials while collecting supplemental information on, or clarification of, our clinical trials or other clinical trials, including trials conducted in other countries or trials conducted by other companies; · we, along with our collaborators and subcontractors, may not employ, in any capacity, persons who have been debarred under the FDA's Application Integrity Policy, or similar policy under foreign regulatory authorities. |
In addition, later discovery of previously unknown adverse events or other problems with our drugs or their manufacturers or manufacturing processes, or failure to comply with regulatory requirements, may yield various results, including: •litigation involving patients taking our drug; • restrictions on such drugs, manufacturers or manufacturing processes; • restrictions on the labeling or marketing of a drug; •restrictions on drug distribution or use; • requirements to conduct post-marketing studies or clinical trials; • warning letters or untitled letters; •withdrawal of the drugs from the market; • refusal to approve pending applications or supplements to approved applications that we submit; • recall of drugs; •fines, restitution or disgorgement of profits or revenues; • suspension or withdrawal of marketing approvals; •damage to relationships with any potential collaborators; • unfavorable press coverage and damage to our reputation; •refusal to permit the import or export of drugs; • drug seizure; or •injunctions or the imposition of civil or criminal penalties. |
These include the following: • Anti-Kickback Statute-the federal healthcare anti-kickback statute prohibits, among other things, persons from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward, or in return for, either the referral of an individual for, or the purchase, order or recommendation or arranging of, any good or service, for which payment may be made under a federal healthcare program such as Medicare and Medicaid; •False Claims Act-the federal False Claims Act imposes criminal and civil penalties, including through civil whistleblower or qui tam actions, against individuals or entities for, among other things, knowingly presenting, or causing to be presented false or fraudulent claims for payment by a federal healthcare program or making a false statement or record material to payment of a false claim or avoiding, decreasing or concealing an obligation to pay money to the federal government, with potential liability including mandatory treble damages and significant per-claim penalties, currently set at $5,500 to $11,000 per false claim; •HIPAA-the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, imposes criminal and civil liability for executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters, and, as amended by the Health Information Technology for Economic and Clinical Health Act and its implementing regulations, also imposes obligations, including mandatory contractual terms and technical safeguards, with respect to maintaining the privacy, security and transmission of individually identifiable health information; • Transparency Requirements-federal laws require applicable manufacturers of covered drugs to report payments and other transfers of value to physicians and teaching hospitals; and •Analogous State and Foreign Laws-analogous state and foreign fraud and abuse laws and regulations, such as state anti-kickback and false claims laws, can apply to sales or marketing arrangements and claims involving healthcare items or services and are generally broad and are enforced by many different federal and state agencies as well as through private actions. |
Among the provisions of the PPACA of potential importance to our business and our drug candidates are the following: •an annual, non-deductible fee on any entity that manufactures or imports specified branded prescription drugs and biologic agents; •an increase in the statutory minimum rebates a manufacturer must pay under the Medicaid Drug Rebate Program; •expansion of healthcare fraud and abuse laws, including the civil False Claims Act and the federal Anti-Kickback Statute, new government investigative powers and enhanced penalties for noncompliance; •a new Medicare Part D coverage gap discount program, in which manufacturers must agree to offer 50% point-of-sale discounts off negotiated prices; •extension of manufacturers’ Medicaid rebate liability; •expansion of eligibility criteria for Medicaid programs; •expansion of the entities eligible for discounts under the Public Health Service pharmaceutical pricing program; •new requirements to report certain financial arrangements with physicians and teaching hospitals; •a new requirement to annually report drug samples that manufacturers and distributors provide to physicians; and •a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research. |
Our existing collaborations and any potential future collaborations have risks, including the following: · our collaborators may control the development of the drug candidates being developed with our technologies and compounds including the timing of development; · our collaborators may control the development of the companion diagnostic to be developed for use in conjunction with our drug candidates including the timing of development; · our collaborators may control the public release of information regarding the developments, and we may not be able to make announcements or data presentations on a schedule favorable to us; · disputes may arise in the future with respect to the ownership of or right to use technology and intellectual property developed with our collaborators; · disagreements with our collaborators could delay or terminate the research, development or commercialization of products, or result in litigation or arbitration; · we may have difficulty enforcing the contracts if any of our collaborators fail to perform; · our collaborators may terminate their collaborations with us, which could make it difficult for us to attract new collaborators or adversely affect the perception of us in the business or financial communities; · our collaboration agreements are likely to be for fixed terms and subject to termination by our collaborators in the event of a material breach or lack of scientific progress by us; · our collaborators may have the first right to maintain or defend our intellectual property rights and, although we would likely have the right to assume the maintenance and defense of our intellectual property rights if our collaborators do not, our ability to do so may be compromised by our collaborators' acts or omissions; · our collaborators may challenge our intellectual property rights or utilize our intellectual property rights in such a way as to invite litigation that could jeopardize or invalidate our intellectual property rights or expose us to potential liability; · our collaborators may not comply with all applicable regulatory requirements, or may fail to report safety data in accordance with all applicable regulatory requirements; · our collaborators may change the focus of their development and commercialization efforts. |
The market price for our common stock may be influenced by many factors, including: · our cash resources; · timing and results of nonclinical studies and clinical trials of our drug candidates or those of our competitors; · the regulatory status of our drug candidates; · failure of any of our drug candidates, if approved, to achieve commercial success; · the success of competitive products or technologies; · regulatory developments in the United States and foreign countries; · our success in entering into collaborative agreements; · developments or disputes concerning patents or other proprietary rights; · the departure of key personnel; · our ability to maintain the listing of our common stock on The Nasdaq Capital Market or an alternative national securities exchange; · variations in our financial results or those of companies that are perceived to be similar to us; · the terms of any financing consummated by us; · changes in the structure of healthcare payment systems; · market conditions in the pharmaceutical and biotechnology sectors and issuance of new or changed securities analysts' reports or recommendations; and · general economic, industry, and market conditions. |
Agreement and Plan of Merger As further described in Note 17 to the financial statements appearing elsewhere in this Annual Report on Form 10-K, on January 21, 2018, we entered into an Agreement and Plan of Merger, or the Merger Agreement, with BioCryst Pharmaceuticals, Inc., a Delaware corporation, or BioCryst, Nautilus Holdco, Inc., a Delaware corporation and a direct, wholly owned subsidiary of BioCryst, or Holdco, Island Merger Sub, Inc., a Delaware corporation and a direct, wholly owned subsidiary of Holdco, or Merger Sub A, and Boat Merger Sub, Inc., a Delaware corporation and a direct, wholly owned subsidiary of Holdco, or Merger Sub B. Pursuant to the Merger Agreement, and subject to the satisfaction or waiver of the conditions specified therein, (a) Merger Sub A will be merged with and into us, or the Idera Merger, with us surviving as a wholly owned subsidiary of Holdco, and (b) Merger Sub B will be merged with and into BioCryst, or the BioCryst Merger, which we refer to together with the Idera Merger as the Mergers, with BioCryst surviving as a wholly owned subsidiary of Holdco. |
Internal control over financial reporting is defined in Rule 13a-15(f) and 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, the Company’s principal executive and principal financial officers and effected by the Company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that: · Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company; · Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and · Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements. |
To achieve these objectives, the compensation committee: · sets short- and long-term compensation at levels the compensation committee believes are competitive with those of other companies in our industry and our region that compete with us for executive talent; · ties a substantial portion of each executive officer’s overall cash compensation to key strategic, financial, research, and operational goals such as clinical trial and regulatory progress, intellectual property portfolio development, establishment and maintenance of key strategic relationships, and exploration of business development opportunities, as well as our financial and operational performance; and · provides a portion of our executive compensation in the form of stock options that vest over time from the date of grant of the option awards and from the time of achievement of performance milestones when applicable, which we believe helps to retain our executives and align their interests with those of our stockholders by allowing them to participate in the longer term success of our company as reflected in stock price appreciation. |
In assessing each named executive officer’s individual performance score, the compensation committee determined: · Mr. Milano’s overall score would be equivalent to the corporate performance score of 90%; · Mr. Arcudi’s individual performance score, recognizing his achievement against his personal objectives, including his contributions to the completion of our 2017 offering and general leadership contributions, would be 95%, resulting in an overall bonus equal to 86% of his bonus target; · Mr. Fletcher’s individual performance score, recognizing his achievement against his personal objectives, including his role in business development along with his general leadership contributions, would be 105%, resulting in an overall bonus equal to 95% of his bonus target; · Dr. Horobin’s individual performance score, recognizing her achievement against her personal objectives, including her role in achievements against our IMO-2125 and IMO-8400 clinical program goals along with her general leadership contributions, would be 90%, resulting in an overall bonus equal to 81% of her bonus target; and · Dr. Yingling’s individual performance score, recognizing his achievement against his personal objectives, including his role in advancing objective knowledge and understanding of our discovery platform along with his general leadership contributions, would be 115%, resulting in an overall bonus equal to 103% of his bonus target. |
Pursuant to his employment agreement, if Dr. Agrawal’s employment was terminated by us without cause or terminated by Dr. Agrawal for good reason, as such terms are defined in the agreement, we agreed to: · continue to pay Dr. Agrawal his base salary as severance for a period ending on the earlier of the final day of the term of the agreement in effect immediately prior to such termination and the second anniversary of his termination date; · pay Dr. Agrawal a lump sum cash payment equal to the pro rata portion of the annual bonus that he earned in the year preceding the year in which his termination occurs; · continue to provide Dr. Agrawal with healthcare, disability and life insurance benefits for a period ending on the earlier of the final day of the term of the agreement in effect immediately prior to the termination date and the second anniversary of the termination date, except to the extent another employer provides Dr. Agrawal with comparable benefits; · accelerate the vesting of any stock options or other equity incentive awards previously granted to Dr. Agrawal as of the termination date to the extent such options or equity incentive awards would have vested had he continued to be an employee until the final day of the term of the agreement in effect immediately prior to such termination; and · permit Dr. Agrawal to exercise any vested stock options until the second anniversary of the termination date. |
Pursuant to the agreement, we provided Dr. Agrawal the following separation benefits in exchange for him agreeing to a release of claims and complying with certain other continuing obligations contained therein (including compliance with the restrictive covenants in his employment agreement): · We paid Dr. Agrawal a pro-rated 2017 bonus payment of $121,648, less all applicable taxes and witholdings; · We paid $8,000, on behalf of Dr. Agrawal, for legal fees associated with the review, negotiation and execution of his separation agreement; · We have agreed that, commencing on the first regular payroll date following his separation date until May 31, 2019, we will provide Dr. Agrawal with severance pay in the form of salary continuation payments at his annualized base salary rate in effect on the date of the separation agreement ($588,100), payable in installments in accordance with our regular payroll practices; · Dr. Agrawal is eligible to receive health and dental benefits through reimbursement of COBRA premiums from his separation date through no later than May 31, 2019; · Dr. Agrawal is eligible to receive life and/or disability insurance benefits through reimbursement of costs of obtaining life and/or disability insurance substantially comparable to such benefits as were being provided immediately prior to his separation, until the earlier of May 31, 2019 and the date on which Dr. Agrawal becomes eligible through other employment for disability and/or life insurance; and · Any stock options or other equity incentive awards previously granted to Dr. Agrawal and held by Dr. Agrawal on his separation date will, to the extent not already vested, continue to vest to the extent such options or equity incentive awards, as applicable, would have vested had Dr. Agrawal continued to be an employee through October 19, 2019, and Dr. Agrawal will be entitled to exercise any such options until the earlier of the expiration of such option and October 19, 2022. |
Pursuant to the Severance and Change of Control Agreements, during such period: (i) the executive's position and duties for the company will be commensurate with the most significant of the duties and positions held by the executive during the 90 day period preceding the date of the consummation of the change of control; (ii) the executive's annual base salary will equal at least 12 times the highest monthly base salary paid to the executive during the 12 months prior to the date of the change of control; (iii) the executive will be entitled to an annual bonus equal to at least the greatest of (a) the average bonus paid to the executive in respect of the three years immediately preceding the year in which the change of control occurs, (b) the annual bonus paid for the year immediately preceding the year in which the change of control occurs and (c) 100% of the target bonus for (1) the year immediately preceding the year in which the change of control occurs, (2) the year in which the change of control occurs or (3) any year following the year in which the change of control occurs and prior to the then-current year, whichever is highest; and (iv) the executive will be entitled to certain other benefits as are consistent with the benefits paid to the executive during the year prior to the change of control. |
The Severance and Change of Control Agreements also provide that if an executive is terminated without “cause” or resigns for “good reason” (as such terms are defined in the Severance and Change of Control Agreements) in either case, within 24 months following a change of control, subject to the executive’s timely execution and non-revocation of a general release of claims in a form provided by us and the executive’s continued compliance with the invention, non-disclosure and non-competition agreement previously entered into in connection with the commencement of executive’s employment, executives would receive a lump sum cash payment payable within 30 days after the date of termination equal to: (i) the executive's target bonus for the year of termination prorated for the portion of the year worked; (ii) 150% of the sum of (a) such executive's annual base salary for the year immediately preceding the year of termination and (b) the greatest of (1) the average bonus paid or earned and accrued, but unpaid to the executive in respect of the three years immediately preceding the year of termination, (2) the annual bonus paid for the year immediately preceding the year of termination and (3) the target bonus for the year of termination; and (iii) 150% of the Company’s share of the annual premium for group medical and/or dental insurance coverage that was in place for the executive immediately prior to the date of termination. |
If the executive is terminated without “cause” or resigns for “good reason,” prior to the date of a change of control, such executive will be entitled to the following under the Severance and Change of Control Agreement, subject to the executive’s timely execution and non-revocation of a general release of claims in a form provided by us and the executive’s continued compliance with the invention, non-disclosure and non-competition agreement previously entered into in connection with the commencement of executive’s employment: (i) a lump sum cash payment payable within 30 days after the date of termination in an amount equal to the greater of (x) the average bonus paid or earned and accrued, but unpaid to the executive in respect of the three years immediately preceding the year of termination, and (y) the annual bonus paid for the year immediately preceding the year of termination prorated for the portion of the year worked; (ii) continued payment of the executive's base salary payable in accordance with our standard payroll practices over the one-year period following termination; and (iii) if the executive elects to continue receiving group medical and/or dental insurance under COBRA (to the extent the executive previously participated in such group insurance plans immediately prior to the date of termination), payment by us of our share of the premium for such coverage that we pay for active and similarly-situated employees who receive the same type of coverage for the one-year period following termination. |
(2)Consists of (i) 2,090,125 shares of common stock held by Pillar Pharmaceuticals I, L.P., or Pillar I, (ii) 9,959,956 shares of common stock held by Pillar Pharmaceuticals II, L.P., or Pillar II, (iii) 2,871,839 shares of common stock held by Pillar Pharmaceuticals III, L.P., or Pillar III, (iv) 200,000 shares of common stock held by Pillar Pharmaceuticals IV, L.P., or Pillar IV, (v) 875,000 shares of common stock held by Pillar V, (vi) 8,875,973 shares of common stock held by Participations Besancon, or Besancon, and over which Pillar Invest Corporation has investment discretion, pursuant to an advisory agreement between Pillar Invest Corporation and Besancon, or the Advisory Agreement, (vii) 1,200,000 shares of common stock issuable upon exercise of warrants to purchase common stock held by Besancon and over which Pillar Invest Corporation has investment discretion pursuant to the Advisory Agreement, (viii) 540,681 shares of common stock held directly by Mr. El Zein and (ix) 285,000 shares of common stock subject to outstanding stock options that are exercisable within 60 days after February 15, 2018 held by Mr. El Zein. |
An applicant seeking approval to market and distribute a new drug product in the United States must typically undertake the following: · completion of preclinical laboratory tests, animal studies and formulation studies in compliance with the FDA’s good laboratory practice, or GLP, regulations; · submission to the FDA of an IND, which must take effect before human clinical trials may begin in the United States; · approval by an independent institutional review board, or IRB, representing each clinical site before each clinical trial may be initiated; · performance of adequate and well-controlled human clinical trials in accordance with good clinical practices, or GCP, to establish the safety and efficacy of the proposed drug product for each indication; · preparation and submission to the FDA of a new drug application, or NDA; · review of the product candidate by an FDA advisory committee, where appropriate or if applicable; · satisfactory completion of one or more FDA inspections of the manufacturing facility or facilities at which the product, or components thereof, are produced to assess compliance with cGMP requirements and to assure that the facilities, methods and controls are adequate to preserve the product’s identity, strength, quality and purity; · satisfactory completion of FDA audits of clinical trial sites to assure compliance with GCPs and the integrity of the clinical data; · payment of user fees and securing FDA approval of the NDA; and · compliance with any post-approval requirements, including Risk Evaluation and Mitigation Strategies, or REMS, where applicable, and post-approval studies required by the FDA. |
Such restrictions under applicable federal and state healthcare laws and regulations, include the following: · the federal Anti-Kickback Statute prohibits, among other things, persons 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, in whole or in part, under a federal healthcare program such as Medicare and Medicaid; · the federal False Claims Act imposes civil penalties, and provides for 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, with potential liability including mandatory treble damages and significant per-claim penalties, currently set at $5,500 to $11,000 per false claim; · the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, imposes criminal and civil liability for executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters; · HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act and their respective implementing regulations, including the Final Omnibus Rule published in January 2013, also imposes obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information; · 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; · the federal transparency requirements under the Health Care Reform Law, known as the federal Physician Payments Sunshine Act, require manufacturers of drugs, devices, biologics and medical supplies to report to the Centers for Medicare & Medicaid Services, or CMS, within the Department of Health and Human Services information related to payments and other transfers of value to physicians and teaching hospitals and physician ownership and investment interests held by physicians and their immediate family members; and · analogous state and foreign laws and regulations, such as state anti-kickback and false claims 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. |
Among the provisions of the PPACA of importance to potential drug candidates are: •an annual, nondeductible fee on any entity that manufactures or imports specified branded prescription drugs and biologic agents, apportioned among these entities according to their market share in certain government healthcare programs, although this fee would not apply to sales of certain products approved exclusively for orphan indications; •expansion of eligibility criteria for Medicaid programs by, among other things, allowing states to offer Medicaid coverage to certain individuals with income at or below 133% of the federal poverty level, thereby potentially increasing a manufacturer’s Medicaid rebate liability; •expanded manufacturers’ rebate liability under the Medicaid Drug Rebate Program by increasing the minimum rebate for both branded and generic drugs and revising the definition of “average manufacturer price,” or AMP, for calculating and reporting Medicaid drug rebates on outpatient prescription drug prices and extending rebate liability to prescriptions for individuals enrolled in Medicare Advantage plans; •addressed 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; •expanded the types of entities eligible for the 340B drug discount program; •established the Medicare Part D coverage gap discount program by requiring manufacturers to provide a 50% point-of-sale-discount off the negotiated price of applicable brand drugs to eligible beneficiaries during their coverage gap period as a condition for the manufacturers’ outpatient drugs to be covered under Medicare Part D; •established a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research; •established the Independent Payment Advisory Board, or IPAB, which has authority to recommend certain changes to the Medicare program to reduce expenditures by the program that could result in reduced payments for prescription drugs. |
Our ability to successfully develop and commercialize these drug candidates, or other potential drug candidates, will depend on our ability to overcome these recent challenges and on several factors, including the following: · the drug candidates demonstrating activity in clinical trials; · the drug candidates demonstrating an acceptable safety profile in nonclinical toxicology studies and during clinical trials; · timely enrollment in clinical trials of IMO-8400, IMO-2125 and other drug candidates, which may be slower than anticipated, potentially resulting in significant delays; · satisfying conditions imposed on us and/or our collaborators by the FDA or equivalent foreign regulatory authorities regarding the scope or design of clinical trials; · the ability to demonstrate to the satisfaction of the FDA, or equivalent foreign regulatory authorities, the safety and efficacy of the drug candidates through current and future clinical trials; · timely receipt of necessary marketing approvals from the FDA and equivalent foreign regulatory authorities; · the ability to combine our drug candidates and the drug candidates being developed by our collaborators and any other collaborators safely and successfully with other therapeutic agents; · achieving and maintaining compliance with all regulatory requirements applicable to the products; · establishment of commercial manufacturing arrangements with third-party manufacturers; · the ability to secure orphan drug exclusivity for our drug candidates either alone or in combination with other products; · the successful commercial launch of the drug candidates, assuming FDA approval is obtained, whether alone or in combination with other products; · acceptance of the products as safe and effective by patients, the medical community, and third-party payors; · competition from other companies and their therapies; · changes in treatment regimens; · favorable market conditions in which to raise additional capital; · the strength of our intellectual property portfolio in the United States and abroad; and · a continued acceptable safety and efficacy profile of the drug candidates following marketing approval. |
Other events that could delay or inhibit conduct of our clinical trials include: · regulators or IRBs may not authorize us to commence a clinical trial or conduct a clinical trial at a prospective trial site; · nonclinical or clinical data may not be readily interpreted, which may lead to delays and/or misinterpretation; · our nonclinical tests, including toxicology studies, or clinical trials may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional nonclinical testing or clinical trials or we may abandon projects that we expect may not be promising; · the rate of enrollment or retention of patients in our clinical trials may be lower than we expect; · we might have to suspend or terminate our clinical trials if the participating subjects experience serious adverse events or undesirable side effects or are exposed to unacceptable health risks; · regulators or IRBs may hold, suspend or terminate clinical research for various reasons, including noncompliance with regulatory requirements, issues identified through inspections of manufacturing or clinical trial operations or clinical trial sites, or if, in their opinion, the participating subjects are being exposed to unacceptable health risks; · regulators may hold or suspend our clinical trials while collecting supplemental information on, or clarification of, our clinical trials or other clinical trials, including trials conducted in other countries or trials conducted by other companies; · we, along with our collaborators and subcontractors, may not employ, in any capacity, persons who have been debarred under the FDA's Application Integrity Policy, or similar policy under foreign regulatory authorities. |
In addition, later discovery of previously unknown adverse events or other problems with our drugs or their manufacturers or manufacturing processes, or failure to comply with regulatory requirements, may yield various results, including: •litigation involving patients taking our drug; • restrictions on such drugs, manufacturers or manufacturing processes; • restrictions on the labeling or marketing of a drug; •restrictions on drug distribution or use; • requirements to conduct post-marketing studies or clinical trials; • warning letters or untitled letters; •withdrawal of the drugs from the market; • refusal to approve pending applications or supplements to approved applications that we submit; • recall of drugs; •fines, restitution or disgorgement of profits or revenues; • suspension or withdrawal of marketing approvals; •damage to relationships with any potential collaborators; • unfavorable press coverage and damage to our reputation; •refusal to permit the import or export of drugs; • drug seizure; or •injunctions or the imposition of civil or criminal penalties. |
These include the following: • Anti-Kickback Statute-the federal healthcare anti-kickback statute prohibits, among other things, persons from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward, or in return for, either the referral of an individual for, or the purchase, order or recommendation or arranging of, any good or service, for which payment may be made under a federal healthcare program such as Medicare and Medicaid; •False Claims Act-the federal False Claims Act imposes criminal and civil penalties, including through civil whistleblower or qui tam actions, against individuals or entities for, among other things, knowingly presenting, or causing to be presented false or fraudulent claims for payment by a federal healthcare program or making a false statement or record material to payment of a false claim or avoiding, decreasing or concealing an obligation to pay money to the federal government, with potential liability including mandatory treble damages and significant per-claim penalties, currently set at $5,500 to $11,000 per false claim; •HIPAA-the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, imposes criminal and civil liability for executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters, and, as amended by the Health Information Technology for Economic and Clinical Health Act and its implementing regulations, also imposes obligations, including mandatory contractual terms and technical safeguards, with respect to maintaining the privacy, security and transmission of individually identifiable health information; • Transparency Requirements-federal laws require applicable manufacturers of covered drugs to report payments and other transfers of value to physicians and teaching hospitals; and •Analogous State and Foreign Laws-analogous state and foreign fraud and abuse laws and regulations, such as state anti-kickback and false claims laws, can apply to sales or marketing arrangements and claims involving healthcare items or services and are generally broad and are enforced by many different federal and state agencies as well as through private actions. |
Among the provisions of the PPACA of potential importance to our business and our drug candidates are the following: · an annual, non-deductible fee on any entity that manufactures or imports specified branded prescription products and biologic agents; · an increase in the statutory minimum rebates a manufacturer must pay under the Medicaid Drug Rebate Program; · a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for products that are inhaled, infused, instilled, implanted or injected; · expansion of healthcare fraud and abuse laws, including the civil False Claims Act and the federal Anti-Kickback Statute, new government investigative powers and enhanced penalties for noncompliance; · a new Medicare Part D coverage gap discount program, in which manufacturers must agree to offer 50% point-of-sale discounts off negotiated prices of applicable brand products to eligible beneficiaries during their coverage gap period, as a condition for the manufacturer's outpatient products to be covered under Medicare Part D; · extension of manufacturers' Medicaid rebate liability to individuals enrolled in Medicaid managed care organizations; · expansion of eligibility criteria for Medicaid programs; · expansion of the entities eligible for discounts under the Public Health Service pharmaceutical pricing program; · new requirements to report certain financial arrangements with physicians and teaching hospitals; · a new requirement to annually report product samples that manufacturers and distributors provide to physicians; · a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research; · a new Independent Payment Advisory Board, which has authority to recommend certain changes to the Medicare program to reduce expenditures by the program that could result in reduced payments for prescription products; and · established the Center for Medicare and Medicaid Innovation within the Centers for Medicare & Medicaid Services to test innovative payment and service delivery models. |
Our existing collaborations and any potential future collaborations have risks, including the following: · our collaborators may control the development of the drug candidates being developed with our technologies and compounds including the timing of development; · our collaborators may control the development of the companion diagnostic to be developed for use in conjunction with our drug candidates including the timing of development; · our collaborators may control the public release of information regarding the developments, and we may not be able to make announcements or data presentations on a schedule favorable to us; · disputes may arise in the future with respect to the ownership of or right to use technology and intellectual property developed with our collaborators; · disagreements with our collaborators could delay or terminate the research, development or commercialization of products, or result in litigation or arbitration; · we may have difficulty enforcing the contracts if any of our collaborators fail to perform; · our collaborators may terminate their collaborations with us, which could make it difficult for us to attract new collaborators or adversely affect the perception of us in the business or financial communities; · our collaboration agreements are likely to be for fixed terms and subject to termination by our collaborators in the event of a material breach or lack of scientific progress by us; · our collaborators may have the first right to maintain or defend our intellectual property rights and, although we would likely have the right to assume the maintenance and defense of our intellectual property rights if our collaborators do not, our ability to do so may be compromised by our collaborators' acts or omissions; · our collaborators may challenge our intellectual property rights or utilize our intellectual property rights in such a way as to invite litigation that could jeopardize or invalidate our intellectual property rights or expose us to potential liability; · our collaborators may not comply with all applicable regulatory requirements, or may fail to report safety data in accordance with all applicable regulatory requirements; · our collaborators may change the focus of their development and commercialization efforts. |
The market price for our common stock may be influenced by many factors, including: · our cash resources; · timing and results of nonclinical studies and clinical trials of our drug candidates or those of our competitors; · the regulatory status of our drug candidates; · failure of any of our drug candidates, if approved, to achieve commercial success; · the success of competitive products or technologies; · regulatory developments in the United States and foreign countries; · our success in entering into collaborative agreements; · developments or disputes concerning patents or other proprietary rights; · the departure of key personnel; · our ability to maintain the listing of our common stock on The Nasdaq Capital Market or an alternative national securities exchange; · variations in our financial results or those of companies that are perceived to be similar to us; · the terms of any financing consummated by us; · changes in the structure of healthcare payment systems; · market conditions in the pharmaceutical and biotechnology sectors and issuance of new or changed securities analysts' reports or recommendations; and · general economic, industry, and market conditions. |
Internal control over financial reporting is defined in Rule 13a-15(f) and 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, the Company’s principal executive and principal financial officers and effected by the Company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that: · Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company; · Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and · Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements. |
Under the April 22, 2013 Pillar Agreement, the Company agreed to seek approval and each of Pillar I and Pillar II agreed to vote in favor, of the following proposals at the Company’s 2013 annual meeting of stockholders held on July 26, 2013 (“Annual Meeting”): · amendments to the Series D Certificate of Designations for the Series D preferred stock to: · modify the dividend provisions of the Series D Certificate of Designations to change the date after which the Company may elect to pay dividends in shares of its common stock from December 31, 2014 to October 1, 2013, and to allow for the payment of such dividends in shares of a to-be-created new series of non-voting preferred stock in the event that payment of such dividends may not be made in shares of its common stock as a result of the application of the beneficial ownership and voting power limitations set forth the Series D Certificate of Designations; and · modify the Series D Certificate of Designations to provide, in the event of a sale of the Company, for the distribution of any assets that remain available for distribution to its stockholders, after payment to the holders of its Series A convertible preferred stock and any other class of its capital stock that ranks senior to its Series D preferred stock, to the holders of the Company’s Series D preferred stock on a pro rata basis with the holders of its common stock, Series E preferred stock and such new series of non-voting preferred stock; and · amendments to the Series E Certificate of Designations to: · modify the dividend provisions of the Series E Certificate of Designations to allow for the payment of dividends in shares of its common stock commencing October 1, 2013; and · allow for the payment of dividends in shares of a to-be-created new series of non-voting preferred stock in the event that payment of such dividends may not be made in shares of its common stock as a result of the application of the beneficial ownership and voting power limitations set forth in the Series E Certificate of Designations. |
Under the second agreement with the Pillar Entities (the “April 30, 2013 Pillar Agreement”), Pillar I irrevocably waived the right of the holders of the Series D preferred stock under Section 2.1 of the Series D Certificate of Designations to receive, in the event of a voluntary or involuntary liquidation, dissolution or winding up of the Company (a “Liquidation”), an amount per share of Series D preferred stock equal to the original issue price of such share of Series D preferred stock plus any dividends accrued or declared but unpaid thereon to the extent such amount is greater than the amount that would have been payable with respect to such share had all shares of Series D preferred stock been converted into shares of the Company’s common stock immediately prior to such Liquidation, and that upon a Liquidation the holders of the Series D preferred stock will receive an amount per share of Series D preferred stock equal to the amount that would be payable with respect to such share had all shares of Series D preferred stock been converted into shares of common stock immediately prior to such Liquidation. |
In addition, under the April 30, 2013 Pillar Agreement, Pillar II and the entity affiliated with Pillar I and Pillar II, as the holders of 100% of the Company’s Series E preferred stock, irrevocably waived the right of the holders of the Series E preferred stock under Section 2.1.1 of the Series E Certificate of Designations to receive, in the event of a Liquidation, an amount per share of Series E preferred stock equal to the original issue price of such share of Series E preferred stock plus any dividends accrued or declared but unpaid thereon to the extent such amount is greater than the amount that would have been payable with respect to such share had all shares of Series E preferred stock been converted into shares of common stock immediately prior to such Liquidation, and that upon a Liquidation the holders of the Series E preferred stock will receive under Section 2.1 of the Series E Certificate of Designations an amount per share of Series E preferred stock equal to the amount that would be payable with respect to such share had all shares of Series E preferred stock been converted into shares of common stock immediately prior to such Liquidation. |
An applicant seeking approval to market and distribute a new drug product in the United States must typically undertake the following: • completion of preclinical laboratory tests, animal studies and formulation studies in compliance with the FDA’s good laboratory practice, or GLP, regulations; • submission to the FDA of an IND, which must take effect before human clinical trials may begin in the United States; • approval by an independent institutional review board, or IRB, representing each clinical site before each clinical trial may be initiated; • performance of adequate and well-controlled human clinical trials in accordance with good clinical practices, or GCP, to establish the safety and efficacy of the proposed drug product for each indication; • preparation and submission to the FDA of a new drug application, or NDA; • review of the product candidate by an FDA advisory committee, where appropriate or if applicable; • satisfactory completion of one or more FDA inspections of the manufacturing facility or facilities at which the product, or components thereof, are produced to assess compliance with current Good Manufacturing Practices, or cGMP, requirements and to assure that the facilities, methods and controls are adequate to preserve the product’s identity, strength, quality and purity; • satisfactory completion of FDA audits of clinical trial sites to assure compliance with GCPs and the integrity of the clinical data; • payment of user fees and securing FDA approval of the NDA; and • compliance with any post-approval requirements, including Risk Evaluation and Mitigation Strategies, or REMS, where applicable, and post-approval studies required by the FDA. |
Such restrictions under applicable federal and state healthcare laws and regulations, include the following: • the federal Anti-Kickback Statute prohibits, among other things, persons 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, in whole or in part, under a federal healthcare program such as Medicare and Medicaid; • the federal False Claims Act imposes civil penalties, and provides for 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; • the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, imposes criminal and civil liability for executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters; • HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act and their respective implementing regulations, including the Final Omnibus Rule published in January 2013, also imposes obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information; • 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; • the federal transparency requirements under the Health Care Reform Law, known as the federal Physician Payments Sunshine Act, require manufacturers of drugs, devices, biologics and medical supplies to report to the Centers for Medicare & Medicaid Services, or CMS, within the Department of Health and Human Services information related to payments and other transfers of value to physicians and teaching hospitals and physician ownership and investment interests held by physicians and their immediate family members; and • analogous state and foreign laws and regulations, such as state anti-kickback and false claims 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. |
Our ability to successfully develop and commercialize these drug candidates, or other potential candidates, will depend on our ability to overcome these recent challenges and on several factors, including the following: • the drug candidates demonstrating activity in clinical trials; • the drug candidates demonstrating an acceptable safety profile in nonclinical toxicology studies and during clinical trials; • timely enrollment in clinical trials of IMO-8400 and other drug candidates, which may be slower than anticipated, potentially resulting in significant delays; • satisfying conditions imposed on us and/or our collaborators by the FDA or equivalent foreign regulatory authorities regarding the scope or design of clinical trials; • the ability to demonstrate to the satisfaction of the FDA, or equivalent foreign regulatory authorities, the safety and efficacy of the drug candidates through current and future clinical trials; • timely receipt of necessary marketing approvals from the FDA and equivalent foreign regulatory authorities; • the ability to combine our drug candidates and the drug candidates being developed by Merck & Co. and any other collaborators safely and successfully with other therapeutic agents; • achieving and maintaining compliance with all regulatory requirements applicable to the products; • establishment of commercial manufacturing arrangements with third-party manufacturers; • the successful commercial launch of the drug candidates, assuming FDA approval is obtained, whether alone or in combination with other products; • acceptance of the products as safe and effective by patients, the medical community, and third-party payors; • competition from other companies and their therapies; • changes in treatment regimens; • favorable market conditions in which to raise additional capital; • the strength of our intellectual property portfolio in the United States and abroad; and • a continued acceptable safety and efficacy profile of the drug candidates following marketing approval. |
Other events that could delay or inhibit conduct of our clinical trials include: • regulators or IRBs may not authorize us to commence a clinical trial or conduct a clinical trial at a prospective trial site; • nonclinical or clinical data may not be readily interpreted, which may lead to delays and/or misinterpretation; • our nonclinical tests, including toxicology studies, or clinical trials may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional nonclinical testing or clinical trials or we may abandon projects that we expect may not be promising; • the rate of enrollment or retention of patients in our clinical trials may be lower than we expect; • we might have to suspend or terminate our clinical trials if the participating subjects experience serious adverse events or undesirable side effects or are exposed to unacceptable health risks; • regulators or IRBs may hold, suspend or terminate clinical research for various reasons, including noncompliance with regulatory requirements, issues identified through inspections of manufacturing or clinical trial operations or clinical trial sites, or if, in their opinion, the participating subjects are being exposed to unacceptable health risks; • regulators may hold or suspend our clinical trials while collecting supplemental information on, or clarification of, our clinical trials or other clinical trials, including trials conducted in other countries or trials conducted by other companies; • we, along with our collaborators and subcontractors, may not employ, in any capacity, persons who have been debarred under the FDA’s Application Integrity Policy, or similar policy under foreign regulatory authorities. |
Subsets and Splits
No community queries yet
The top public SQL queries from the community will appear here once available.