10q10k10q10k.net

What changed in Applied Therapeutics, Inc.'s 10-K — 2023 vs 2024

vs

Paragraph-level year-over-year comparison of Applied Therapeutics, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+737 added−600 removedSource: 10-K (2025-04-15) vs 10-K (2024-03-06)

Top changes in Applied Therapeutics, Inc.'s 2024 10-K

737 paragraphs added · 600 removed · 463 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

200 edited+82 added−61 removed212 unchanged
Biggest changeAccordingly, we are committed to their health, safety and wellness. ​ Information About Our Executive Officers The following table sets forth information regarding our executive officers: ​ ​ ​ ​ ​ Name Age Position(s) Executive Officers ​ ​ ​ ​ Shoshana Shendelman, Ph.D. ​ 45 ​ President, Chief Executive Officer and Chair of the Board of Directors ​ ​ ​ ​ ​ Riccardo Perfetti, M.D., Ph.D ​ 63 ​ Chief Medical Officer ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Les Funtleyder ​ 54 Chief Financial Officer ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Catherine Thorpe ​ 61 Chief Accounting Officer ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Adam Hansard ​ 48 Chief Commercial Officer ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Constantine Chinoporos ​ 58 Chief Operating Officer and Chief Business Officer ​ ​ ​ ​ ​ ​ Shoshana Shendelman, Ph.D. , age 45, is our founder and has served as our President and Chief Executive Officer and as chair of our board of directors since January 2016.
Biggest changeJohnson 67 Executive Chairman and Chair of the Board of Directors Les Funtleyder 55 Interim Chief Executive Officer and Chief Financial Officer Catherine Thorpe 62 Interim Chief Accounting Officer Constantine Chinoporos 58 Chief Operating Officer and Chief Business Officer Dale Hooks 58 Chief Commercial Officer Riccardo Perfetti, M.D., Ph.D 65 Chief Medical Officer John Johnson , age 67, has served as our Executive Chairman and Chair of our Board of Directors since December 2024.
We received aggregate net proceeds, net of underwriting discounts and commissions and offering costs of $74.4 million. In June 2022, we completed an underwritten public offering of 20,000,000 shares of our common stock, 10,000,000 pre-funded warrants to purchase shares of common stock (the “Pre-Funded Warrants”), and 30,000,000 accompanying warrants to purchase shares of our common stock (“Common Warrants”).
We received aggregate net proceeds, net of underwriting discounts and commissions and offering costs of $74.4 million. In June 2022, we completed an underwritten public offering of 20,000,000 shares of our common stock, 10,000,000 pre-funded warrants to purchase shares of common stock (the “Pre-Funded Warrants”), and 30,000,000 accompanying warrants to purchase shares of our common stock (the “Common Warrants”).
The placebo-treated group declined by a mean of -0.31 ml/kg/min over 15 months of treatment, while the AT-001 1500mg twice daily treated group remained primarily stable, with a mean change of -0.01 ml/kg/min over 15 months. While a trend favored active treatment, the difference between active and placebo treated groups (0.30 ml/kg/min) was not statistically significant (p=0.210).
The placebo-treated group declined by a mean of -0.31 ml/kg/min over 15 months of treatment, while the AT-001 1500mg twice daily treated group remained primarily stable, with a mean change of -0.01 ml/kg/min over 15 months. While a trend favored active treatment, the difference between active and placebo treated groups (0.30 ml/kg/min) was not statistically significant (p=0.210).
Approximately 38% of study subjects were on SGLT2 or GLP-1 therapies for treatment of diabetes, while 62% were not.
Approximately 38% of study subjects were on SGLT2 or GLP-1 therapies for treatment of diabetes, while 62% were not.
In a pre-specified subgroup analysis of the primary endpoint in patients not concomitantly treated with SGLT2 or GLP-1 therapies, the placebo group declined by a mean of -0.54 ml/kg/min, while the 1500mg BID AT-001 treated group improved by a mean of 0.08 ml/kg/min over 15 months of treatment, with a difference between groups of 0.62 ml/kg/min (p=0.040).
In a pre-specified subgroup analysis of the primary endpoint in patients not concomitantly treated with SGLT2 or GLP-1 therapies, the placebo group declined by a mean of -0.54 ml/kg/min, while the 1500mg BID AT-001 treated group improved by a mean of 0.08 ml/kg/min over 15 months of treatment, with a difference between groups of 0.62 ml/kg/min (p=0.040).
Additionally, in this subgroup analysis, the number of patients who experienced a clinically significant worsening in cardiac functional capacity of 6% or more was substantially higher in the placebo group (46%) as compared to the 1500mg BID AT-001 treated group (32.7%), odds ratio 0.56 (p=0.035).
Additionally, in this subgroup analysis, the number of patients who experienced a clinically significant worsening in cardiac functional capacity of 6% or more was substantially higher in the placebo group (46%) as compared to the 1500mg BID AT-001 treated group (32.7%), odds ratio 0.56 (p=0.035).
A 6% change in cardiac functional capacity has been shown to predict long-term survival and hospitalization for heart failure. The effect of AT-001 was dose dependent, with the low dose (1000mg BID) demonstrating an intermediate effect between the high dose and placebo.
A 6% change in cardiac functional capacity has been shown to predict long-term survival and hospitalization for heart failure. The effect of AT-001 was dose dependent, with the low dose (1000mg BID) demonstrating an intermediate effect between the high dose and placebo.
Columbia University retains the right to conduct, and grant third parties the right to conduct, non-clinical academic research using the licensed technology; provided that such research is not funded by a commercial entity or for-profit entity or results in rights granted to a commercial or for-profit entity.
Columbia University retains the right to conduct, and grant third parties the right to conduct, non-clinical academic research using the licensed technology; provided that such research is not funded by a commercial entity or for-profit entity or results in rights granted to a commercial or for-profit entity.
We will also be required to pay tiered royalties to Columbia University in the low- to mid-single digit percentages on our, our affiliates’ and our sublicensees’ net sales of licensed products, subject to specified offsets and reductions.
We will also be required to pay tiered royalties to Columbia University in the low- to mid-single digit percentages on our, our affiliates’ and our sublicensees’ net sales of licensed products, subject to specified offsets and reductions.
(UCL)). UM was granted an exclusive agency from UR and UCL to license each of their rights in the technology.
UM was granted an exclusive agency from UR and UCL to license each of their rights in the technology.
Pursuant to the Agreement, we granted Advanz Pharma the exclusive right and license to commercialize drug products containing AT-007 (also known as govorestat), our proprietary Aldose Reductase Inhibitor (ARI) (the “Licensed Product”), for use in treatment of Sorbitol Dehydrogenase Deficiency (“SORD”) and Galactosemia (each a “Licensed Indication”) in the European Economic Area, Switzerland and the United Kingdom (the “Territory”).
Pursuant to the Advanz Agreement, we granted Advanz Pharma the exclusive right and license to commercialize drug products containing AT-007 (also known as govorestat), our proprietary Aldose Reductase Inhibitor (ARI) (“Licensed Product”), for use in treatment of Sorbitol Dehydrogenase Deficiency (“SORD”) and Galactosemia (each a “Licensed Indication”) in the European Economic Area, Switzerland and the United Kingdom (“Territory”).
Other potential consequences include, among other things: ● restrictions on the marketing or manufacturing of the product, complete withdrawal of the product from the market or product recalls; ● fines, warning letters or holds on post-approval clinical trials; ● refusal of the FDA to approve pending NDAs or supplements to approved NDAs, or suspension or revocation of product approvals; ● product seizure or detention, or refusal to permit the import or export of products; or ● injunctions or the imposition of civil or criminal penalties.
Other potential consequences include, among other things: • restrictions on the marketing or manufacturing of the product, complete withdrawal of the product from the market or product recalls; • fines, warning letters or clinical holds on post‑approval clinical trials; • refusal of the FDA to approve pending NDAs or supplements to approved NDAs, or suspension or revocation of product approvals; • product seizure or detention, or refusal to permit the import or export of products; or • injunctions or the imposition of civil or criminal penalties.
Treatment with AT-001 (twice daily or three times daily) resulted in sustained reduction in sorbitol, and significant reduction in NTproBNP, demonstrating that inhibition of AR decreases cardiac stress. This data supported dose selection and advancement into a Phase 2/3 registrational trial for DbCM. In September 2019, we initiated a Phase 3 registrational trial for AT-001 in DbCM called ARISE-HF.
Treatment with AT-001 (twice daily or three times daily) resulted in sustained reduction in sorbitol, and significant reduction in NTproBNP, demonstrating that inhibition of AR decreases cardiac stress. This data supported dose selection and advancement into a Phase 2/3 trial for DbCM. In September 2019, we initiated a Phase 2/3 trial for AT-001 in DbCM called ARISE-HF.
In addition, we have pending patent applications in the United States, Europe, Japan, China, Canada, Australia, Russia, Brazil, Israel, Mexico, New Zealand, Singapore, South Africa, and Hong Kong. The 20-year term of patents in this family runs through June 2037, absent any available patent term adjustments or extensions. AT-001 and AT-003.
In addition, we have pending patent applications in the United States, Europe, Japan, Canada, Australia, Russia, Brazil, Israel, Mexico, New Zealand, Singapore, South Africa, and Hong Kong. The 20-year term of patents in this family runs through June 2037, absent any available patent term adjustments or extensions. AT-001 and AT-003.
To qualify, the FDA must determine that the drug product has an effect on a surrogate endpoint that is reasonably likely to predict clinical benefit, or on a clinical endpoint that can be measured earlier than irreversible morbidity or mortality, that is reasonably likely to predict an effect on irreversible morbidity or mortality or other clinical benefit, taking into account the severity, rarity or prevalence of the condition and the availability or lack of alternative treatments.
Specifically, to qualify, the FDA must determine that the drug product has an effect on a surrogate endpoint that is reasonably likely to predict clinical benefit, or on a clinical endpoint that can be measured earlier than irreversible morbidity or mortality, that is reasonably likely to predict an effect on irreversible morbidity or mortality or other clinical benefit, taking into account the severity, rarity or prevalence of the condition and the availability or lack of alternative treatments.
ARISE-HF was a global registrational study in approximately 675 patients with DbCM at high risk of progression to overt heart failure. The study evaluated the treatment effect of AT-001 high dose (1500 mg twice daily) and low dose (1,000mg twice daily) compared to placebo on cardiac functional capacity over 15 months of treatment.
ARISE-HF was a global study in approximately 675 patients with DbCM at high risk of progression to overt heart failure. The study evaluated the treatment effect of AT-001 high dose (1500 mg twice daily) and low dose (1,000mg twice daily) compared to placebo on cardiac functional capacity over 15 months of treatment.
If our operations are found to be in violation of any of the federal and state laws described above or any other governmental regulations that apply to us, we may be subject to significant criminal, civil and administrative penalties 33 Table of Contents including damages, fines, individual imprisonment, additional reporting requirements and oversight if we become subject to a corporate integrity agreement or similar agreement to resolve allegations of non-compliance with these laws, contractual damages, reputational harm, diminished profits and future earnings, disgorgement, exclusion from participation in government healthcare programs and the curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and our results of operations.
If our operations are found to be in violation of any of the federal and state laws described above or any other governmental regulations that apply to us, we may be subject to significant criminal, civil and administrative penalties including damages, fines, individual imprisonment, additional reporting requirements and oversight if we become subject to a corporate integrity agreement or similar agreement to resolve allegations of non‑compliance with these laws, contractual damages, reputational harm, diminished profits and future earnings, disgorgement, exclusion from 32 Table of Contents participation in government healthcare programs and the curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and our results of operations.
In May 2019, we completed our initial public offering (the “IPO”) whereby we sold 4,000,000 shares of common stock at a public offering price of $10.00 per share, resulting in aggregate net proceeds of $34.6 million, after deducting underwriting discounts and commissions and offering expenses.
In May 2019, we completed our initial public offering (“IPO”) whereby we sold 4,000,000 shares of common stock at a public offering price of $10.00 per share, resulting in aggregate net proceeds of $34.6 million, after deducting underwriting discounts and commissions and offering expenses.
AR is our first molecular target that has been implicated in multiple diseases and for which sorbitol levels can be assessed as a biomarker of enzyme activity. Prior AR-targeting compounds produced nonselective inhibitors and failed to demonstrate adequate safety and efficacy.
AR is our first molecular target that has been implicated in multiple diseases and for which sorbitol levels can be assessed as a potential biomarker of enzyme activity. Prior AR-targeting compounds produced nonselective inhibitors and failed to demonstrate adequate safety and efficacy.
In these patients, despite dietary restriction, Galactosemia manifests as a combination of CNS and systemic toxicities in tissues, including cognitive dysfunction and intellectual deficiencies, speech and motor pathologies, pre-senile cataracts and tremor, as well as ovarian insufficiency in females. There are no treatments available for Galactosemia.
In these patients, despite dietary restriction, Galactosemia manifests as a combination of CNS and systemic toxicities in tissues, including cognitive dysfunction and intellectual deficiencies, speech and motor pathologies, pre-senile cataracts and tremor, as well as ovarian insufficiency in females. There are no approved treatments available for Galactosemia.
Unless otherwise required by regulation, the pediatric data requirements do not apply to products with orphan designation. The FDA also may require submission of a risk evaluation and mitigation strategy, or REMS, plan to ensure that the benefits of the drug outweigh its risks.
Unless otherwise required by regulation, the pediatric data requirements generally do not apply to products with orphan designation. The FDA also may require submission of a risk evaluation and mitigation strategy, or REMS, plan to ensure that the benefits of the drug outweigh its risks.
We completed a Phase 1/2 clinical trial evaluating AT-001 in approximately 120 patients with type 2 diabetes, in which no drug- related adverse effects or tolerability issues were observed. In September 2019, we announced the initiation of a Phase 3 registrational trial of AT-001 in DbCM.
We completed a Phase 1/2 clinical trial evaluating AT-001 in approximately 120 patients with type 2 diabetes, in which no drug-related adverse effects or tolerability issues were observed. In September 2019, we announced the initiation of a Phase 2/3 trial of AT-001 in DbCM.
As a condition of approval, the FDA may require a sponsor of a drug receiving accelerated approval to perform post-marketing studies to verify and describe the predicted effect on irreversible morbidity or mortality or other clinical endpoint, and the drug may be subject to accelerated withdrawal procedures.
As a condition of approval, the FDA may require a sponsor of a drug receiving accelerated approval to perform a post-marketing study or studies to verify and describe the predicted effect on irreversible morbidity or mortality or other clinical endpoint, and the drug may be subject to accelerated withdrawal procedures.
Later discovery of previously unknown problems with a product, including adverse events of unanticipated severity or frequency, problems with manufacturing processes, or failure to comply with regulatory requirements, may result in mandatory revisions to the approved labeling to add new safety information; imposition of post-market studies 31 Table of Contents or clinical trials to assess new safety risks; or imposition of distribution or other restrictions under a REMS program.
Later discovery of previously unknown problems with a product, including adverse events of unanticipated severity or frequency, problems with manufacturing processes, or failure to comply with regulatory requirements, may result in mandatory revisions to the approved labeling to add new safety information; imposition of post‑market studies 30 Table of Contents or clinical trials to assess new safety risks; or imposition of distribution or other restrictions under a REMS program.
Treatment with AT-007 in the drosophila model of SORD prevented the disease phenotype and protected from neuronal degeneration. On October 25, 2021, we reported data from a pilot open-label study in 8 SORD Deficiency patients. AT-007 reduced blood sorbitol levels by approximately 66% from baseline through 30 days of treatment. AT-007 was safe and well tolerated in all treated patients.
Treatment with AT-007 in the drosophila model of SORD prevented the disease phenotype and protected from neuronal degeneration. On October 25, 2021, we reported data from a pilot open-label study in 8 SORD Deficiency patients. AT-007 reduced blood sorbitol levels by approximately 66% from baseline through 30 days of treatment. AT-007 was generally safe and well tolerated in treated patients.
Unless the context otherwise requires, the terms, “Applied Therapeutics,” the “Company,” “we,” “us,” “our” and the “ registrant” refer to Applied Therapeutics, Inc. ​ Investors and others should note that we announce material financial information to our investors using our investor relations website (http://ir.appliedtherapeutics.com), SEC filings, press releases, public conference calls and webcasts. ​ 39 Table of Contents
Unless the context otherwise requires, the terms, “Applied Therapeutics,” the “Company,” “we,” “us,” “our” and the “ registrant” refer to Applied Therapeutics, Inc. Investors and others should note that we announce material financial information to our investors using our investor relations website (http://ir.appliedtherapeutics.com), SEC filings, press releases, public conference calls and webcasts. 38 Table of Contents
In the United States, the pharmaceutical industry has been a particular focus of these efforts, which include major legislative initiatives to reduce the cost of care through changes in the healthcare system, including limits on the pricing, coverage, and reimbursement of pharmaceutical and biopharmaceutical products, especially under government-funded healthcare programs, and increased governmental control of drug pricing.
In the United States, the pharmaceutical industry has been a particular focus of these efforts, which include major legislative and executive branch initiatives to reduce the cost of care through changes in the healthcare system, including limits on the pricing, coverage, and reimbursement of pharmaceutical and biopharmaceutical products, especially under government‑funded healthcare programs, and increased governmental control of drug pricing.
When we grant sublicenses under the 2016 Columbia Agreement we are required to pay to Columbia University a portion of the net sublicensing revenue received from such third parties, at percentages between 10% and 20%, depending on the stage of development at the 19 Table of Contents time such revenue is received from such third parties.
When we grant sublicenses under the 2016 Columbia Agreement we are required to pay to Columbia University a portion of the net sublicensing revenue received from such third parties, at percentages between 10% and 20%, depending on the stage of development at the 18 Table of Contents time such revenue is received from such third parties.
The 2016 Columbia Agreement may not be assigned by us without Columbia University’s consent, except to any successor to all or substantially all of our business to which the 2016 Columbia Agreement relates and upon notice to Columbia University. ​ In January 2019, we entered into a second license agreement with Columbia University (the “2019 Columbia Agreement”).
The 2016 Columbia Agreement may not be assigned by us without Columbia University’s consent, except to any successor to all or substantially all of our business to which the 2016 Columbia Agreement relates and upon notice to Columbia University. In January 2019, we entered into a second license agreement with Columbia University (the "2019 Columbia Agreement").
Although these programs failed to produce effective drugs with a favorable risk/benefit profile, the prior ARI clinical development programs validated the role of AR in the pathogenesis of several diabetic complications and provided useful information on optimal patient criteria and trial design.
Although these programs failed to produce effective drugs with a favorable risk/benefit profile, the prior ARI clinical development programs supported the role of AR in the pathogenesis of several diabetic complications and provided useful information on optimal patient criteria and trial design.
Pfizer Inc. was developing an ARI, Alond (zopolrestat), for the treatment of DPN and DbCM in a Phase 2 clinical trial that demonstrated favorable outcomes on heart function in DbCM patients, but the clinical trial was discontinued due to an unfavorable risk/benefit profile, with several patients experiencing liver toxicity and significant elevations in both aspartate aminotransferase and alanine aminotransferase, which are enzymes central to identification of liver toxicity and damage.
Pfizer Inc. was developing an ARI, Alond (zopolrestat), for the treatment of DPN and DbCM in a Phase 2 clinical trial that demonstrated favorable outcomes on heart function in DbCM patients, but the clinical trial was discontinued due to an unfavorable risk/benefit profile, with several patients experiencing liver toxicity and significant elevations in both aspartate aminotransferase and alanine aminotransferase, which are enzymes central to identification of liver toxicity and 15 Table of Contents damage.
AR knock-out rats are protected from DR development, and several prior ARIs demonstrated efficacy on DR endpoints in clinical trials, but were not approved due to dose-limiting safety concerns. 18 Table of Contents Market Opportunity A recent retrospective epidemiological analysis of diabetic patients globally confirmed that DR affects approximately 35% of diabetics, and is a leading cause of blindness worldwide.
AR knock-out rats are protected from DR development, and several prior ARIs demonstrated efficacy on DR endpoints in clinical trials, but were not approved due to dose-limiting safety concerns. Market Opportunity A recent retrospective epidemiological analysis of diabetic patients globally confirmed that DR affects approximately 35% of diabetics, and is a leading cause of blindness worldwide.
When we sublicense the rights granted under the 2020 Miami License Agreement to one or more third parties, we are required to pay to UM a portion of the non-royalty sublicensing revenue received from such third parties ranging from 15% – 25%.
When we sublicense the rights granted under the 2020 Miami License Agreement to one or more third parties, we are required to pay to UM a portion of the non-royalty sublicensing revenue received from such third parties ranging from 15% – 25%. The Advanz Agreement includes a sublicense under the 2020 Miami License Agreement.
For more information, see the section titled “Risk Factors — Risks Related to Our Intellectual Property.” Trademarks and Know-How In connection with the ongoing development and advancement of our products and services in the United States and various international jurisdictions, we seek to create protection for our marks and enhance their value by pursuing trademarks and service marks where available and when appropriate.
For more information, see the section titled “Risk Factors — Risks Related to Our Intellectual Property.” 24 Table of Contents Trademarks and Know‑How In connection with the ongoing development and advancement of our products and services in the United States and various international jurisdictions, we seek to create protection for our marks and enhance their value by pursuing trademarks and service marks where available and when appropriate.
Our unique approach to drug development leverages recent technological advances to design improved drugs, employs early use of biomarkers to confirm biological activity and focuses on abbreviated regulatory pathways. Our first molecular target is aldose reductase, or AR, an enzyme that converts glucose to sorbitol under oxidative stress conditions, and is implicated in multiple diseases.
Our unique approach to drug development leverages recent technological advances to design improved drugs, employs early use of biomarkers to confirm biological activity and focuses on potentially accelerated regulatory pathways. Our first molecular target is aldose reductase, or AR, an enzyme that converts glucose to sorbitol under oxidative stress conditions, and is implicated in multiple diseases.
In addition, IND safety reports must be submitted to the FDA for any of the following: serious and unexpected suspected adverse reactions, findings from other studies or animal or in vitro testing that suggest a significant risk in humans exposed to the product, and any clinically important increase in the case of a serious suspected adverse reaction over that listed in the protocol or investigator brochure.
In addition, IND safety reports must be submitted to the FDA for any of the following: serious and unexpected suspected adverse reactions, findings from other studies or animal or in vitro testing that suggest a significant risk in humans exposed to the product, and any clinically important increase in the case of a serious suspected 26 Table of Contents adverse reaction over that listed in the protocol or investigator brochure.
However, when the oxidative environment of the cell changes due to hyperglycemia or ischemia, AR is both activated and upregulated, and greater than 30% of the patient’s glucose is then shunted through the polyol pathway, resulting in significant downstream damage to cells and tissues. The detrimental consequences of AR activation have been well established by decades of prior research.
However, when the oxidative environment of the cell changes due to hyperglycemia or ischemia, AR is both activated and upregulated, and greater than 30% of the patient’s glucose is then shunted through the polyol pathway, resulting in significant downstream damage to cells and tissues. The detrimental consequences of AR activation have been characterized by decades of prior research.
The term “remuneration” has been broadly interpreted to include anything of value. The federal Anti-Kickback Statute has been interpreted to apply to arrangements between pharmaceutical manufacturers on the one hand and prescribers, purchasers and formulary managers on the other.
The term “remuneration” has been broadly interpreted to include anything of value. The federal Anti‑Kickback Statute has been interpreted to apply to, among others, arrangements between pharmaceutical manufacturers on the one hand and prescribers, purchasers and formulary managers on the other.
On January 31, 2024, the Company sold an additional 1,000,000 shares of the 5 Table of Contents company’s common stock pursuant to the Leerink ATM Agreement with an average sale price of $3.13 per share, resulting in net proceeds of $3.0 million, after deducting underwriting discounts, commissions and offering expenses.
On January 31, 2024, the Company sold an additional 1,000,000 shares of the company’s common stock pursuant to the Leerink ATM Agreement with an average sale price of $3.13 per share, resulting in net proceeds of $3.0 million, after deducting underwriting discounts, commissions and offering expenses.
We will continue leveraging our relationships with academic institutions and universities to acquire or license additional technologies that are consistent with our strategy of applying new technologies to validated molecular pathways. 6 Table of Contents Our Pipeline The following table shows the status of our current ARI programs: We seek to protect our proprietary and intellectual property position for our product candidates, our core technology, and other know-how through U.S. and foreign patent protection.
We may continue leveraging our relationships with academic institutions and universities to acquire or license additional technologies that are consistent with our strategy of applying new technologies to targeted molecular pathways. 6 Table of Contents Our Pipeline The following table shows the status of our current ARI programs: We seek to protect our proprietary and intellectual property position for our product candidates, our core technology, and other know-how through U.S. and foreign patent protection.
There are currently no therapies approved to treat Galactosemia. Two companies have announced plans for preclinical or conceptual programs to develop gene therapies in Galactosemia. We believe these potential AAV gene therapies are several years away from entering the clinic, and there is no data to date in preclinical or clinical studies demonstrating efficacy or safety.
There are currently no therapies approved to treat Galactosemia. Two companies have announced plans for preclinical or conceptual programs to develop gene therapies in Galactosemia. We believe these potential AAV gene therapies are several years away from entering the clinic, and there are no publicly available data to date in preclinical or clinical studies demonstrating efficacy or safety.
In total, our patent portfolio, including patents licensed from Columbia University and patents owned by us, comprises nine different patent families, filed in various jurisdictions worldwide, including families directed to composition of matter for AR inhibitors, and families directed to methods of treating Galactosemia and complications associated with Galactosemia, SORD Deficiency and PMM2-CDG using AR inhibitors.
In total, our patent portfolio, including patents licensed from Columbia University, patents licensed from University of Miami and patents owned by us, comprises ten different patent families, filed in various jurisdictions worldwide, including families directed to composition of matter for AR inhibitors, and families directed to methods of treating Galactosemia and complications associated with Galactosemia, SORD Deficiency and PMM2-CDG using AR inhibitors.
The EU population (including the UK) is slightly larger than the US population, estimated at approximately 4,000 patients, leading to a combined US + EU market opportunity of approximately 7,000 patients. When additional markets, such as Japan and Canada are considered, we believe the overall Market opportunity for Galactosemia is approximately 7,600 patients worldwide.
The EU population (including the UK) is slightly larger than the US population, estimated at approximately 4,000 patients, leading to a combined US + EU market opportunity of approximately 7,300 patients. When additional markets, such as Japan and Canada are considered, we believe the overall market opportunity for Galactosemia is approximately 8,000 patients worldwide.
We have exclusively licensed from Columbia University a patent family that includes six issued patents in the United States, 82 issued patents in Europe, Japan, Canada, and Australia, a pending application in the United States and a pending application in Europe that claim the composition of matter of and certain methods of use 24 Table of Contents with respect to AT-001 and AT-003.
We have exclusively licensed from Columbia University a patent family that includes six issued patents in the United States, 82 issued patents in Europe, Japan, Canada, and Australia, a pending application in the United States and a pending application in Europe that claim the composition of matter of and certain methods of use with respect to AT-001 and AT-003.
Thus, we believe that not only is AT-001 a more potent AR 15 Table of Contents inhibitor than prior drugs, but that we have overcome the safety and toxicity limitations from prior compounds, which were due to lack of selectivity and off-target inhibition of Aldehyde Reductase.
Thus, we believe that not only is AT-001 a more potent AR inhibitor than prior drugs, but that we have overcome the safety and toxicity limitations from prior compounds, which were due to lack of selectivity and off-target inhibition of Aldehyde Reductase.
AT-001 was dosed as an active pharmaceutical ingredient, or API, powder in a rapid release capsule and the trial examined both once-daily and twice-daily, or BID, dosing regimens. AT-001 was safe and well tolerated at all doses tested. Additionally, there were no observed adverse interactions with any concomitant diabetes medications used by patients during the trial.
AT-001 was dosed as an active pharmaceutical ingredient, or API, powder in a rapid release capsule and the trial examined both once-daily and twice-daily, or BID, dosing regimens. 16 Table of Contents AT-001 was safe and well tolerated at all doses tested. Additionally, there were no observed adverse interactions with any concomitant diabetes medications used by patients during the trial.
Sorbitol is also further metabolized to fructose, which initiates a cascade of metabolic dysregulation and inflammatory damage to cells, such as: reactive oxygen species, or ROS, generation; advanced glycation end products, or AGE; protein kinase C, or PKC, activation; and methylglyoxal overproduction.
Sorbitol is also further metabolized to fructose, which is also thought to contribute to a cascade of metabolic dysregulation and inflammatory damage to cells, such as: reactive oxygen species, or ROS, generation; advanced glycation end products, or AGE; protein kinase C, or PKC, activation; and methylglyoxal overproduction.
Patients quickly progress at a steady state of decline to stage 3, which includes marked cavity dilation and severe limitations in daily activities. The final stage of 14 Table of Contents DbCM, stage 4, is represented by acute heart failure resulting in death.
Patients quickly progress at a steady state of decline to stage 3, which includes marked cavity dilation and severe limitations in daily activities. The final stage of DbCM, stage 4, is represented by acute heart failure resulting in death.
A re-formulation of proprietary 23 Table of Contents crystalline epalrestat, BNV-222, is in development for DPN in Russia in a 12-month Phase 2 / 3 clinical trial, which completed enrollment in 2016, but has not yet reported any results.
A re‑formulation of proprietary crystalline epalrestat, BNV‑222, is in development for DPN in Russia in a 12‑month Phase 2/3 clinical trial, which completed enrollment in 2016, but has not yet reported any results.
All taxes, annuities or maintenance fees for a patent, as required by 25 Table of Contents the USPTO and various foreign jurisdictions, must be timely paid in order for the patent to remain in force during this period of time.
All taxes, annuities or maintenance fees for a patent, as required by the USPTO and various foreign jurisdictions, must be timely paid in order for the patent to remain in force during this period of time.
In addition, the government may assert that a claim including items or services resulting 32 Table of Contents from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the federal civil False Claims Act or the civil monetary penalties laws.
In addition, the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the federal civil False Claims Act or the civil monetary penalties laws.
For example, the Inflation Reduction Act of 2022, enacted on August 16, 2022, seeks to reduce prescription drug costs by, among other provisions, allowing Medicare to negotiate prices for certain high-cost prescription drugs in Medicare Parts B and D, imposing an excise tax on pharmaceutical manufacturers that refuse to negotiate pricing with Medicare, requiring inflation rebates to limit annual drug price increases in Medicare, redesigning the Medicare Part D formula, and limiting the cost-sharing for insulin products.
For example, the Inflation Reduction Act of 2022, enacted on August 16, 2022, seeks to reduce prescription drug costs by, among other provisions, allowing Medicare to negotiate prices for certain non-rare disease high-cost prescription drugs in Medicare Parts B and D, imposing an excise tax on pharmaceutical manufacturers that refuse to negotiate pricing with Medicare, requiring inflation rebates to limit annual drug price 34 Table of Contents increases in Medicare, redesigning the Medicare Part D formula, and limiting the cost-sharing for insulin products.
Among policy makers and payors in the United States and 34 Table of Contents elsewhere, there is significant interest in promoting changes in healthcare systems with the stated goals of containing healthcare costs, improving quality and expanding access.
Among policy makers and payors in the United States and elsewhere, there is significant interest in promoting changes in healthcare systems with the stated goals of containing healthcare costs, improving quality and expanding access.
The principal purposes of our equity and cash incentive plans are to attract, retain and reward personnel and increase our success and stockholder value thereby. The success of our business is fundamentally connected to the well-being of our employees.
The principal purposes of our equity and cash incentive plans are to attract, retain and reward personnel and increase our success and stockholder value thereby. 35 Table of Contents The success of our business is fundamentally connected to the well-being of our employees.
The Advanz Agreement includes a sublicense under the 2020 Miami License Agreement. ​ The 2020 Miami License Agreement terminates upon the expiration of all issued patents and filed patent applications or 10 years after the first commercial sale of the last product or process for which a royalty is due, unless earlier terminated.
The 2020 Miami License Agreement terminates upon the expiration of all issued patents and filed patent applications or 10 years after the first commercial sale of the last product or process for which a royalty is due, unless earlier terminated.
AR Activity Causes Toxic Accumulation of Galactitol in Galactosemia We have demonstrated that inhibiting AR activity shifts galactose metabolism to an alternative enzyme called galactose dehydrogenase, which allows galactose to be metabolized to galactonate, a benign substance that is removed in the urine.
AR Activity Is Believed to Cause Potentially Toxic Accumulation of Galactitol in Galactosemia We have demonstrated that inhibiting AR activity shifts galactose metabolism to an alternative enzyme called galactose dehydrogenase, which allows galactose to be metabolized to galactonate, a benign substance that is removed in the urine.
Perfetti served as a Senior Medical Officer, Vice President and Head of Global Medical Affairs, Diabetes 37 Table of Contents and Cardiovascular Business Unit at Sanofi S.A., a publicly traded pharmaceutical company from October 2007 to September 2018. Prior to joining Sanofi, Dr.
Prior to joining us, Dr. Perfetti served as a Senior Medical Officer, Vice President and Head of Global Medical Affairs, Diabetes and Cardiovascular Business Unit at Sanofi S.A., a publicly traded pharmaceutical company from October 2007 to September 2018. Prior to joining Sanofi, Dr.
There are no drugs in development to our knowledge outside of AT-007, and we believe that the IP licensed from University of Miami is sufficiently broad to encompass the entire class of aldose reductase inhibitors for treatment of SORD Deficiency. There are currently no therapies approved to treat DbCM.
There are no drugs in development to our knowledge outside of AT-007, and we believe that the IP licensed from University of Miami is sufficiently broad to encompass the entire class of aldose reductase inhibitors for treatment of SORD Deficiency. There are currently no therapies approved to treat PMM2-congenital disorder of glycosylation.
It is unclear whether additional drug pricing and other healthcare reform measures will be enacted, and if enacted, what effect they would have on our business.
It is unclear whether additional drug pricing and other healthcare reform measures will be enacted, or prior measures repealed, and if enacted or repealed, what effect they would have on our business.
AR has been shown to cause DR by inducing hyperosmolarity in retinal cells due to elevated sorbitol, as well as through fructose-mediated detrimental downstream effects, such as AGE generation and PKC activation.
AR has been shown to cause DR by inducing hyperosmolarity 17 Table of Contents in retinal cells due to elevated sorbitol, as well as through fructose-mediated detrimental downstream effects, such as AGE generation and PKC activation.
Exclusive License Agreement with Columbia University On October 26, 2016, we entered into a license agreement with Columbia University (the “2016 Columbia Agreement”).
Exclusive License Agreement with Columbia University On October 26, 2016, we entered into a license agreement with Columbia University (the "2016 Columbia Agreement").
We have exclusively licensed a patent family from University of Miami that includes pending applications in the United States, Europe, Japan, Australia, Brazil, Canada, China, Israel, Mexico, New Zealand, India, Russia, Singapore, South Africa, South Korea and Hong Kong, that claims methods for treating inherited neuropathy using a variety of therapeutic modalities including inhibitors of AR.
We have exclusively licensed a patent family from University of Miami that includes an issued patent in the United States that claims methods of treating inherited neuropathy associated with mutation in the SORD gene using inhibitors of AR and pending applications in the United States, Europe, Japan, Australia, Brazil, Canada, China, Israel, Mexico, New Zealand, India, Russia, Singapore, South Africa, South Korea and Hong Kong, that claims methods for treating inherited neuropathy using a variety of therapeutic modalities including inhibitors of AR.
As shown in the figure below, AR activity produces excess sorbitol, which causes osmotic dysregulation within cells and tissues, such as nerve and retina, and is toxic to many cell types, including cardiomyocytes.
As shown in the figure below, AR activity produces excess sorbitol, which contributes to osmotic dysregulation within cells and tissues, such as nerve and retina, and is thought to be toxic to many cell types, including cardiomyocytes.
As of December 31, 2023, we sold an aggregate of 17,615,976 shares of our common stock, pursuant to the Leerink ATM Agreement with an average sale price of $2.04 per share, resulting in net proceeds of $36.9 million, after deducting underwriting discounts, commissions and offering expenses.
In 2023 we sold an aggregate of 17,615,976 shares of our common stock, pursuant to the Leerink ATM Agreement with an average sale price of $2.04 per share, resulting in net proceeds of $36.9 million, after deducting underwriting discounts, 5 Table of Contents commissions and offering expenses.
Former President Trump implemented certain directives designed to delay the implementation of certain PPACA provisions or otherwise circumvent requirements for health insurance mandated by the PPACA, while Congress has considered legislation that would repeal or repeal and replace all or part of the PPACA.
In his first administration, President Trump implemented certain directives designed to delay the implementation of certain PPACA provisions or otherwise circumvent requirements for health insurance mandated by the PPACA, while Congress has considered legislation that would repeal or repeal and replace all or part of the PPACA.
AT-007 for the Treatment of Rare Metabolic Disease (Galactosemia, SORD Deficiency, PMM2-CDG) Overview AT- 007 is a novel CNS penetrant ARI for the treatment of CNS rare diseases, including Galactosemia, SORD deficiency and PMM2-CDG. 9 Table of Contents ​ Galactosemia Galactosemia is a devastating rare pediatric metabolic disease that affects how the body processes a simple sugar called galactose, and for which there is no known cure or approved treatment available.
AT‑007 for the Treatment of Rare Metabolic Disease (Galactosemia, SORD Deficiency, PMM2-CDG) Overview AT-007 is a novel CNS penetrant ARI currently being investigated and proposed for the treatment of CNS rare diseases, including Galactosemia, SORD Deficiency, and PMM2-CDG deficiency. ​ Galactosemia Galactosemia is a devastating rare pediatric metabolic disease that affects how the body processes a simple sugar called galactose, and for which there is no known cure or approved treatment available.
SORD is the enzyme which follows AR in the polyol pathway and converts sorbitol to fructose. Patients who are deficient in SORD can’t metabolize sorbitol normally, and sorbitol levels accumulate to unnaturally high levels. Sorbitol, like galactitol, has been shown to be toxic to cells, especially neurons, resulting in progressive neuronal degeneration.
SORD is the enzyme which follows AR in the polyol pathway and converts sorbitol to fructose. Patients who are deficient in SORD cannot metabolize sorbitol normally, and sorbitol levels accumulate to unnaturally high levels. Sorbitol, like galactitol, is thought to be toxic to cells, especially neurons, resulting in progressive neuronal degeneration.
Legislative proposals to reform healthcare or reduce costs under government insurance programs may result in lower reimbursement for our product candidates, if approved, or exclusion of our product candidates from coverage and reimbursement.
Legislative or executive proposals to reform healthcare or reduce funding or costs under government insurance programs may result in lower reimbursement for our product candidates, if approved, or exclusion of our product candidates from coverage and reimbursement. The U.S.
The resubmitted application is also subject to review before the FDA accepts it for filing. Once 28 Table of Contents the submission is accepted for filing, the FDA begins an in-depth substantive review.
The resubmitted application is also subject to review before the FDA accepts it for filing. Once the submission is accepted for filing, the FDA begins an in‑depth substantive review.
If the FDA approves a sponsor’s marketing application for a designated orphan drug for use in the rare disease or condition for which it was designated, the sponsor is eligible for a seven-year period of marketing exclusivity, during 29 Table of Contents which the FDA may not approve another sponsor’s marketing application for a drug with the same active moiety and intended for the same use or indication as the approved orphan drug, except in limited circumstances, such as if a subsequent sponsor demonstrates its product is clinically superior.
If the FDA approves a sponsor’s marketing application for a designated orphan drug for use in the rare disease or condition for which it was designated, the sponsor is eligible for a seven-year period of marketing exclusivity, during which the FDA may not approve another sponsor’s marketing application for the same drug for the same disease or condition as the approved orphan drug, except in limited circumstances, such as if a subsequent sponsor demonstrates its product is clinically superior.
Market Opportunity The global incidence of Galactosemia is estimated to be 1 in 50,000 to 1 in 90,000, depending on ethnicity. The U.S. Galactosemia population is approximately 3,200 patients, based on newborn screening data identifying 2,500 infants through 2014, and the estimated birth rate of 80 patients per year. Prior studies estimated that the U.S.
Market Opportunity The global incidence of Galactosemia is estimated to be 1 in 50,000 to 1 in 90,000, depending on ethnicity. The U.S. Galactosemia population is approximately 3,300 patients, based on newborn screening data identifying 2,500 11 Table of Contents infants through 2014, and the estimated birth rate of 80 patients per year.
The FDA may not grant approval of an NDA on a timely basis, or at all. After evaluating the NDA and all related information, including the advisory committee recommendation, if any, and inspection reports regarding the manufacturing facilities and clinical trial sites, the FDA may issue an approval letter, or, in some cases, a complete response letter.
After evaluating the NDA and all related information, including the advisory committee recommendation, if any, and inspection reports regarding the manufacturing facilities and clinical trial sites, the FDA may issue an approval letter, or, in some cases, a complete response letter.
Our product candidates may not be considered medically necessary or cost-effective. A payor’s decision to provide coverage for a product does not imply that an adequate reimbursement rate will be approved. Adequate third-party payor reimbursement may not be available to enable us to realize an appropriate return on our investment in product development.
A payor’s decision to provide coverage for a product does not imply that an adequate reimbursement rate will be approved. Adequate third-party payor reimbursement may not be available to enable us to realize an appropriate return on our investment in product development.
The study was placed on partial clinical hold in August 2020 while we worked with the FDA to redesign and operationally modify the study to seamless design to ensure continuous treatment and the opportunity to receive clinical benefit.
ACTION-Galactosemia Kids In June 2020, we initiated the ACTION-Galactosemia Kids pediatric Galactosemia study. The study was placed on partial clinical hold in August 2020 while we worked with the FDA to redesign and operationally modify the study to seamless design to ensure continuous treatment and the opportunity to receive clinical benefit.
Our ability to generate product revenue sufficient to achieve profitability will depend on the successful development and commercialization of one or more of our product candidates. Our net loss was $119.8 million for the year ended December 31, 2023. As of December 31, 2023, we had an accumulated deficit of $468.6 million.
Our ability to generate product revenue sufficient to achieve profitability will depend on the successful development and commercialization of one or more of our product candidates. Our net loss was $105.6 million for the year ended December 31, 2024. As of December 31, 2024, we had an accumulated deficit of $574.2 million.
AT-001 was generally safe and well tolerated, with no substantial differences in serious adverse events between AT-001 treated groups as compared to placebo. ​ AT-003 is a novel ARI designed to cross through the back of the eye when dosed orally, and has demonstrated strong retinal penetrance, for the treatment of diabetic retinopathy, or DR.
AT-001 was generally safe and well tolerated, with no substantial differences in serious adverse events between AT-001 treated groups as compared to placebo. AT‑003 for the Treatment of Diabetic Retinopathy Overview We are developing AT-003, an ARI designed to cross through the back of the eye when dosed orally, which has demonstrated strong retinal penetrance, for the treatment of DR.
We have obtained adequate supplies of the drug substance for AT-007 and AT-001 to satisfy our immediate clinical and preclinical demands. Drug product formulation development for AT-007 and AT-001 are in progress. We have contracted with a third-party manufacturer capable of both formulation development and drug product manufacturing through commercialization.
We have obtained adequate supplies of the drug substance for AT‑007 and AT‑001 to satisfy our immediate clinical and preclinical demands. 21 Table of Contents Drug product formulation development for AT‑007 and AT-001 have been completed. We have contracted with a third-party manufacturer capable of both formulation development and drug product manufacturing through commercialization.
Some preclinical testing may continue even after the IND is submitted. An IND automatically becomes effective 30 days after receipt by the FDA, unless before that time the FDA raises concerns or questions related to one or more proposed clinical trials and places the clinical trial on a clinical hold or a partial clinical hold.
An IND automatically becomes effective 30 days after receipt by the FDA, unless before that time the FDA raises concerns or questions related to one or more proposed clinical trials and places the clinical trial on a clinical hold or a partial clinical hold.
No patents have issued to date, but we expect that the 20-year term of any patents that do grant in this family will run through 2040, absent any available patent term adjustments or extensions. ​ Methods for Treating PMM2-CDG We own a family of patent applications that claim methods for treating PMM2-CDG using AT-007 and other inhibitors of AR.
The 20-year term of patents in this family will run through 2040, absent any available patent term adjustments or extensions. Methods for Treating PMM2-CDG We own a family of patent applications that claim methods for treating PMM2-CDG using AT-007 and other inhibitors of AR.
AT-003 for the Treatment of Diabetic Retinopathy Overview We are developing AT-003, an ARI designed to cross through the back of the eye when dosed orally, which has demonstrated strong retinal penetrance, for the treatment of DR. DR is an ophthalmic disease that occurs in diabetic patients, and for which treatments are currently limited to intravitreal administration.
AT-003 is a novel ARI designed to cross through the back of the eye when dosed orally, and has demonstrated strong retinal penetrance, for the treatment of diabetic retinopathy, or DR. DR is an ophthalmic disease that occurs in diabetic patients and for which treatments are currently limited to high-cost biologics requiring intravitreal administration.

… 263 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

173 edited+149 added−41 removed340 unchanged
Biggest changeRisk Factor Summary The following is a summary of the risk factors included in this Item 1A and is qualified entirely by the disclosure included in the rest of this Item 1A: Risks Related to Our Financial Position and Capital Needs ● We have incurred and expect to continue to incur substantial operating losses and our ability to use our net operating losses to offset future taxable income may be subject to certain limitations. ● Our operating history makes evaluating our business and future viability more difficult. ● We will require substantial additional funding to finance our operations, and may suffer consequences to our development programs upon failure to do so. ● Raising additional capital may cause adverse effects. ​ Risks Related to the Development and Commercialization of Our Product Candidates ● Our success is substantially dependent on the successful clinical development, regulatory approval and commercialization of our product candidates and may be adversely affected upon failure to do so. ● We or Advanz Pharma may fail to perform under any of the agreements entered into in connection with the partnership for the commercialization of AT-007, which may subject us to liabilities, and we may fail to achieve anticipated benefits of the partnership. ● Success in preclinical studies or earlier clinical trials may not be indicative of results in future clinical trials and our results may not be sufficient for the necessary regulatory approvals. ● Clinical drug development involves a lengthy and expensive process and the development of additional product candidates is risky and uncertain. ● We may be unable to obtain/maintain or receive the benefits of regulatory approval, rare pediatric disease designation/exclusivity, accelerated registration pathways, breakthrough therapy designations or fast track designations for our product candidates, as applicable. ● Clinical trials are expensive, time consuming and subject to factors outside our control. ● Our product candidates may cause undesirable side effects, affecting regulatory approval, commercial potential or result in significant negative consequences following any potential marketing approval. ● Interim, “top line” and preliminary data from our clinical trials may be subject to change. ● The market opportunities for our product candidates may be smaller than we believe or approval we obtain may narrow our patient population. ● We may face substantial competition. ● We may face risks related to strategic collaborations to develop our product candidates ● Our product candidates may fail to achieve market acceptance necessary for commercial success. ● We may face risks related to any potential international operations. ● We may be adversely affected by product liability lawsuits. ● Our insurance policies may be inadequate and potentially expose us to unrecoverable risks. 40 Table of Contents ​ Risks Related to Regulatory Compliance ● We are subject to healthcare laws and regulations, which carry substantial penalties for noncompliance. ● Coverage and adequate reimbursement may not be available for our product candidates. ● Healthcare reform measures may have a negative impact on our business and results of operations. ​ Risks Related to Our Dependence on Third Parties ● Third-parties may conduct our preclinical studies and clinical trials in an unsatisfactory manner. ● We intend to rely on third parties to produce supplies of our product candidates. ● We and our third-party affiliates are subject to environmental, health and safety laws and regulations. ​ Risks Related to Our Intellectual Property ● Breaches of our license agreements may result in the adverse effects to our ability to continue the development and commercialization of our product candidates. ● Insufficient patent protection could allow our competitors to develop and commercialize products and technology similar or identical to ours. ● Obtaining and maintaining our patent rights is expensive, complicated and labor intensive and patent terms may be inadequate to protect our competitive position on our product candidates. ● We may be subject to claims alleging violations of intellectual property rights. ● Changes in patent law could impair our ability to protect our product candidates. ● We may be unable to protect our intellectual property rights. ● Intellectual property rights do not necessarily address all potential threats to our business. ​ Risks Related to Our Business Operations, Employee Matters and Managing Growth ● We are highly dependent on the services of our current executive officers. ● We may experience difficulties resulting from the expansion of our organization. ● We may be subject to security breaches in our information technology systems. ● Our employees and the third-parties we deal with may engage in misconduct or improper activities. ● Our business may be adversely affected by the coronavirus outbreak. ​ Risks Related to Ownership of Our Common Stock ● The market price of our common stock is volatile and has fluctuated substantially . ● Concentration of ownership of our common stock among our existing executive officers, directors and principal stockholders may prevent new investors from influencing significant corporate decisions. ● We do not anticipate paying any cash dividends on our capital stock in the foreseeable future. ​ General Risk Factors ● We may be affected by unfavorable research or reports. ● We may use our cash and cash equivalents ineffectively or in ways with which you do not agree. ● We are subject to risks as an “emerging growth company” and a public company. ● We may avail ourselves of defensive and forum selection provisions in our governing documents and under Delaware law. 41 Table of Contents Risks Related to Our Financial Position and Capital Needs We have incurred significant operating losses since inception and anticipate that we will continue to incur substantial operating losses for the foreseeable future and may never achieve or maintain profitability.
Biggest changeRisks Related to the Development and Commercialization of Our Product Candidates • The Warning Letter from FDA could impede our current and future clinical trials or NDA submissions. • Our success is substantially dependent on the successful clinical development, regulatory approval and commercialization of our product candidates and may be adversely affected upon failure to do so. • We received the Complete Response Letter from the FDA indicating that our new drug application or NDA for govorestat for the treatment of Classic Galactosemia was not approvable at this time, and do not know if govorestat or any of our product candidates will ever receive regulatory approval. • We or Advanz Pharma may fail to perform under our partnership agreements for AT-007 (govorestat) commercialization, potentially leading to liabilities and unachieved benefits. • Success in preclinical studies or earlier clinical trials may not be indicative of results in future clinical trials and our results may not be sufficient for the necessary regulatory approvals. • Clinical drug development involves a lengthy and expensive process and the development of additional product candidates is risky and uncertain. • We may be unable to obtain or maintain regulatory approvals, designations, or accelerated pathways for our product candidates. • Clinical trials are expensive, time consuming and subject to factors outside our control. • Our product candidates may cause undesirable side effects, affecting regulatory approval, commercial potential or result in significant negative consequences following any potential marketing approval. 39 Table of Contents • Interim, “top-line” and preliminary data from our clinical trials may be subject to change. • Market opportunities for our products may be smaller or approval may narrow our patient population. • We may face substantial competition. • We may face risks related to strategic collaborations to develop our product candidates • We may experience sudden changes in the regulatory standards that govern the acceptability of our clinical studies to support approval. • Even if approved, our products may not achieve market acceptance necessary for commercial success. • We may face risks from potential international operations if we commercialize any product candidate. • We may be adversely affected by product liability lawsuits. • Our insurance policies may be inadequate and potentially expose us to unrecoverable risks.
In all such circumstances, Advanz must continue to pay royalties and milestone payments, but may recoup certain of its manufacturing and development establishment costs, and deduct such costs from royalties owed. ​ Any of these factors could cause us to incur higher costs, disrupt the supply of our product candidates or approved products, delay the approval of our product candidates or prevent or disrupt the commercialization of our approved products.
In all such circumstances, Advanz must continue to pay royalties and milestone payments, but may recoup certain of its manufacturing and development establishment costs, and deduct such costs from royalties owed. ​ Any of these factors could cause us to incur higher costs, disrupt the supply of our product candidates or approved products, delay or prevent the approval of our product candidates or prevent or disrupt the commercialization of our approved products.
All of our current product candidates that have proceeded to clinical trials target inhibition of aldose reductase. There can be no assurance that aldose reductase inhibitors will ever receive regulatory approval. All of our current product candidates that have proceeded to clinical trials target inhibition of the aldose reductase enzyme.
There can be no assurance that aldose reductase inhibitors will ever receive regulatory approval. All of our current product candidates that have proceeded to clinical trials target inhibition of the aldose reductase enzyme.
While we will have agreements governing their activities, our CROs will not be our employees, and we will not control whether or not they devote sufficient time and resources to our future clinical and preclinical programs.
While we have and will have agreements governing their activities, our CROs will not be our employees, and we will not control whether or not they devote sufficient time and resources to our future clinical and preclinical programs.
Regulatory authorities enforce GCPs through periodic inspections of trial sponsors, principal investigators and clinical trial sites. Although we rely on CROs to conduct GCP-compliant clinical trials, we remain responsible for ensuring that each of our GLP preclinical studies and clinical trials is conducted in accordance with its investigational plan and protocol and applicable laws and regulations.
Regulatory authorities enforce GCPs through periodic inspections of trial sponsors, principal investigators and clinical trial sites. Although we rely on CROs to conduct GCP-compliant clinical trials, we remain responsible for ensuring that each of our preclinical studies and clinical trials is conducted in accordance with its investigational plan and protocol and applicable laws and regulations.
If the market opportunities for our product candidates are smaller than we estimate, we may not be able to achieve our forecast revenue, which could hinder our business plan and adversely affect our business and results of operations. We may face substantial competition, which may result in others developing or commercializing drugs before or more successfully than us.
If the market opportunities for our product candidates are smaller than we estimate, we may not be able to achieve our forecast revenue, which could hinder our business plan and adversely affect our business and results of operations. We face competition, which may result in others developing or commercializing drugs before or more successfully than us.
Preclinical studies and Phase 1 clinical trials are primarily designed to test safety, to study pharmacokinetics and pharmacodynamics and to understand the side effects of product candidates at various doses and schedules. Success in preclinical studies and earlier clinical trials does not ensure that later efficacy trials will be successful, nor does it predict final results.
Preclinical studies and Phase 1 clinical trials are primarily designed and operate to test safety, to study pharmacokinetics and pharmacodynamics and to understand the side effects of product candidates at various doses and schedules. Success in preclinical studies and earlier clinical trials does not ensure that later efficacy trials will be successful, nor does it predict final results.
These changes include aggregate reductions to Medicare payments to providers of 2% per fiscal year pursuant to the Budget Control Act of 2011, which began in 2013, and due to subsequent legislative amendments to the statute, including the BBA, which will remain in effect through 2027 unless additional Congressional action is taken.
These changes include aggregate reductions to Medicare payments to providers of 2% per fiscal year pursuant to the Budget Control Act of 2011, which began in 2013, and due to subsequent legislative amendments to the statute, including the Bipartisan Budget Act (BBA), which will remain in effect through 2027 unless additional Congressional action is taken.
The development and commercialization of new drugs is highly competitive. We may face potential competition with respect to our current product candidates and may face competition with respect to any other product candidates that we may seek to develop or commercialize in the future from pharmaceutical and biotechnology companies, academic institutions, government agencies and other public and private research institutions.
The development and commercialization of new drugs is highly competitive. We face competition with respect to our current product candidates and may face competition with respect to any other product candidates that we may seek to develop or commercialize in the future from pharmaceutical and biotechnology companies, academic institutions, government agencies and other public and private research institutions.
Additional changes that affect our business include the expansion of programs such as Medicare payment for performance initiatives for physicians under the Medicare Access and CHIP Reauthorization Act of 2015. At this time, the full impact of the introduction of the Medicare quality payment program on overall physician reimbursement is unclear.
Additional changes that may affect our business include the expansion of programs such as Medicare payment for performance initiatives for physicians under the Medicare Access and CHIP Reauthorization Act of 2015. At this time, the full impact of the introduction of the Medicare quality payment program on overall physician reimbursement is unclear.
We intend to rely on CROs and clinical trial sites to ensure the proper and timely conduct of our preclinical studies and clinical trials, and we expect to have limited influence over their actual performance. We rely upon CROs to monitor and manage data for our clinical programs, as well as the execution of future preclinical studies.
We have relied and intend to rely on CROs and clinical trial sites to ensure the proper and timely conduct of our preclinical studies and clinical trials, and we expect to have limited influence over their actual performance. We rely upon CROs to monitor and manage data for our clinical programs, as well as the execution of future preclinical studies.
In addition, the FDA or comparable foreign regulatory authorities may change their policies, adopt additional regulations or revise existing regulations or take other actions, which may prevent or delay approval of our future product candidates under development on a timely basis.
In addition, the FDA or comparable foreign regulatory authorities may change their policies, adopt additional regulations, revise existing regulations or guidance or take other actions, which may prevent or delay approval of our future product candidates under development on a timely basis.
There are no currently approved aldose reductase inhibitors on the market outside of Japan, India and China, and there can be no assurance that aldose reductase inhibitors will ever receive regulatory approval in all other countries, including the United States.
There are no currently approved aldose reductase inhibitors on the market outside of Japan, India, and China, and there can be no assurance that aldose reductase inhibitors will ever receive regulatory approval in other countries, including the United States.
The Advanz Agreement includes a sublicense under the 2016 Columbia Agreement and the 2020 Miami License Agreement. ​ Our partnership with Advanz is subject to various risks, including but not limited to the following: ​ ● If Advanz breaches the contractual obligations owed to us pursuant to the Advanz Agreement or any related agreements, we could be exposed to commercial, regulatory or other liabilities. ● We may be subject to liabilities in connection with the development, manufacturing and supply of AT-007 ● under the Advanz Agreement, including with respect to the 2016 Columbia Agreement and the 2020 Miami License Agreement. ● We may not be able to adequately protect our intellectual property or may become involved in intellectual property enforcement actions, which may cause us to incur substantial costs as a result of litigation or other proceedings relating to patent and other intellectual property rights, and such litigation may divert the attention of our management and scientific personnel and adversely affect our development and commercialization efforts. 46 Table of Contents ● We may have limited control over the commercialization efforts of Advanz, and Advanz may fail to successfully sell and market AT-007. ● Our ability to receive certain economic benefits from the partnership, including the milestone payments and royalties, depends on certain contingencies beyond our control. ● In certain circumstances, Advanz may exercise certain step-in rights, including the ability for Advanz to perform its own supply arrangements, and in some cases, specified development rights in the Territory and assignment of certain contract rights.
Our partnership with Advanz is subject to various risks, including, but not limited to, the following: • If Advanz breaches the contractual obligations owed to us pursuant to the Advanz Agreement or any related agreements, we could be exposed to commercial, regulatory or other liabilities. 49 Table of Contents • We may be subject to liabilities in connection with the development, manufacturing and supply of AT-007 under the Advanz Agreement, including with respect to the 2016 Columbia Agreement and the 2020 Miami License Agreement. • We may not be able to adequately protect our intellectual property or may become involved in intellectual property enforcement actions, which may cause us to incur substantial costs as a result of litigation or other proceedings relating to patent and other intellectual property rights, and such litigation may divert the attention of our management and scientific personnel and adversely affect our development and commercialization efforts. • We may have limited control over the commercialization efforts of Advanz, and Advanz may fail to successfully sell and market AT-007. • Our ability to receive certain economic benefits from the partnership, including the milestone payments and royalties, depends on certain contingencies beyond our control. • In certain circumstances, Advanz may exercise certain step-in rights, including the ability for Advanz to perform its own supply arrangements, and in some cases, specified development rights in the Territory and assignment of certain contract rights.
Under the terms of the Advanz Agreement, Advanz receives exclusive commercial rights in the European Economic Area, Switzerland, and the UK (the “Territory”) for AT-007 in Galactosemia and SORD Deficiency, with certain rights to future indications for AT-007 in the Territory.
Under the terms of the Advanz Agreement, Advanz receives exclusive commercial rights in the European Economic Area, Switzerland, and the UK (Territory) for AT-007 in Galactosemia and SORD Deficiency, with certain rights to future indications for AT-007 in the Territory.
If our operations are found to be in violation of any of these laws or any other governmental regulations that may apply to us, we may be subject to significant civil, criminal and administrative penalties, damages, fines, disgorgement, imprisonment, exclusion from participating in government-funded healthcare programs, such as Medicare and Medicaid, additional reporting requirements and oversight if we become subject to a 58 Table of Contents corporate integrity agreement or similar agreement to resolve allegations of noncompliance with these laws, contractual damages, reputational harm and the curtailment or restructuring of our operations.
If our operations are found to be in violation of any of these laws or any other governmental regulations that may apply to us, we may be subject to significant civil, criminal and administrative penalties, damages, fines, disgorgement, imprisonment, exclusion from participating in government-funded healthcare programs, such as Medicare and Medicaid, additional reporting requirements and oversight if we become subject to a corporate integrity agreement or similar agreement to resolve allegations of noncompliance with these laws, contractual damages, reputational harm and the curtailment or restructuring of our operations.
Although it is our policy to require our employees and contractors who may be involved in the conception or development of intellectual property to execute agreements assigning such intellectual property to us, we may be unsuccessful in executing such an agreement with each party who, in fact, conceives or develops intellectual property that we regard as our own, and we cannot be certain that our agreements with such parties will be upheld in the face of a potential challenge or that they will not be breached, for which we may not have an adequate remedy.
Although it is our policy to require our employees and contractors who may be involved in the conception or development of 72 Table of Contents intellectual property to execute agreements assigning such intellectual property to us, we may be unsuccessful in executing such an agreement with each party who, in fact, conceives or develops intellectual property that we regard as our own, and we cannot be certain that our agreements with such parties will be upheld in the face of a potential challenge or that they will not be breached, for which we may not have an adequate remedy.
For example, the Inflation Reduction Act of 2022 also seeks to reduce prescription drug costs by, among other provisions, allowing Medicare to negotiate prices for certain high-cost 60 Table of Contents prescription drugs in Medicare Parts B and D, imposing an excise tax on pharmaceutical manufacturers that refuse to negotiate pricing with Medicare, requiring inflation rebates to limit annual drug price increases in Medicare, redesigning the Medicare Part D formula, and limiting cost-sharing for insulin products.
For example, the Inflation Reduction Act of 2022 also seeks to reduce prescription drug costs by, among other provisions, allowing Medicare to negotiate prices for certain high-cost prescription drugs in Medicare Parts B and D, imposing an excise tax on pharmaceutical manufacturers that refuse to negotiate pricing with Medicare, requiring inflation rebates to limit annual drug price increases in Medicare, redesigning the Medicare Part D formula, and limiting cost-sharing for insulin products.
In order to realize the future tax benefits of our NOL carryforwards, we must generate taxable income, of which there is no assurance. Accordingly, we have provided a full valuation allowance for deferred tax assets as of December 31, 2023 and 2022.
In order to realize the future tax benefits of our NOL carryforwards, we must generate taxable income, of which there is no assurance. Accordingly, we have provided a full valuation allowance for deferred tax assets as of December 31, 2024 and 2023.
A failure to obtain accelerated approval or any other form of expedited development, review or approval for a product candidate would result in a longer time period to commercialize such product candidate, could increase the cost of development of such product candidate and could harm our competitive position in the marketplace.
A failure to obtain accelerated approval or any other form of expedited development, review or approval for a product candidate may result in a longer time period to commercialize such product candidate, could increase the cost of development of such product candidate and could harm our competitive position in the marketplace.
If our relationship with any of these CROs terminates, we may not be able to enter into arrangements with alternative CROs or do so on commercially reasonable terms. Switching or adding additional CROs involves substantial 63 Table of Contents cost and requires management time and focus. In addition, there is a natural transition period when a new CRO commences work.
If our relationship with any of these CROs terminates, we may not be able to enter into arrangements with alternative CROs or do so on commercially reasonable terms. Switching or adding additional CROs involves substantial cost and requires management time and focus. In addition, there is a natural transition period when a new CRO commences work.
If we fail to comply with applicable regulatory requirements following approval of our product candidates, a regulatory authority may, among other actions: ● issue an untitled letter or warning letter asserting that we are in violation of the law; 55 Table of Contents ● seek an injunction or impose administrative, civil or criminal penalties or monetary fines; ● suspend or withdraw regulatory approval; ● suspend any ongoing clinical trials; ● refuse to approve a pending NDA or comparable foreign marketing application or any supplements thereto submitted by us or our partners; ● restrict the marketing or manufacturing of the drug; ● seize or detain the drug or otherwise require the withdrawal of the drug from the market; ● refuse to permit the import or export of product candidates; or ● refuse to allow us to enter into supply contracts, including government contracts.
If we or our contract manufacturers or partners fail to comply with applicable regulatory requirements following approval of our product candidates, a regulatory authority may, among other actions: • issue an untitled letter or warning letter asserting that we are in violation of the law; • seek an injunction or impose administrative, civil or criminal penalties or monetary fines; • suspend or withdraw regulatory approval; • suspend any ongoing clinical trials; • refuse to approve a pending NDA or comparable foreign marketing application or any supplements thereto submitted by us or our partners; • restrict the marketing or manufacturing of the drug; • seize or detain the drug or otherwise require the withdrawal of the drug from the market; • refuse to permit the import or export of product candidates; or • refuse to allow us to enter into supply contracts, including government contracts.
Further, we, the FDA or an IRB may suspend our clinical trials at any time if it appears that we or our collaborators are failing to conduct a trial in accordance with regulatory requirements, including the FDA’s current Good Clinical Practice, or GCP, regulations, that we are exposing participants to unacceptable health risks, or if the FDA finds deficiencies in our investigational new drug applications, or INDs, or the conduct of these trials.
Further, we, the FDA or an IRB may suspend our clinical trials at any time if it appears that we or our collaborators are failing to conduct a trial in accordance with regulatory requirements, including the FDA’s GCP regulations, that we are exposing participants to unacceptable health risks, or if the FDA finds deficiencies in our investigational new drug applications, or INDs, or the conduct of these trials.
Regardless of merit or eventual outcome, liability claims may result in: ● decreased demand for any product candidate that we may develop; ● loss of revenue; ● substantial monetary awards to trial participants or patients; ● significant time and costs to defend the related litigation; ● withdrawal of clinical trial participants; ● increased insurance costs; ● the inability to commercialize any product candidate that we may develop; and ● injury to our reputation and significant negative media attention.
Regardless of merit or eventual outcome, liability claims may result in: • decreased demand for any product candidate that we may develop; • loss of revenue; • substantial monetary awards to trial participants or patients; • significant time and costs to defend the related litigation; • withdrawal of clinical trial participants; • increased insurance costs; 61 Table of Contents • the inability to commercialize any product candidate that we may develop; and • injury to our reputation and significant negative media attention.
The limitations in the carryforward/carryback periods, as well as the limitation on use of NOLs for NOLs arising in tax years beginning after December 31, 2017 may significantly impact our ability to utilize our NOLs to offset taxable income in the future.
The limitations in the carryforward and carryback periods, as well as the limitation on use of NOLs arising in tax years beginning after December 31, 2017, may significantly impact our ability to utilize our NOLs to offset taxable income in the future.
The FDA may grant orphan drug designation to a drug intended to treat a rare disease or condition, which is defined as a disease or condition that either affects fewer than 200,000 individuals in the United States, or if it affects more than 200,000 individuals, there is no reasonable expectation that sales of the drug in the United States will be sufficient to offset the costs of developing and making the drug available in the United 49 Table of Contents States.
The FDA may grant orphan drug designation to a drug intended to treat a rare disease or condition, which is defined as a disease or condition that either affects fewer than 200,000 individuals in the United States, or if it affects more than 200,000 individuals, there is no reasonable expectation that sales of the drug in the United States will be sufficient to offset the costs of developing and making the drug available in the United States.
Without an internal team or the support of a third-party to perform marketing and sales functions, we may be unable to compete successfully against these more established companies. 56 Table of Contents Even if we obtain and maintain approval for our product candidates from the FDA, we may never obtain approval outside the United States, which would limit our market opportunities.
Without an internal team or the support of a third-party to perform marketing and sales functions, we may be unable to compete successfully against these more established companies. Even if we obtain and maintain approval for our product candidates from the FDA, we may never obtain approval outside the United States, which would limit our market opportunities.
We may be held liable for any resulting damages, costs or liabilities, which could exceed our resources, and state or federal or other applicable authorities may curtail our use of certain materials and/or interrupt our business operations. Furthermore, environmental, health and safety laws and regulations are complex, change frequently and have tended to become more 62 Table of Contents stringent.
We may be held liable for any resulting damages, costs or liabilities, which could exceed our resources, and state or federal or other applicable authorities may curtail our use of certain materials and/or interrupt our business operations. Furthermore, environmental, health and safety laws and regulations are complex, change frequently and have tended to become more stringent.
Our reliance on third parties to conduct clinical trials will result in less direct control over the management of data developed through clinical trials than would be the case if we were relying entirely upon our own staff. Communicating with CROs and other third parties can be challenging, potentially leading to mistakes as well as difficulties in coordinating activities.
Our reliance on third parties to conduct clinical trials results in less direct control over the management of data developed through clinical trials than would be the case if we were relying entirely upon our own staff. Communicating with CROs and other third parties can be challenging, potentially leading to mistakes as well as difficulties in coordinating activities.
Until such time, if ever, as we can generate substantial product revenue, we expect to finance our cash needs through public or private equity or debt financings, including through third-party funding, marketing and distribution arrangements, as well as other collaborations, strategic alliances and licensing arrangements, or any combination of these approaches.
Until such time, if ever, as we can generate substantial product revenue, we expect to finance our cash needs through public or private equity or debt financings, including through third-party funding, marketing and distribution arrangements, as well as other collaborations, strategic alliances and licensing arrangements, or any combination of these 45 Table of Contents approaches.
If we are unable to continue to attract and retain high-quality personnel, our ability to pursue our growth strategy will be limited. Our future performance will also depend, in part, on our ability to successfully integrate newly hired executive officers into our management team and our ability to develop an effective working relationship among senior management.
If we are unable to continue to attract and retain high-quality personnel, our ability to pursue our growth strategy will be limited. Our future performance will also depend, in part, on our ability to successfully integrate newly hired executive officers into our management team, including Mr. Johnson, and our ability to develop an effective working relationship among senior management.
We expect to control only certain aspects of our CROs’ activities. Nevertheless, we will be responsible for ensuring that each of our preclinical studies and clinical trials is conducted in accordance with the applicable protocol, legal, regulatory and scientific standards, and our reliance on the CROs does not relieve us of our regulatory responsibilities.
We expect to control only certain aspects of our CROs’ activities. Nevertheless, we are responsible for ensuring that each of our preclinical studies and clinical trials is conducted in accordance with the applicable protocol, legal, regulatory and scientific standards, and our reliance on the CROs does not relieve us of our regulatory responsibilities.
A failure to obtain accelerated approval or any other form of expedited development, review or approval for a product candidate that we may choose to develop would result in a longer time period prior to commercializing such 51 Table of Contents product candidate, could increase the cost of development of such product candidate and could harm our competitive position in the marketplace.
A failure to obtain accelerated approval or any other form of expedited development, review or approval for a product candidate that we may choose to develop would result in a longer time period prior to commercializing such product candidate, could increase the cost of development of such product candidate and could harm our competitive position in the marketplace.
However, the America Invents Act and its implementation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or 69 Table of Contents defense of our issued patents, all of which could have an adverse effect on our business, financial condition, results of operations, and prospects. In addition, the U.S.
However, the America Invents Act and its implementation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents, all of which could have an adverse effect on our business, financial condition, results of operations, and prospects. In addition, the U.S.
However, the applicable authorities, including the FDA 66 Table of Contents and the USPTO in the United States, and any equivalent regulatory authority in other countries, may not agree with our assessment of whether such extensions are available, and may refuse to grant extensions to our patents, or may grant more limited extensions than we request.
However, the applicable authorities, including the FDA and the USPTO in the United States, and any equivalent regulatory authority in other countries, may not agree with our assessment of whether such extensions are available, and may refuse to grant extensions to our patents, or may grant more limited extensions than we request.
If any of our trade secrets were to be disclosed to or independently developed by a competitor, our competitive position would be harmed. We also seek to preserve the integrity and confidentiality of our data and other confidential information by maintaining physical security of our premises and physical and electronic security of our information technology systems.
If any of our trade secrets were to be disclosed to or independently developed by a competitor, our competitive position would be harmed. 75 Table of Contents We also seek to preserve the integrity and confidentiality of our data and other confidential information by maintaining physical security of our premises and physical and electronic security of our information technology systems.
As a result, we intend to periodically explore a variety of possible strategic collaborations in an effort to gain access to additional product candidates or resources. These strategic collaborations may include partnerships with large strategic partners, particularly for the development of DPN treatments using AT-001.
As a result, we expect that we may periodically explore a variety of possible strategic collaborations in an effort to gain access to additional product candidates or resources. These strategic collaborations may include partnerships with large strategic partners, particularly for the development of DPN treatments using AT-001.
Any significant delay in the supply of a product candidate, or the raw material components thereof, for an ongoing clinical trial due to the need to replace a third-party manufacturer could considerably delay completion of our clinical trials, product testing and potential regulatory approval of our product candidates.
Any significant delay in the supply of a product candidate, or the raw material components thereof, for an ongoing clinical trial due to the need to replace a third-party 65 Table of Contents manufacturer could considerably delay completion of our clinical trials, product testing and potential regulatory approval of our product candidates.
In addition, even if one or more of our product candidates qualify as breakthrough therapies, the FDA may later decide that the product candidate no longer meets the conditions for qualification or it may decide that the time period for FDA review or approval will not be shortened.
In addition, even if one or more of our product candidates qualify as breakthrough therapies, the FDA may later decide that 53 Table of Contents the product candidate no longer meets the conditions for qualification or it may decide that the time period for FDA review or approval will not be shortened.
In addition, in an infringement proceeding, a court may decide that a patent of ours or our licensors is not valid or is unenforceable, or may 68 Table of Contents refuse to stop the other party from using the technology at issue on the grounds that our patents do not cover the technology in question.
In addition, in an infringement proceeding, a court may decide that a patent of ours or our licensors is not valid or is unenforceable, or may refuse to stop the other party from using the technology at issue on the grounds that our patents do not cover the technology in question.
Any regulatory approvals that we receive for our product candidates may also be subject to a REMS, limitations on the approved indicated uses for which the drug may be marketed or to the conditions of approval, or contain requirements for potentially costly post-marketing testing, including Phase 4 trials, and surveillance to monitor the quality, safety and efficacy of the drug.
Any regulatory approvals that we receive for our product candidates may also be subject to a risk evaluation and mitigation strategy (REMS), limitations on the approved indicated uses for which the drug may be marketed or to the conditions of approval, or contain requirements for potentially costly post-marketing testing, including Phase 4 trials, and surveillance to monitor the quality, safety and efficacy of the drug.
Further, we may not be able to obtain adequate remedies for any breach. In addition, our confidential information may otherwise become known or be independently discovered by competitors, in which case 71 Table of Contents we would have no right to prevent them, or those to whom they communicate it, from using that technology or information to compete with us.
Further, we may not be able to obtain adequate remedies for any breach. In addition, our confidential information may otherwise become known or be independently discovered by competitors, in which case we would have no right to prevent them, or those to whom they communicate it, from using that technology or information to compete with us.
Even if we obtain regulatory approvals for our product candidates, such approvals will be subject to ongoing regulatory requirements for manufacturing, labeling, packaging, storage, advertising, promotion, sampling, record keeping and submission of safety and other post-market information.
Even if we obtain regulatory approvals for our product candidates, they will remain subject to ongoing regulatory oversight. Even if we obtain regulatory approvals for our product candidates, such approvals will be subject to ongoing regulatory requirements for manufacturing, labeling, packaging, storage, advertising, promotion, sampling, record keeping and submission of safety and other post-market information.
Such misconduct also could involve the improper use of information obtained in the course of 74 Table of Contents clinical trials or interactions with the FDA or other regulatory authorities, which could result in regulatory sanctions and cause serious harm to our reputation.
Such misconduct also could involve the improper use of information obtained in the course of clinical trials or interactions with the FDA or other regulatory authorities, which could result in regulatory sanctions and cause serious harm to our reputation.
We or Advanz Pharma may fail to perform under any of the agreements entered into in connection with the partnership for commercialization of AT-007, which may subject us to liabilities, and we may fail to achieve anticipated benefits of the partnership. ​ In January 2023, we announced a partnership with Advanz Pharma (“Advanz”) for commercialization of AT-007 (govorestat) in Europe, and entered into an Exclusive License and Supply Agreement (the “Advanz Agreement”) with Advanz.
We or Advanz Pharma may fail to perform under any of the agreements entered into in connection with the partnership for the potential commercialization of AT-007, which may subject us to liabilities, and we may fail to achieve anticipated benefits of the partnership. ​ In January 2023, we announced a partnership with Advanz Pharma ("Advanz") for the potential commercialization of AT-007 (govorestat) in Europe, and entered into an Exclusive License and Supply Agreement ("Advanz Agreement") with Advanz.
Even if we eventually complete clinical testing and receive approval of a new drug application, or NDA, or foreign marketing for our product candidates, the FDA or the comparable foreign regulatory authorities may grant approval or other marketing authorization contingent on the performance of costly additional clinical trials, including 45 Table of Contents post-market clinical trials.
Even if we eventually complete clinical testing and receive approval of a new drug application or foreign marketing for our product candidates, the FDA or the comparable foreign regulatory authorities may grant approval or other marketing authorization contingent on the performance of costly additional clinical trials, including post-market clinical trials.
If we or our licensors fail to maintain the patents and patent applications covering our products or technologies, we may not be able to stop a competitor from marketing products that are the same as or similar to our product candidates, which would have an adverse effect on our business.
If we or our licensors fail to maintain the patents and patent applications covering our products or technologies, we may not be able to stop a competitor from marketing products that are the same as or similar to our product candidates, which would have an adverse effect on our 70 Table of Contents business.
Our internal computer systems, cloud-based computing services and those of our current and any future collaborators and other contractors or consultants are vulnerable to damage or interruption from computer viruses, data corruption, cyber-based attacks (including phishing attempts, denial of service attacks, and malware or ransomware incidents), unauthorized access, natural disasters, terrorism, war, international hostilities and telecommunication and electrical failures.
Our internal computer systems, cloud-based computing services and those of our current and any future collaborators and other contractors or consultants are vulnerable to damage or interruption from computer viruses, data corruption, cyber-based attacks (including phishing attempts, denial of service attacks, and malware or ransomware incidents, attacks enhanced or facilitated by artificial intelligence), unauthorized access, natural disasters, terrorism, war, international hostilities and telecommunication and electrical failures.
Regardless of when filed, we may fail to identify relevant third-party patents or patent applications, or we may incorrectly conclude that a third-party patent is invalid or not infringed by our product candidates or activities.
Regardless of when filed, we may fail to identify relevant third-party patents or patent applications, 71 Table of Contents or we may incorrectly conclude that a third-party patent is invalid or not infringed by our product candidates or activities.
Our future capital requirements will depend on many factors, including: ​ ● the timing, progress and results of our ongoing preclinical studies and clinical trials of our product candidates; ● the scope, progress, results and costs of preclinical development, laboratory testing and clinical trials of other product candidates that we may pursue; ● our ability to establish collaborations on favorable terms, if at all; ● the costs, timing and outcome of regulatory review of our product candidates; ● the costs and timing of future commercialization activities, including product manufacturing, marketing, sales and distribution, for any of our product candidates for which we receive marketing approval; ● the revenue, if any, received from commercial sales of our product candidates for which we receive marketing approval; ● the cost of any milestone and royalty payments with respect to any approved product candidates; ● the costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending any intellectual property-related claims; 43 Table of Contents ● the costs of operating as a public company; and ● the extent to which we acquire or in-license other product candidates and technologies.
Our future capital requirements will depend on many factors, including: • the timing, progress and results of our ongoing preclinical studies and clinical trials of our product candidates; • FDA requirements for the approval of govorestat for any indication; • the scope, progress, results and costs of preclinical development, laboratory testing and clinical trials of other product candidates that we may pursue; • our ability to establish collaborations on favorable terms, if at all; • the costs, timing and outcome of regulatory review of our product candidates; • the costs and timing of future commercialization activities if we are successful in reaching commercialization of any product candidate, including product manufacturing, marketing, sales and distribution, for any of our product candidates for which we receive marketing approval; • the revenue, if any, received from commercial sales of our product candidates for which we receive marketing approval, if any; • the cost of any milestone and royalty payments with respect to any approved product candidates; • the costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending any intellectual property-related claims; • the costs of operating as a public company; and • the extent to which we acquire or in-license other product candidates and technologies.
Preliminary or “top-line” data also remain subject to audit and verification procedures that may result in the final data being materially different from the preliminary data we previously published. As a result, interim and preliminary data should be viewed with caution until the final data are available.
Preliminary or “top-line” data remain subject to new or further audit and verification procedures that may result in the final data being materially different from the preliminary data we previously published. As a result, interim and preliminary data should be viewed with caution until the final data and results are available.
If we are unable to obtain approval under an accelerated pathway, we may be required to conduct additional preclinical studies or clinical trials, which could increase the expense of obtaining, reduce the likelihood of obtaining and/or delay the timing of obtaining, necessary marketing approvals.
We may seek approval from the FDA under the accelerated approval pathway. If we are unable to obtain accelerated approval, we may be required to conduct additional preclinical studies or clinical trials, which could increase the expense of obtaining, reduce the likelihood of obtaining and/or delay the timing of obtaining, necessary marketing approvals.
We seek to protect our proprietary technology in part by entering into confidentiality agreements and, if applicable, material transfer agreements, consulting agreements or other similar 70 Table of Contents agreements with our advisors, employees, third-party contractors and consultants prior to beginning research or disclosing proprietary information.
We seek to protect our proprietary technology in part by entering into confidentiality agreements and, if applicable, material transfer agreements, consulting agreements or other similar agreements with our advisors, employees, third-party contractors and consultants prior to beginning research or disclosing proprietary information.
In particular, our current product candidates AT-007, AT-001 and AT-003 are dependent on our license agreement with The Trustees of Columbia University in the City of New York, or Columbia University.
In particular, our current product candidates AT-007, AT-001 and AT-003 are dependent on our license agreement with The Trustees of 68 Table of Contents Columbia University in the City of New York, or Columbia University.
We cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative action in the United States or any other jurisdiction.
We cannot predict the likelihood, nature or extent of government regulation that may arise 64 Table of Contents from future legislation or administrative action in the United States or any other jurisdiction.
These 53 Table of Contents third-parties compete with us in recruiting and retaining qualified scientific, management and commercial personnel, establishing clinical trial sites and subject registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our programs.
These third-parties compete with us in recruiting and retaining qualified scientific, management and commercial personnel, establishing clinical trial sites and subject registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our programs.
The patent prosecution process is expensive, time-consuming and complex, and we may not be able to file, prosecute, maintain, enforce or license all necessary or desirable patent applications at a reasonable cost or in a timely manner.
The patent prosecution process is expensive, time-consuming and complex, and we may not be able to file, prosecute, maintain, enforce or license all necessary or desirable patent applications at a reasonable cost or in a timely 69 Table of Contents manner.
ITEM 1A. RISK FACTORS. An investment in shares of our common stock involves a high degree of risk.
ITEM 1A. RIS K FACTORS. An investment in shares of our common stock involves a high degree of risk.
As an organization, we have limited experience designing clinical trials and may be unable to design and execute a clinical trial to support regulatory approval. Many companies in the pharmaceutical and biotechnology industries have suffered significant setbacks in late-stage clinical trials even after achieving promising results in preclinical testing and earlier clinical trials.
As an organization, we have limited experience designing clinical trials and may be unsuccessful in designing and executing a clinical trial to support regulatory approval Many companies in the pharmaceutical and biotechnology industries have suffered significant setbacks in late-stage clinical trials even after achieving promising results in preclinical testing and earlier clinical trials.
Prior attempts to inhibit this enzyme were hindered by nonselective, nonspecific inhibition, which resulted in limited efficacy and significant off-target safety effects. Our current product candidates, including AT-007, AT-001 and AT-003, may face similar or different challenges that prevent their successful commercialization.
Prior attempts to inhibit this enzyme were hindered by nonselective, nonspecific inhibition, which resulted in limited efficacy and significant off-target safety effects. Our current product candidates may face similar or different challenges that prevent their successful commercialization.
If a court were to find an exclusive-forum provision in our amended and restated certificate of incorporation or our amended and restated bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving the dispute in other jurisdictions, which could harm our business. ITEM 1B. UNRESOLVED STAFF COMMENTS. None.
If a court were to find an exclusive-forum provision in our amended and restated certificate of incorporation or our amended and restated bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving the dispute in other jurisdictions, which could harm our business. 84 Table of Contents ITEM 1B. UNRESO LVED STAFF COMMENTS. None.
In general, under Section 382 of the United States Internal Revenue Code of 1986, as amended, or the Code, a corporation that undergoes an “ownership change” is subject to limitations on its ability to utilize its pre-change NOLs to offset future taxable income.
In general, under Section 382 of the United States Internal Revenue Code of 1986, as amended, or the Code, a corporation that undergoes an “ownership change” is subject to limitations on its ability to utilize its pre-change net operating losses (“NOLs”) to offset future taxable income.
Any government investigation of alleged violations of law could require us to expend significant time and resources in response and could generate negative publicity. The occurrence of any event or penalty described above may inhibit our ability to commercialize our product candidates and harm our business, financial condition, results of operations and prospects.
Any government investigation of alleged violations of law could require us to expend significant time and resources in response and could generate negative publicity. The occurrence of any event or penalty described above may inhibit our ability to commercialize our product candidates and harm our business.
In addition to the factors discussed in this “Risk Factors” section and elsewhere in this Annual Report, the market price for our common stock has been, and is likely to continue to be influenced by the following: ● the commencement, enrollment, results of , or any delays in our planned or future clinical trials of our product candidates or those of our competitors; ● the success of competitive drugs or therapies; ● regulatory or legal developments in the United States and other countries; ● the success of competitive products or technologies; ● developments or disputes concerning patent applications, issued patents or other proprietary rights; ● the recruitment or departure of key personnel; ● the level of expenses related to our product candidates or clinical development programs; ● the results of our efforts to discover, develop, acquire or in-license additional product candidates; ● actual or anticipated changes in estimates as to financial results, development timelines or recommendations by securities analysts; ● our inability to obtain or delays in obtaining adequate drug supply for any approved drug or inability to do so at acceptable prices; ● disputes or other developments relating to proprietary rights, including patents, litigation matters and our ability to obtain patent protection for our technologies; ● significant lawsuits, including patent or stockholder litigation; ● variations in our financial results or those of companies that are perceived to be similar to us; ● changes in the structure of healthcare payment systems, including coverage and adequate reimbursement for any approved drug; ● market conditions in the pharmaceutical and biotechnology sectors; ● general economic, political, and market conditions and overall fluctuations in the financial markets in the United States and abroad; and ● investors’ general perception of us and our business.
In addition to the factors discussed in this “Risk Factors” section and elsewhere in this Annual Report, the market price for our common stock has been, and is likely to continue to be influenced by the following: • the commencement, enrollment, results of, or any delays in our planned or future clinical trials of our product candidates or those of our competitors; • the success of competitive drugs or therapies; • the Complete Response Letter we received from the FDA for the NDA we submitted for govorestat; • the departure of our founder and CEO and changes to our senior management team and board; • regulatory or legal developments in the United States and other countries; • the success of competitive products or technologies; • developments or disputes concerning patent applications, issued patents or other proprietary rights; • the recruitment or departure of key personnel; • the level of expenses related to our product candidates or clinical development programs; • the results of our efforts to discover, develop, acquire or in-license additional product candidates; • actual or anticipated changes in estimates as to financial results, development timelines or recommendations by securities analysts; 80 Table of Contents • our inability to obtain or delays in obtaining adequate drug supply for any approved drug or inability to do so at acceptable prices; • disputes or other developments relating to proprietary rights, including patents, litigation matters and our ability to obtain patent protection for our technologies; • significant lawsuits, including patent or stockholder litigation; • variations in our financial results or those of companies that are perceived to be similar to us; • changes in the structure of healthcare payment systems, including coverage and adequate reimbursement for any approved drug; • market conditions in the pharmaceutical and biotechnology sectors; • general economic, political, and market conditions and overall fluctuations in the financial markets in the United States and abroad; and • investors’ general perception of us and our business.
We may experience numerous unforeseen events prior to, during, or as a result of, clinical trials that could delay or prevent our ability to receive marketing approval or commercialize our product candidates, including the following: ● delays in reaching a consensus with regulatory authorities on the design or implementation of our clinical trials; ● regulators or institutional review boards, or IRBs, may not authorize us or our investigators to commence a clinical trial or conduct a clinical trial at a prospective trial site; ● delays in reaching agreement on acceptable terms with prospective clinical research organizations, or CROs, and clinical trial sites; ● the number of patients required for clinical trials of our product candidates may be larger than we anticipate, enrollment in these clinical trials may be slower than we anticipate, participants may drop out of these clinical trials at a higher rate than we anticipate or fail to return for post-treatment follow-up or we may fail to recruit suitable patients to participate in a trial; ● clinical trials of our product candidates may produce negative or inconclusive results; ● imposition of a clinical hold by regulatory authorities as a result of a serious adverse event, concerns with a class of product candidates or after an inspection of our clinical trial operations, trial sites or manufacturing facilities; ● occurrence of serious adverse events associated with the product candidate that are viewed to outweigh its potential benefits; ● changes in regulatory requirements and guidance that require amending or submitting new clinical protocols; or ● we may decide, or regulators may require us, to conduct additional clinical trials or abandon product development programs.
We may experience numerous unforeseen events prior to, during, or as a result of, clinical trials that could delay or prevent our ability to receive marketing approval or commercialize our product candidates, including the following: • delays in reaching a consensus with regulatory authorities on the design or implementation of our clinical trials; • regulators or institutional review boards, or IRBs, may not authorize us or our investigators to commence a clinical trial or conduct a clinical trial at a prospective trial site; • delays in reaching agreement on acceptable terms with prospective clinical research organizations, or CROs, and clinical trial sites; • FDA requirements for the approval of govorestat for any indication; • the number of patients required for clinical trials of our product candidates may be larger than we anticipate, enrollment in these clinical trials may be slower than we anticipate, participants may drop out of these clinical trials at a higher rate than we anticipate or fail to return for post-treatment follow-up or we may fail to recruit suitable patients to participate in a trial; • clinical trials of our product candidates may produce negative or inconclusive results; • imposition of a clinical hold by regulatory authorities as a result of a serious adverse event, concerns with a class of product candidates or after an inspection of our clinical trial operations, trial sites or manufacturing facilities; 51 Table of Contents • occurrence of serious adverse events associated with the product candidate that are viewed to outweigh its potential benefits; • deviations from GCP or clinical trial protocols, data integrity issues and other issues that could affect the data or other results of a clinical trial, the safety or efficacy of a product candidate or a product candidate’s review or approval by regulatory authorities; • changes in regulatory requirements and guidance that require amending or submitting new clinical protocols; or • we may decide, or regulators may require us, to conduct additional clinical trials or abandon product development programs.
NOLs generated in tax years beginning before January 1, 2018 will not be subject to the taxable income limitation, and NOLs generated in tax years ending before January 1, 2018 will continue to have a two-year carryback and 20-year carryforward period.
NOLs generated in tax years beginning before January 1, 2018, are not subject to the 80% taxable income limitation, and NOLs generated in tax years ending before January 1, 2018, continue to have a two-year carryback and 20-year carryforward period.
We also may be unable to license 67 Table of Contents or acquire third-party intellectual property rights on terms that would allow us to make an appropriate return on our investment or at all.
We also may be unable to license or acquire third-party intellectual property rights on terms that would allow us to make an appropriate return on our investment or at all.
The price of our shares could decline if one or more equity research analysts downgrade our shares or issue other unfavorable commentary or research 77 Table of Contents about us.
The price of our shares could decline if one or more equity research analysts downgrade our shares or issue other unfavorable commentary or research about us.
In addition, our software systems include cloud-based applications that are hosted by third-party service providers with security and information technology systems subject to similar risks.
In addition, our software systems include cloud-based applications that are hosted by third-party service providers with security and information 78 Table of Contents technology systems subject to similar risks.
If we are required by regulatory authorities to perform studies in addition to those currently expected, or if there are any delays in the initiation and completion of our clinical trials or the development of any of our product candidates, our expenses could increase.
If we are required by regulatory authorities to perform studies in addition to those currently expected, or if there are any additional delays in the initiation and completion of our clinical trials or the development and approval of any of our product candidates, our expenses will likely increase.
Under the FDA’s rare pediatric disease priority review voucher, or RPD-PRV, program, upon the approval of an NDA for the treatment of a rare pediatric disease, the sponsor of such application would be eligible for an RPD-PRV that can be used to obtain priority review for a subsequent NDA.
Under the FDA’s rare pediatric disease priority review voucher, or RPD-PRV, program, upon the approval of an NDA for the treatment of a rare pediatric disease, the sponsor of such application may be eligible for an RPD-PRV that can be used to obtain priority review for a subsequent NDA or Biologics License Application (BLA).
Also, regulatory approval for our product candidates may be withdrawn. If we fail to comply with the applicable regulatory requirements, our target market will be reduced and our ability to realize the full market potential of our product candidates will be harmed and our business, financial condition, results of operations and prospects could be harmed.
If we fail to comply with the applicable regulatory requirements, our target market will be reduced and our ability to realize the full market potential of our product candidates will be harmed and our business, financial condition, results of operations and prospects could be harmed.
Deferred tax assets for NOLs will need to be measured at the applicable tax rate in effect when the NOL is expected to be utilized.
Deferred tax assets for NOLs are measured at the applicable tax rate in effect when the NOL is expected to be utilized.
In addition, NOLs arising in tax years ending after December 31, 2017 44 Table of Contents can be carried forward indefinitely, but carryback is generally prohibited.
In addition, NOLs arising in tax years ending after December 31, 2017, can be carried forward indefinitely, but carryback is generally prohibited.
Additionally, if the results of our clinical trials are inconclusive or if there are safety concerns or serious adverse events associated with our product candidates, we may: ● be delayed in obtaining marketing approval, or not obtain marketing approval at all; ● obtain approval for indications or patient populations that are not as broad as intended or desired; ● obtain approval with labeling that includes significant use or distribution restrictions or safety warnings, including in the form of a risk evaluation and mitigation strategy, or REMS; ● be subject to additional post-marketing testing requirements; ● be required to perform additional clinical trials to support approval or be subject to additional post-marketing testing requirements; ● have regulatory authorities withdraw, or suspend, their approval of the drug or impose restrictions on its distribution in the form of a modified REMS; ● be subject to the addition of labeling statements, such as warnings or contraindications; ● be sued; or ● experience damage to our reputation. ​ Our product development costs will also increase if we experience delays in testing or obtaining marketing approvals.
Additionally, if the results of our clinical trials are inconclusive or if there are safety concerns or serious adverse events associated with our product candidates, we may: • receive a new warning letter from the FDA, which can damage our reputation and prevent the continuance of our clinical trials; • be delayed in obtaining marketing approval, or not obtain marketing approval at all; • obtain approval for indications or patient populations that are not as broad as intended or desired; • obtain approval with labeling that includes significant use or distribution restrictions or safety warnings, including in the form of a risk evaluation and mitigation strategy, or REMS; • be subject to additional post-marketing testing requirements; • be required to perform additional clinical trials to support approval or be subject to additional post-marketing testing requirements; • have regulatory authorities withdraw, or suspend, their approval of the drug or impose restrictions on its distribution in the form of a new or modified REMS; • be subject to the addition of labeling statements, such as warnings or contraindications; • be sued; or • experience damage to our reputation.
Of the large number of products in development across the pharmaceutical industry, only a small percentage successfully complete the FDA or comparable foreign regulatory authorities approval processes and are commercialized.
Of the large number of products in development across the pharmaceutical industry, only a small percentage successfully complete the FDA or comparable foreign regulatory authorities approval processes and receiving marketing authorization.
We continue to evaluate the effect that the PPACA and its possible repeal and replacement may have on our business and the potential profitability of our product candidates. ​ Other legislative changes have been proposed and adopted since the PPACA was enacted.
Congress may consider additional legislation to repeal or repeal and replace other elements of the PPACA. We continue to evaluate the effect that the PPACA and its possible repeal and replacement may have on our business and the potential profitability of our product candidates. ​ Other legislative changes have been proposed and adopted since the PPACA was enacted.
The following examples are illustrative: ● others may be able to make compounds or formulations that are similar to our product candidates but that are not covered by the claims of any patents, should they issue, that we own or license; ● we or our licensors might not have been the first to make the inventions covered by the issued patents or pending patent applications that we own or license; ● we or our licensors might not have been the first to file patent applications covering certain of our inventions; ● others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our intellectual property rights; ● it is possible that our pending patent applications will not lead to issued patents; ● issued patents that we own or license may not provide us with any competitive advantages, or may be held invalid or unenforceable as a result of legal challenges; ● our competitors might conduct research and development activities in the United States and other countries that provide a safe harbor from patent infringement claims for certain research and development activities, as well as in countries where we do not have patent rights, and then use the information learned from such activities to develop competitive drugs for sale in our major commercial markets; ● we may not develop additional proprietary technologies that are patentable; and ● the patents of others may have an adverse effect on our business. 72 Table of Contents Risks Related to Our Business Operations, Employee Matters and Managing Growth We are highly dependent on the services of our Chief Executive Officer and Chairman, Dr.
The following examples are illustrative: • others may be able to make compounds or formulations that are similar to our product candidates but that are not covered by the claims of any patents, should they issue, that we own or license; • we or our licensors might not have been the first to make the inventions covered by the issued patents or pending patent applications that we own or license; • we or our licensors might not have been the first to file patent applications covering certain of our inventions; • others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our intellectual property rights; • it is possible that our pending patent applications will not lead to issued patents; • issued patents that we own or license may not provide us with any competitive advantages, or may be held invalid or unenforceable as a result of legal challenges; • our competitors might conduct research and development activities in the United States and other countries that provide a safe harbor from patent infringement claims for certain research and development activities, as well as in countries where we do not have patent rights, and then use the information learned from such activities to develop competitive drugs for sale in our major commercial markets; • we may not develop additional proprietary technologies that are patentable; and • the patents of others may have an adverse effect on our business. 76 Table of Contents Risks Related to Our Business Operations, Employee Matters and Managing Growth We are involved in a securities-related class action and derivative litigation and defending against these claims could result in substantial costs and divert management time and resources, damages and have a material adverse effect on our results of operations.
If we are not able to meet market demand for any approved product, it would negatively impact our ability to generate revenue, harm our reputation, and could have an adverse effect on our business and financial condition. 61 Table of Contents Further, our reliance on third-party manufacturers entails risks to which we would not be subject if we manufactured product candidates ourselves, including: ● inability to meet our product specifications and quality requirements consistently; ● delay or inability to procure or expand sufficient manufacturing capacity; ● issues related to scale-up of manufacturing; ● costs and validation of new equipment and facilities required for scale-up; ● our third-party manufacturers may not be able to execute our manufacturing procedures and other logistical support requirements appropriately; ● our third-party manufacturers may fail to comply with cGMP requirements and other inspections by the FDA or other comparable regulatory authorities; ● our inability to negotiate manufacturing agreements with third parties under commercially reasonable terms, if at all; ● breach, termination or nonrenewal of manufacturing agreements with third parties in a manner or at a time that is costly or damaging to us; ● reliance on single sources for drug components; ● lack of qualified backup suppliers for those components that are currently purchased from a sole or single-source supplier; ● our third-party manufacturers may not devote sufficient resources to our product candidates; ● we may not own, or may have to share, the intellectual property rights to any improvements made by our third-party manufacturers in the manufacturing process for our product candidates; ● operations of our third-party manufacturers or suppliers could be disrupted by conditions unrelated to our business or operations, including the bankruptcy of the manufacturer or supplier; and ● carrier disruptions or increased costs that are beyond our control.
Further, our reliance on third-party manufacturers entails risks to which we may not be subject if we manufactured product candidates ourselves, including: • inability to meet our product specifications and quality requirements consistently; • delay or inability to procure or expand sufficient manufacturing capacity; • issues related to scale-up of manufacturing; • costs and validation of new equipment and facilities required for scale-up; • our third-party manufacturers may not be able to execute our manufacturing procedures and other logistical support requirements appropriately; • our third-party manufacturers may fail to comply with cGMP requirements and other inspections by the FDA or other comparable regulatory authorities; • our inability to negotiate manufacturing agreements with third parties under commercially reasonable terms, if at all; • breach, termination or nonrenewal of manufacturing agreements with third parties in a manner or at a time that is costly or damaging to us; • reliance on single sources for drug components; • lack of qualified backup suppliers for those components that are currently purchased from a sole or single-source supplier; • diminished numbers of FDA inspectors available to conduct pre-approval inspections may slow the pre-approval inspection process and delay review and/or approval of our applications; • our third-party manufacturers may not devote sufficient resources to our product candidates; • we may not own, or may have to share, the intellectual property rights to any improvements made by our third-party manufacturers in the manufacturing process for our product candidates; • operations of our third-party manufacturers or suppliers could be disrupted by conditions unrelated to our business or operations, including the bankruptcy of the manufacturer or supplier; and • carrier disruptions or increased costs that are beyond our control.
Future collaborations could subject us to a number of risks, including: ● we may be required to undertake the expenditure of substantial operational, financial and management resources; ● we may be required to issue equity securities that would dilute our stockholders’ percentage ownership of our company; ● we may be required to assume substantial actual or contingent liabilities; ● we may not be able to control the amount and timing of resources that our strategic collaborators devote to the development or commercialization of our product candidates; ● strategic collaborators may select indications or design clinical trials in a way that may be less successful than if we were doing so; ● strategic collaborators may delay clinical trials, provide insufficient funding, terminate a clinical trial or abandon a product candidate, repeat or conduct new clinical trials or require a new version of a product candidate for clinical testing; ● strategic collaborators may not pursue further development and commercialization of products resulting from the strategic collaboration arrangement or may elect to discontinue research and development programs; ● strategic collaborators may not commit adequate resources to the marketing and distribution of our product candidates, limiting our potential revenues from these products; ● disputes may arise between us and our strategic collaborators that result in the delay or termination of the research, development or commercialization of our product candidates or that result in costly litigation or arbitration that diverts management’s attention and consumes resources; ● strategic collaborators may experience financial difficulties; ● strategic collaborators may not properly maintain, enforce or defend our intellectual property rights or may use our proprietary information in a manner that could jeopardize or invalidate our proprietary information or expose us to potential litigation; ● business combinations or significant changes in a strategic collaborator’s business strategy may adversely affect a strategic collaborator’s willingness or ability to complete its obligations under any arrangement; ● strategic collaborators could decide to move forward with a competing product candidate developed either independently or in collaboration with others, including our competitors; and ● strategic collaborators could terminate the arrangement or allow it to expire, which would delay the development and may increase the cost of developing our product candidates. 54 Table of Contents Even if any product candidates receive marketing approval, they may fail to achieve market acceptance by physicians, patients, third-party payors or others in the medical community necessary for commercial success.
Future collaborations could subject us to a number of risks, including: • we may be required to undertake the expenditure of substantial operational, financial and management resources; • we may be required to issue equity securities that would dilute our stockholders’ percentage ownership of our company; • we may be required to assume substantial actual or contingent liabilities; • we may not be able to control the amount and timing of resources that our strategic collaborators devote to the development or commercialization of our product candidates; • strategic collaborators may select indications or design clinical trials in a way that may be less successful than if we were doing so; • strategic collaborators may delay clinical trials, provide insufficient funding, terminate a clinical trial or abandon a product candidate, repeat or conduct new clinical trials or require a new version of a product candidate for clinical testing; • strategic collaborators may not pursue further development and commercialization of products resulting from the strategic collaboration arrangement or may elect to discontinue research and development programs; • strategic collaborators may not commit adequate resources to the marketing and distribution of our product candidates, limiting our potential revenues from these products; 57 Table of Contents • disputes may arise between us and our strategic collaborators that result in the delay or termination of the research, development or commercialization of our product candidates or that result in costly litigation or arbitration that diverts management’s attention and consumes resources; • strategic collaborators may experience financial difficulties; • changes in the collaborator’s strategic focus or available funding; • strategic collaborators may not properly maintain, enforce or defend our intellectual property rights or may use our proprietary information in a manner that could jeopardize or invalidate our proprietary information or expose us to potential litigation; • business combinations or significant changes in a strategic collaborator’s business strategy may adversely affect a strategic collaborator’s willingness or ability to complete its obligations under any arrangement; • strategic collaborators could decide to move forward with a competing product candidate developed either independently or in collaboration with others, including our competitors; • collaborators may not pursue development of our product candidates or may elect not to continue or renew development programs based on results of clinical trials or other studies; • strategic collaborators could terminate the arrangement or allow it to expire, which would delay the development and may increase the cost of developing our product candidates; • collaborators may not perform their obligations as expected; and • other factors, such as an acquisition or business combination, that divert resources or create competing priorities.

… 283 more changes not shown on this page.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

6 edited+3 added−0 removed0 unchanged
Biggest changeWe leverage well-known and established third parties as industry partners to support our key business processes and utilize the services of reputable external advisory firms for running important functions such as cybersecurity assessments and technical security management activities, including network security management. ​ We engaged an independent cybersecurity advisory service firm to perform a focused cybersecurity assessment to better understand our current cybersecurity threats and risks and build a foundation for establishing a cybersecurity risk assessment framework to identify, assess and manage cybersecurity risks arising from our business operations. ​ To date, risks from cybersecurity threats, including those resulting from any previous cybersecurity incidents, have not materially affected us, including our operations or financial standing.
Biggest changeWe leverage well-known and established third parties as industry partners to support our key business processes and utilize the services of reputable external advisory firms for running important functions such as cybersecurity assessments and technical security management activities, including network security management.
The Audit Committee oversees our risk management program, which focuses on the most significant risks we face. Audit Committee meetings include discussions of specific risk areas throughout the year, including, among others, those relating to cybersecurity. Our Chief Financial Officer or Chief Operating Officer reports on our enterprise risk profile on an annual basis or as needed.
Audit Committee meetings include discussions of specific risk areas throughout the year, including, among others, those relating to cybersecurity . Our Chief Financial Officer or Chief Operating Officer reports on our enterprise risk profile on an annual basis or more frequently as needed.
We do not believe that cybersecurity threats resulting from any previous cybersecurity incidents of which we are aware are reasonably likely to materially affect us. 80 Table of Contents For additional information regarding risks from cybersecurity threats, please refer to Item 1A, “Risk Factors,” in this annual report on Form 10-K. ​ One of the key functions of our Board of Directors is informed oversight of our risk management processes, including risks from cybersecurity threats.
We do not believe that cybersecurity threats resulting from any previous cybersecurity incidents of which we are aware are reasonably likely to materially affect us. For additional information regarding risks from cybersecurity threats, please refer to Item 1A, “Risk Factors,” in this annual report on Form 10-K.
Our Chief Executive Officer is responsible for making strategic decisions and approving external communication releases related to cybersecurity risks or incidents.
Our Chief Financial Officer and Chief Operating Officer are jointly responsible for managing cybersecurity risks and implementing the required policies across the Company. Our Chief Executive Officer is responsible for making strategic decisions and approving external communication releases related to cybersecurity risks or incidents.
Our Board of Directors is responsible for monitoring and assessing strategic risk exposure, and our executive officers are responsible for the day-to-day management of the material risks we face. Our Board of Directors administers its cybersecurity risk oversight function directly as a whole, as well as through the Audit Committee of the Board of Directors (the “Audit Committee”).
One of the key functions of our Board of Directors is informed oversight of our risk management processes, including risks from cybersecurity threats. Our Board of Directors is responsible for monitoring and assessing strategic risk exposure, and our executive officers are responsible for the day-to-day management of the material risks we face.
Our Audit Committee also engages with external counsel on legal matters related to cybersecurity incident management and reporting. ​ Our Chief Financial Officer and Chief Operating Officer are jointly responsible for managing cybersecurity risks and implementing the required policies across the Company.
Our Audit Committee also engages with external counsel on legal matters related to cybersecurity incident management and reporting. To date, risks from cybersecurity threats, including those resulting from any previous cybersecurity incidents, have not materially affected us, including our operations or financial standing.
Added
ITEM 1C. CYB ERSECURITY. We have established policies and procedures for assessing, identifying and managing material risk from cybersecurity threats, and have integrated these processes into our overall risk management systems and processes.
Added
Our Chief Executive Officer and Chief Financial Officer work closely with our third-party IT manager to stay informed about and monitor the prevention, detection, mitigation and remediation of any potentially significant cybersecurity incidents, including making determinations on the materiality of a cybersecurity incident.
Added
Our Board of Directors administers its cybersecurity risk oversight function directly as a whole, as well as through the Audit Committee of the Board of Directors (the "Audit Committee"). The Audit Committee oversees our risk management program, which focuses on the most significant risks we face.

Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−0 removed1 unchanged
Biggest changeITEM 2. PROPERTIES. Our corporate headquarters are located at 545 Fifth Ave, Suite 1400, New York, NY 10017 where we lease office space pursuant to a lease agreement that commenced on October 31, 2019 and expires on October 31, 2024.
Biggest changeITEM 2. P ROPERTIES. Our corporate headquarters are located at 545 Fifth Ave, Suite 1400 and 1401, New York, NY 10017 where we lease office space pursuant to a lease agreement amended on September 11, 2024 and expires on October 31, 2029.
We intend to add new facilities or expand existing facilities as we add employees, and we believe that suitable additional or substitute space will be available as needed to accommodate any such expansion of our operations.
We intend to add new facilities or expand existing facilities as we add employees, and we believe that suitable additional or substitute space will be available as needed to accommodate any such expansion of our operations. 85 Table of Contents

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

0 edited+10 added−2 removed0 unchanged
Removed
ITEM 3. LEGAL PROCEEDINGS. We are not a party to any material legal proceedings, and we are not aware of any material claims or actions pending or threatened against us.
Added
ITEM 3. LEGAL PROCEEDINGS. Securities Class Action Litigation On December 17, 2024, a purported stockholder filed a putative class action lawsuit against the Company and certain current and former Company officers and directors in the United States District Court for the Southern District of New York ( Alexandru v. Applied Therapeutics, Inc., et al. , No. 1:24-cv-09715).
Removed
In the future, we might from time to time become involved in litigation relating to claims arising from our ordinary course of business, the resolution of which we do not anticipate would have a material adverse impact on our financial position, results of operations or cash flows. ITEM 4. MINE SAFETY DISCLOSURES. Not applicable. PART II
Added
The complaint alleges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder by making false and/or misleading statements between January 3, 2024 to December 2, 2024 in connection with the Company’s NDA to the FDA for govorestat for the treatment of Classic Galactosemia, and seeks unspecified damages.
Added
On December 27, 2024, another purported stockholder filed a putative class action lawsuit against the Company and a former Company officer and director in the United States District Court for the Southern District of New York ( Ikram v. Applied Therapeutics, Inc., et al. , No. 1:24-cv-09973).
Added
The complaint alleges claims substantially similar to those alleged in the Alexandru action and also seeks unspecified damages. On February 18, 2025, several purported stockholders filed motions seeking to consolidate the Alexandru and Ikram actions and seeking appointment as lead plaintiff in the consolidated action.
Added
On March 11, 2025, the court consolidated the Alexandru and Ikram actions (In re Applied Therapeutics Securities Litigation, No. 1:24-cv-9715) and appointed a lead plaintiff and lead counsel. The deadline for lead plaintiff to file a consolidated amended complaint is May 2, 2025.
Added
Shareholder Derivative Litigation On January 31, 2025, a purported stockholder filed a derivative action in the United States District Court for the Southern District of New York ( Hassine v. Shendelman, et al. , No. 1:25-cv-00935).
Added
The complaint purports to assert derivative claims against certain current and former Company officers and directors for breach of fiduciary duty, unjust enrichment, abuse of control, gross mismanagement, waste of corporate assets, violations of Section 14(a) of the Exchange Act, and contribution under Sections 10(b) and 21D of the Exchange Act.
Added
The complaint seeks to implement reforms to the Company’s corporate governance and internal procedures and to recover on behalf of the Company for any liability the Company might incur as a result of the individual defendants’ alleged misconduct, as well as declaratory, equitable, and monetary relief, including attorneys’ fees and other costs.
Added
The derivative action is based substantially on the same facts alleged in the consolidated action described above. On March 4, 2025, plaintiff and the Company filed a joint stipulation seeking to temporarily stay the derivative action. On March 5, 2025, the court so-ordered the stipulation, thereby temporarily staying the derivative action. ITEM 4. MINE S AFETY DISCLOSURES.
Added
Not applicable. 86 Table of Contents PAR T II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

4 edited+1 added−1 removed1 unchanged
Biggest changeAny future determination to pay dividends will be at the discretion of our board of directors and will depend upon a number of factors, including our results of operations, financial condition, future prospects, contractual restrictions, restrictions imposed by applicable law and other factors that our board of directors deems relevant.
Biggest changeAny future determination to pay dividends will be at the discretion of our board of directors and will depend upon a number of factors, including our results of operations, financial condition, future prospects, contractual restrictions, restrictions imposed by applicable law and other factors that our board of directors deems relevant. Recent Sales of Unregistered Securities None.
This number of holders of record also does not include stockholders whose shares may be held in trust by other entities. 81 Table of Contents Dividend Policy We have never paid or declared any cash dividends on our common stock, and we do not anticipate paying any cash dividends on our common stock in the foreseeable future.
This number of holders of record also does not include stockholders whose shares may be held in trust by other entities. Dividend Policy We have never paid or declared any cash dividends on our common stock, and we do not anticipate paying any cash dividends on our common stock in the foreseeable future.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. Market Information On May 16, 2019, our common stock began trading on the Nasdaq Global Market under the symbol “APLT.” Prior to that time, there was no public market for our common stock.
ITEM 5. MARKET FOR REGIST RANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. Market Information On May 16, 2019, our common stock began trading on the Nasdaq Global Market under the symbol “APLT.” Prior to that time, there was no public market for our common stock.
Stockholders As of December 31, 2023, there were approximately 26 stockholders of record of our common stock. The actual number of holders of our common stock is greater than this number of record holders, and includes stockholders who are beneficial owners, but whose shares are held in street names by brokers or held by other nominees.
Stockholders As of December 31, 2024, there were approximately 30 stockholders of record of our common stock. The actual number of holders of our common stock is greater than this number of record holders, and includes stockholders who are beneficial owners, but whose shares are held in street names by brokers or held by other nominees.
Removed
Recent Sales of Unregistered Securities ​ None. ​ Issuer Purchases of Equity Securities On October 12, 2023, we entered into an exchange agreement with entities affiliated with Venrock Healthcare Capital Partners, pursuant to which we exchanged an aggregate of 5,658,034 shares of common stock, owned by the Exchanging Stockholders for pre-funded warrants to purchase an aggregate of 5,658,034 shares of common stock (subject to adjustment in the event of stock splits, recapitalizations and other similar events affecting common stock), with an exercise price of $0.001 per share.
Added
Issuer Purchases of Equity Securities None. ITEM 6. [ RESERVED] 87 Table of Contents

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

73 edited+29 added−30 removed51 unchanged
Biggest changeChanges in fair value of warrant liabilities consists of mark to market changes on our common warrants that are classified as liabilities. 88 Table of Contents Results of Operations The following table summarizes our results of operations: ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ December 31, (in thousands) 2023 2022 REVENUE: ​ ​ ​ ​ ​ ​ License revenue ​ $ 9,219 ​ $ — Research and development services revenue ​ ​ 774 ​ ​ — Total revenue ​ ​ 9,993 ​ ​ — COSTS AND EXPENSES: ​ ​ Research and development ​ ​ 53,905 ​ ​ 55,634 General and administrative ​ 20,623 ​ ​ 27,316 Total costs and expenses ​ 74,528 ​ ​ 82,950 LOSS FROM OPERATIONS ​ (64,535) ​ ​ (82,950) OTHER INCOME (EXPENSE), NET: ​ ​ ​ ​ ​ Interest income ​ ​ 1,372 ​ ​ 685 Change in fair value of warrant liabilities ​ ​ (56,573) ​ ​ (66) Other expense ​ ​ (27) ​ ​ (177) Total other income (expense), net ​ ​ (55,228) ​ ​ 442 Net loss ​ $ (119,763) ​ $ (82,508) ​ Research and Development Expenses The following table summarizes our research and development expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ ​ December 31, ​ ​ (in thousands) 2023 2022 Increase/(Decrease) Clinical and pre-clinical ​ $ 39,841 ​ $ 42,928 ​ $ (3,087) Drug manufacturing and formulation ​ 2,429 ​ ​ 957 ​ 1,472 Personnel expenses ​ 6,283 ​ ​ 6,648 ​ (365) Stock-based compensation ​ ​ 3,005 ​ ​ 3,619 ​ ​ (614) Regulatory and other expenses ​ 2,347 ​ ​ 1,482 ​ 865 Total research and development expenses ​ $ 53,905 ​ $ 55,634 ​ $ (1,729) ​ Research and development expenses for the year ended December 31, 2023, were $53.9 million, compared to $55.6 million for the year ended December 31, 2022.
Biggest changeResults of Operations The following table summarizes our results of operations: Year Ended December 31, (in thousands) 2024 2023 REVENUE: License revenue $ — $ 9,219 Research and development services revenue 455 774 Total revenue 455 9,993 COSTS AND EXPENSES: Research and development 48,744 53,905 General and administrative 56,010 20,623 Total costs and expenses 104,754 74,528 LOSS FROM OPERATIONS (104,299 ) (64,535 ) OTHER INCOME (EXPENSE), NET: Interest income 3,534 1,372 Change in fair value of warrant liabilities (4,782 ) (56,573 ) Other expense (77 ) (27 ) Total other expense, net (1,325 ) (55,228 ) Net loss $ (105,624 ) $ (119,763 ) Revenue Revenue for the year ended December 31, 2024 was $0.5 million, compared to $10.0 million for the year ended December 31, 2023.
In the event of certain corporate transactions, the holders of the Pre-Funded Warrants will be entitled to receive, upon exercise of the Pre-Funded Warrants, the kind and amount of securities, cash or other property that the holders would have received had they exercised the Pre-Funded Warrants immediately prior to such transaction.
In the event of certain corporate transactions, the holders of the Pre-Funded Warrants will be entitled to receive, upon exercise of the Pre-Funded Warrants, the kind and amount of securities, cash or other property that the holders would have received had they exercised the Pre-Funded Warrants immediately prior to such transaction.
The Pre-Funded Warrants do not entitle the holders thereof to any voting rights or any of the other rights or privileges to which holders of common stock are entitled.
The Pre-Funded Warrants do not entitle the holders thereof to any voting rights or any of the other rights or privileges to which holders of common stock are entitled.
Financing Activities During the year ended December 31, 2023, net cash provided by financing activities was $74.5 million, primarily from proceeds from the issuance of shares and pre-funded warrants of $64.5 million, $10.3 million from the exercise of common warrants, proceeds from financed insurance premium of $1.5 million, $0.1 million from exercise of stock options for common stock under the equity incentive plan, partially offset by repayment of short-term borrowings of $1.9 million.
During the year ended December 31, 2023, net cash provided by financing activities was $74.5 million, primarily from proceeds from the issuance of shares and pre-funded warrants of $64.5 million, $10.3 million from the exercise of common warrants, proceeds from financed insurance premium of $1.5 million, $0.1 million from exercise of stock options for common stock under the equity incentive plan, partially offset by repayment of short-term borrowings of $1.9 million.
We completed a Phase 1/2 clinical trial evaluating AT-001 in approximately 120 patients with type 2 diabetes, in which no drug- related adverse effects or tolerability issues were observed. In September 2019, we announced the initiation of a Phase 3 registrational trial of AT-001 in DbCM.
We completed a Phase 1/2 clinical trial evaluating AT‑001 in approximately 120 patients with type 2 diabetes, in which no drug‑related adverse effects or tolerability issues were observed. In September 2019, we announced the initiation of a Phase 2/3 trial of AT-001 in DbCM.
The securities issued have the benefit of the Registration Rights Agreement (the “Registration Rights Agreement”), dated as of February 27, 2024, by and among the Company and the 2024 Purchasers, requiring the Company to prepare and file a registration statement with the SEC as soon as reasonably practicable, but in no event later March 28, 2024 (the “Filing Deadline”), and to use commercially reasonable efforts to have the registration statement declared effective within 30 days of the Filing Deadline, subject to extension under the terms of the Registration Rights Agreement.
The securities issued have the benefit of the Registration Rights Agreement (the “Registration Rights Agreement”), dated as of February 27, 2024, by and among us and the 2024 Purchasers, requiring us to prepare and file a registration statement with the SEC as soon as reasonably practicable, but in no event later March 28, 2024 (“Filing Deadline”), and to use commercially reasonable efforts to have the registration statement declared effective within 30 days of the Filing Deadline, subject to extension under the terms of the Registration Rights Agreement.
General and administrative expenses also include professional fees for legal, accounting, auditing, tax and consulting services; travel expenses; and facility-related expenses, which include allocated expenses for rent and maintenance of facilities and other operating costs.
General and administrative expenses also include professional fees for legal, accounting, auditing, tax and consulting services; travel expenses; and facility-related expenses, which include expenses for rent and maintenance of facilities and other operating costs.
Treatment with AT-007 in the drosophila model of SORD prevented the disease phenotype and protected from neuronal degeneration. On October 25, 2021, we reported data from a pilot open-label study in eight SORD Deficiency patients. AT-007 reduced blood sorbitol levels by approximately 66% from baseline through 30 days of treatment. AT-007 was safe and well tolerated in all treated patients.
Treatment with AT-007 in the drosophila model of SORD prevented the disease phenotype and protected from neuronal degeneration. On October 25, 2021, we reported data from a pilot open-label study in eight SORD Deficiency patients. AT-007 reduced blood sorbitol levels by approximately 66% from baseline through 30 days of treatment. AT-007 was generally safe and well tolerated in treated patients.
Operating Expenses Research and Development Expenses Research and development expenses consist primarily of costs incurred for our research activities, including our discovery efforts and the development of our product candidates, and include: ● employee-related expenses, including salaries, related benefits and stock-based compensation expense for employees engaged in research and development functions; ● fees paid to consultants for services directly related to our product development and regulatory efforts; ● expenses incurred under agreements with contract research organizations, or CROs, as well as contract manufacturing organizations, or CMOs, and consultants that conduct and provide supplies for our preclinical studies and clinical trials; ● costs associated with preclinical activities and development activities; ● costs associated with our technology and our intellectual property portfolio; and ● costs related to compliance with regulatory requirements.
Operating Expenses Research and Development Expenses Research and development expenses consist primarily of costs incurred for our research activities, including our discovery efforts and the development of our product candidates, and include: • employee‑related expenses, including salaries, related benefits and stock‑based compensation expense for employees engaged in research and development functions; • fees paid to consultants for services directly related to our product development and regulatory efforts; • expenses incurred under agreements with contract research organizations, or CROs, as well as contract manufacturing organizations, or CMOs, and consultants that conduct and provide supplies for our preclinical studies and clinical trials; 91 Table of Contents • costs associated with preclinical activities and development activities; • costs associated with our technology and our intellectual property portfolio; and • costs related to compliance with regulatory requirements.
As a result, if factors change and we use different assumptions, the fair value of the warrant liabilities may be materially different in the future. 95 Table of Contents Stock-Based Compensation We account for our stock-based compensation as expense in the statements of operations based on the awards’ grant date fair values.
As a result, if factors change and we use different assumptions, the fair value of the warrant liabilities may be materially different in the future. 99 Table of Contents Stock‑Based Compensation We account for our stock‑based compensation as expense in the statements of operations based on the awards’ grant date fair values.
Our unique approach to drug development leverages recent technological advances to design improved drugs, employs early use of biomarkers to confirm biological activity and focuses on abbreviated regulatory pathways. Our first molecular target is aldose reductase, or AR, an enzyme that converts glucose to sorbitol under oxidative stress conditions, and is implicated in multiple diseases.
Our unique approach to drug development leverages recent technological advances to design improved drugs, employs early use of biomarkers to confirm biological activity and focuses on potentially accelerated regulatory pathways. Our first molecular target is aldose reductase, or AR, an enzyme that converts glucose to sorbitol under oxidative stress conditions, and is implicated in multiple diseases.
The Pre-Funded Warrants and Common Warrants are subject to adjustment in the event of certain stock dividends and distributions, stock splits, stock combinations, reclassifications or similar events affecting the common stock and also upon any distributions for no consideration of assets to the Company’s stockholders.
The Pre-Funded Warrants are subject to adjustment in the event of certain stock dividends and distributions, stock splits, stock combinations, reclassifications or similar events affecting the common stock and also upon any distributions for no consideration of assets to our stockholders.
PMM2-CDG is a glycosylation disorder caused by deficiencies in the enzyme phosphomannomutase 2, which leads to CNS symptoms similar to Galactosemia, including low IQ, tremor, and speech and motor problems. Aldose Reductase is over-activated in this disease as a compensatory consequence of PMM2 deficiency, and a CNS 83 Table of Contents penetrant ARI may be a compelling clinical option.
PMM2-CDG is a glycosylation disorder caused by deficiencies in the enzyme phosphomannomutase 2, which leads to CNS symptoms similar to Galactosemia, including low IQ, tremor, and speech and motor problems. Aldose Reductase is over-activated in this disease as a compensatory consequence of PMM2 deficiency, and a CNS penetrant ARI may be a compelling clinical option.
This is partially offset by an increase of $1.9 million in prepaid expense, an increase of $0.7 million in accrued expenses and other liabilities, $7.4 million in non-cash stock-based compensation expense, $2.1 million of amortization of insurance premium, $56.6 million in changes in fair value of our warrant liabilities, $0.4 million in amortization of operating lease right-of-use assets, and an increase of $0.3 million of other liabilities.
This is partially offset by an increase of $1.9 million in prepaid expense, $0.7 million in accrued expenses and other liabilities, $7.4 million in non-cash stock-based 95 Table of Contents compensation expense, $2.1 million of amortization of insurance premium, $56.6 million in changes in fair value of our warrant liabilities, $0.4 million in amortization of operating lease right-of-use assets, and $0.3 million of other liabilities.
Holders may not exercise any Pre-Funded Warrants that would cause the aggregate number of shares of common stock beneficially owned by the holder to exceed 9.99% of the Company’s outstanding common stock immediately after exercise.
Holders may not exercise any Pre-Funded Warrants that would cause the aggregate number of shares of common stock beneficially owned by the holder to exceed 9.99% of our outstanding common stock immediately after exercise.
Due to the numerous risks and uncertainties associated with the development of our product candidates and programs, and because the extent to which we may enter into collaborations with third parties for development of our product candidates is unknown, we are unable to estimate the timing and amounts of increased capital outlays and 92 Table of Contents operating expenses associated with completing the research and development of our product candidates.
Due to the numerous risks and uncertainties associated with the development of our product candidates and programs, and because the extent to which we may enter into collaborations with third parties for development of our product candidates is unknown, we are unable to estimate the timing and amounts of increased capital outlays and operating expenses associated with completing the research and development of our product candidates.
A New Drug Application (NDA) was submitted in December 2023 to the US FDA, and the FDA accepted the filing of the NDA for govorestat (AT-007) for the treatment of Classic Galactosemia in February of 2024.
We submitted a New Drug Application (NDA) in December 2023 to the US FDA, and the FDA accepted the filing of the NDA for govorestat (AT-007) for the treatment of Classic Galactosemia in February of 2024.
We will pay the sales agent a commission rate of up to 3% of the 85 Table of Contents gross offering proceeds of any shares sold and has agreed to provide the sales agent with indemnification and contribution against certain liabilities. The Leerink ATM Agreement contains customary representations and warranties.
We will pay the sales agent a commission rate of up to 3% of the gross offering proceeds of any shares sold and has agreed to provide the sales agent with indemnification and contribution against certain liabilities. The Leerink ATM Agreement contains customary representations and warranties.
As of December 31, 2023, we had sold an aggregate of 17,615,976 shares of our common stock, pursuant to the Leerink ATM Agreement with an average sale price of $2.04 per share, resulting in net proceeds of $36.9 million, after deducting underwriting discounts, commissions and offering expenses.
During the year ended December 31, 2023, we had sold an aggregate of 17,615,976 shares of our common stock, pursuant to the Leerink ATM Agreement with an average sale price of $2.04 per share, resulting in net proceeds of $36.9 million, after deducting underwriting discounts, commissions and offering expenses.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and the related notes included elsewhere in this Annual Report.
ITEM 7. MANAGEM ENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and the related notes included elsewhere in this Annual Report.
Galactosemia is 82 Table of Contents a devastating rare pediatric metabolic disease that affects how the body processes a simple sugar called galactose, and for which there is no known cure or approved treatment available. The U.S.
Galactosemia is a devastating rare pediatric metabolic disease that affects how the body processes a simple sugar called galactose, and for which there is no known cure or approved treatment available. The U.S.
The Black-Scholes option pricing model requires inputs based on certain subjective assumptions, including (a) the expected stock price volatility, (b) the calculation of expected term of the award, (c) the risk-free interest rate and (d) expected dividends.
The Black‑Scholes option pricing model requires inputs based on certain subjective assumptions, including (a) the expected stock price volatility, (b) the calculation of expected term of the award, (c) the risk‑free interest rate and (d) expected dividends.We have based our estimate of expected volatility on our historical volatility.
Broadly, we have not yet established an ongoing source of product revenue sufficient to cover our operating costs and we are dependent on debt and equity financing to fund our operations. As of December 31, 2023, our cash, cash equivalents were $49.9 million.
Broadly, we have not yet established an ongoing source of product revenue sufficient to cover our operating costs and we are dependent on debt and equity financing to fund our operations. As of December 31, 2024, our cash and cash equivalents were $79.4 million.
The March 2024 Private Placement resulted in gross proceeds to the Company of approximately $100 million, before deducting placement agent commissions and other offering expenses. The Pre-Funded Warrants are immediately exercisable from the date of issuance and do not have an expiration date. They have an exercise price of $0.001.
The March 2024 Private Placement resulted in gross proceeds to us of approximately $92.3 million, after deducting placement agent commissions and other offering expenses. The Pre-Funded Warrants are immediately exercisable from the date of issuance and do not have an expiration date. They have an exercise price of $0.001.
Research and development activities are central to our business model. We expect that our research and development expenses will continue to increase for the foreseeable future as we continue clinical development for our product candidates and continue to discover and develop additional product candidates.
Research and development activities are central to our business model. We expect that our research and development expenses will remain a significant expense for the foreseeable future as we continue clinical development for our product candidates and continue to discover and develop additional product candidates.
Our future funding requirements, both near and long-term, will depend on many factors, including: ● the initiation, scope, progress, timing, costs and results of our ongoing and planned clinical trials for our product candidates; ● the outcome, timing and cost of meeting regulatory requirements established by the FDA and other comparable foreign regulatory authorities; ● the cost of filing, prosecuting, defending and enforcing our patent claims and other intellectual property rights; ● the cost of defending potential intellectual property disputes, including patent infringement actions; ● the achievement of milestones or occurrence of other developments that trigger payments under the Columbia Agreements or other agreements we may enter into; ● the extent to which we are obligated to reimburse, or entitled to reimbursement of, clinical trial costs under future collaboration agreements, if any; ● the effect of competing technological and market developments; ● the cost and timing of completion of clinical or commercial-scale manufacturing activities; ● the costs of operating as a public company; ● the extent to which we in-license or acquire other products and technologies; ● our ability to establish and maintain collaborations on favorable terms, if at all; ● the cost of establishing sales, marketing and distribution capabilities for our product candidates in regions where we choose to commercialize our product candidates, if approved; and ● the initiation, progress, timing and results of the commercialization our product candidates, if approved, for commercial sale. ​ A change in the outcome of any of these variables with respect to the development of a product candidate could mean a significant change in the costs and timing associated with the development of that product candidate.
Our future funding requirements, both near and long‑term, will depend on many factors, including: • the initiation, scope, progress, timing, costs and results of our ongoing and planned clinical trials for our product candidates; • the outcome, timing, effort and cost of meeting regulatory requirements established by the FDA including the costs incurred to respond to CRL and warning letter and other federal, state, local and foreign regulatory authorities; 96 Table of Contents • the cost of filing, prosecuting, defending and enforcing our patent claims and other intellectual property rights; • the cost of defending potential intellectual property disputes, including patent infringement actions; • the achievement of milestones or occurrence of other developments that trigger payments under the Columbia Agreements or other agreements we may enter into; • the extent to which we are obligated to reimburse, or entitled to reimbursement of, clinical trial costs under future collaboration agreements, if any; • the effect of competing technological and market developments; • the cost and timing of completion of clinical or commercial‑scale manufacturing activities; • the costs of operating as a public company; • the extent to which we in‑license or acquire other products and technologies; • our ability to establish and maintain collaborations on favorable terms, if at all; • the cost of establishing sales, marketing and distribution capabilities for our product candidates in regions where we choose to commercialize our product candidates, if approved; and • the initiation, progress, timing and results of the commercialization our product candidates, if approved, for commercial sale.
We believe that our expenses may increase significantly if and as we: ● continue the ongoing and planned development of our product candidates; ● initiate, conduct and complete any ongoing, anticipated or future preclinical studies and clinical trials for our current and future product candidates; ● seek marketing approvals for any product candidates that successfully complete clinical trials; ● establish a sales, marketing, manufacturing and distribution infrastructure to commercialize any current or future product candidate for which we may obtain marketing approval; ● seek to discover and develop additional product candidates; ● continue to build a portfolio of product candidates through the acquisition or in-license of drugs, product candidates or technologies; ● maintain, protect and expand our intellectual property portfolio; ● hire additional clinical, regulatory and scientific personnel; and ● add operational, financial and management information systems and personnel, including personnel to support our product development and planned future commercialization efforts. ​ Furthermore, we have and expect to incur additional costs associated with operating as a public company, including significant legal, accounting, investor relations and other expenses.
We believe that our expenses may increase significantly if and as we: • continue the ongoing and planned development of our product candidates for regulatory approval; • initiate, conduct and complete any ongoing, anticipated or future preclinical studies and clinical trials for our current and future product candidates; • seek marketing approvals for any product candidates that successfully complete clinical trials; • establish a sales, marketing, manufacturing and distribution infrastructure to commercialize any current or future product candidate for which we may obtain marketing approval; • seek to discover and develop additional product candidates; • continue to build a portfolio of product candidates through the acquisition or in‑license of drugs, product candidates or technologies; • maintain, protect and expand our intellectual property portfolio; • hire additional clinical, regulatory and scientific personnel; and • add operational, financial and management information systems and personnel, including personnel to support our product development and planned future commercialization efforts.
The fair value of stock-based payments is recognized as expense over the requisite service period which is generally the vesting period. Stock-Based Compensation–Restricted Stock Units We account for restricted stock units in accordance with the authoritative guidance for stock-based compensation.
The fair value of stock‑based payments is recognized as expense over the requisite service period which is generally the vesting period. Forfeitures are recognized as a reduction of stock-based compensation expense as they occur. Stock-Based Compensation–Restricted Stock Units We account for restricted stock units in accordance with the authoritative guidance for stock-based compensation.
The methods that the Company uses to make such estimates include (1) the adjusted market assessment approach, under which we forecast and analyze Galactosemia and SORD sales in the appropriate market, the phase of clinical development as well as considering recent similar license arrangements within the same phase of clinical development, therapeutic area, type of agreement, etc. and (2) the expected cost of satisfying the performance obligations plus a margin, or the expected cost plus a margin approach. ​ We recognize revenue when, or as, we satisfy a performance obligation by transferring a promised good or service to a customer and the customer obtains control of the good or service.
The methods that the Company uses to make such estimates include (1) the adjusted market assessment approach, under which we forecast and analyze Galactosemia and SORD sales in the appropriate market, the phase of clinical development as well as considering recent similar license arrangements within the same phase of clinical development, therapeutic area, type of agreement, etc. and (2) the expected cost of satisfying the performance obligations plus a margin, or the expected cost plus a margin approach.
Our AR program currently includes three small molecules, which are all potent and selective inhibitors of AR, but are engineered to have unique tissue permeability profiles to target different disease states, including diabetic complications, heart disease and rare metabolic diseases.
Our AR program currently includes multiple potent and selective inhibitors of AR, which are engineered to have specific tissue permeability profiles to target different disease states, including diabetic complications, heart disease and rare metabolic diseases.
We use the simplified method as allowed by the SEC Staff Accounting Bulletin No.107, Share-Based Payment, to calculate the expected term for options granted as we do not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term.
Our historical volatility is calculated based on a period of time commensurate with the expected term assumption.We use the simplified method as allowed by the SEC Staff Accounting Bulletin No.107, Share‑Based Payment, to calculate the expected term for options granted as we do not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term.
The FDA has granted pediatric rare disease designation and orphan designation for AT-007 in PMM2-CDG. ​ AT-001 (also called caficrestat) is a novel ARI with broad systemic exposure and peripheral nerve permeability that we are developing for the treatment of diabetic cardiomyopathy, or DbCM, a fatal fibrosis of the heart, for which no treatments are available.
AT‑001 (also called caficrestat) is a novel ARI with broad systemic exposure and peripheral nerve permeability that we are developing for the treatment of diabetic cardiomyopathy, or DbCM, a fatal fibrosis of the heart, for which no treatments are available.
If any of our product candidates enter into later stages of clinical development, they will generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials.
If any of our product candidates enter into later stages of clinical development, they will generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later‑stage clinical trials. Historically, we have incurred research and development expenses that primarily relate to the development of AT‑007 and AT-001 programs.
Revenue related to the grant of a license of functional IP that is distinct from the other promised goods or services in the contract and therefore represents a performance obligation is recognized at the point in time that we have the right to payment for the license, the customer has legal title to the license and can direct the use of the license (for example, to grant sublicenses) to benefit from its right to use the intellectual property, the customer has the significant risks and rewards of ownership of the license and the customer has accepted the asset (license) by signing the license agreement. ​ Recognition of revenue related to research and development services that are a distinct performance obligation is deferred at inception of a contract and is recognized as the services are performed to satisfy the performance obligation based on the costs incurred as a percentage of the estimated total costs to be incurred to satisfy the 94 Table of Contents performance obligation.
Revenue related to the grant of a license of functional IP that is distinct from the other promised goods or services in the contract and therefore represents a performance obligation is recognized at the point in time that we have the right to payment for the license, the customer has legal title to the license and can direct the use of the license (for example, to grant sublicenses) to benefit from its right to use the intellectual property, the customer has the significant risks and rewards of ownership of the license and the customer has accepted the asset ("license") by signing the license agreement.
The Pre-Funded Warrants and Common Warrants do not entitle the holders thereof to any voting rights or any of the other rights or privileges to which the Company’s stockholders are entitled. ​ April 2023 Offering ​ On April 26, 2023, we completed a sale of a total of 9,735,731 shares of common stock, at a purchase price of $0.946 per share, and 22,000,000 Pre-Funded Warrants to purchase common stock, at a purchase price of $0.945 per Pre-Funded Warrant, in a private placement (the “April 2023 Private Placement”) to a select group of accredited investors (the “2023 Purchasers”), pursuant to a Securities Purchase Agreement, dated as of April 23, 2023, by and between us and the 2023 Purchasers.
April 2023 Offering On April 26, 2023, we completed the April 2023 Private Placement, in which we sold a total of 9,735,731 shares of common stock, at a purchase price of $0.946 per share, and 22,000,000 Pre-Funded Warrants to purchase common stock, at a purchase price of $0.945 per Pre-Funded Warrant, in a private placement to a select group of accredited investors (the “2023 Purchasers”), pursuant to a Securities Purchase Agreement, dated as of April 23, 2023, by and between us and the 2023 Purchasers.
Food and Drug Administration, or FDA, has granted both orphan drug designation and rare pediatric disease designation to AT-007 for the treatment of Galactosemia and in June 2021, the FDA granted Fast Track Designation to AT-007 for the treatment of Galactosemia. In clinical studies, AT-007 significantly reduced plasma galactitol levels in both adults and children with Galactosemia.
Food and Drug Administration, or FDA, has granted both orphan drug designation and rare pediatric disease designation to AT-007 for the treatment of Galactosemia and in June 2021, the FDA granted Fast Track Designation to AT-007 for the treatment of Galactosemia.
Patients with SORD Deficiency accumulate very high levels of sorbitol in their cells and tissues as a result of the enzyme deficiency, which results in tissue toxicities such as peripheral neuropathy and motor neuron disease.
AR is then followed by Sorbitol Dehydrogenase, which converts sorbitol to fructose. Patients with SORD Deficiency accumulate very high levels of sorbitol in their cells and tissues as a result of the enzyme deficiency, which is thought to result in tissue toxicities such as peripheral neuropathy and motor neuron disease.
The following table summarizes our research and development expenses for the years ended December 31, 2023 and 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, (in thousands) 2023 2022 Product pipeline research and development expenses ​ ​ ​ ​ ​ ​ AT-001 ​ $ 19,540 ​ $ 20,809 AT-007 ​ 24,319 ​ ​ 23,902 Personnel-related expenses ​ ​ 6,387 ​ ​ 6,648 Stock-based compensation ​ ​ 3,005 ​ ​ 3,618 Other expenses ​ 654 ​ ​ 657 Total research and development expenses ​ $ 53,905 ​ $ 55,634 ​ General and Administrative Expenses General and administrative expenses consist primarily of salaries and other related costs, including stock-based compensation, for personnel in our executive, finance, and commercial functions.
The following table summarizes our research and development expenses for the years ended December 31, 2024 and 2023: Year Ended December 31, (in thousands) 2024 2023 Product pipeline research and development expenses AT-001 $ 4,600 $ 19,540 AT-007 29,360 24,319 Personnel-related expenses 6,512 6,387 Stock-based compensation 7,340 3,005 Other expenses 932 654 Total research and development expenses $ 48,744 $ 53,905 General and Administrative Expenses General and administrative expenses consist primarily of salaries and other related costs, including stock-based compensation, for personnel in our executive, finance, and commercial functions.
During the year ended December 31, 2022, operating activities used cash of $78.1 million, due to our net losses of $82.5 million, a decrease in operating lease liability of $0.4 million, a decrease in financed insurance premium of $3.1 million, a decrease of $1.6 million in accrued expense, and a decrease in accounts payable of $4.9 million.
During the year ended December 31, 2023, operating activities used cash of $55.2 million, due to our net losses of $119.8 million, a decrease in operating lease liability of $0.4 million, a decrease in financed insurance premium of $1.5 million, and a decrease of $2.8 million in accounts payable.
Overview We are a clinical-stage biopharmaceutical company developing a pipeline of novel product candidates against validated molecular targets in indications of high unmet medical needs. We focus on molecules and pathways whose role in the disease process is well known based on prior research, but have previously failed to yield successful products due to poor efficacy and tolerability.
Overview We are a clinical‑stage biopharmaceutical company developing a pipeline of novel product candidates against molecular targets in indications of high unmet medical needs. We focus on previously identified disease processes where other molecules have failed to yield successful products due to poor efficacy and tolerability.
AT-001 was generally safe and well tolerated, with no substantial differences in serious adverse events between AT-001 treated groups as compared to placebo. ​ As we advance our product candidates forward in additional indications, such as SORD deficiency, PMM2-CDG and retinopathy, we anticipate potential moderate growth in our clinical development and operations teams to support the additional clinical trials, as well as addition of a medical affairs team to support the late stage indications and preparations for commercialization.
As we advance our product candidates forward in additional indications, such as SORD Deficiency, PMM2-CDG and retinopathy, we anticipate potential moderate growth in our clinical development and operations teams to support the additional clinical trials, as well as the addition of a medical affairs team to support the late stage indications and preparations for commercialization.
This was partially offset by the repayment of short-term borrowings of $3.3 million. Funding Requirements We expect our expenses to increase substantially in connection with our ongoing activities, particularly as we advance the preclinical activities and clinical trials of our product candidates.
Funding Requirements We expect our expenses to increase substantially in connection with our ongoing activities, particularly as we advance the preclinical activities and clinical trials of our product candidates.
On January 31, 2024, the Company sold an additional 1,000,000 shares of the company’s common stock pursuant to the Leerink ATM Agreement with an average sale price of $3.13 per share, resulting in net proceeds of $3.0 million, after deducting underwriting discounts, commissions and offering expenses.
During the year ended December 31, 2024, we sold an aggregate 3,000,000 shares of our common stock, pursuant to Leerink ATM Agreement with an average sale price of $4.31 per share, resulting in net proceeds of $12.4 million, after deducting underwriting discounts, commissions and offering expenses.
Net cash provided by investing activities for the year ended December 31, 2022, was $13.2 million relating to our purchases of available-for-sale marketable securities for $64.2 million and proceeds from the maturities of available-for-sale marketable securities for $77.4 million.
Investing Activities There was no cash provided by investing activities for the year ended December 31, 2024. Net cash provided by investing activities for the year ended December 31, 2023, was $13.9 million relating to the proceeds from the sale of available-for-sale securities of $4.9 million and maturities of available-for-sale securities of $8.9 million.
Due to recent regulatory changes impacting development of the PI3K inhibitor class of compounds, the Company has discontinued its early stage preclinical PI3K program and further development of AT -104. The compound and all rights associated with the technology were returned to Columbia University.
Due to regulatory changes impacting development of the PI3K inhibitor class of compounds, the Company discontinued its early stage preclinical PI3K program and further development of AT-104.
Initial data in fibroblast cell lines derived from PMM2-CDG patients demonstrates that AT-007 treatment increases phosphomannomutase 2 activity.
Initial data in fibroblast cell lines derived from PMM2-CDG patients demonstrates that AT-007 treatment increases phosphomannomutase 2 activity. The FDA has granted rare pediatric disease designation and orphan designation for AT-007 in PMM2-CDG.
Warrant Liabilities We account for our common warrant liabilities by measuring the fair value at inception and are then subsequently measured on a recurring basis, with changes in fair value recognized in other income (expense) within our statement of operations. ​ We utilized a Black-Scholes option pricing model to estimate the fair value of our warrant liabilities, which utilizes certain unobservable inputs and is therefore considered a Level 3 fair value measurement.
Warrant Liabilities We account for our common warrant liabilities by measuring the fair value at inception and are then subsequently measured on a recurring basis, with changes in fair value recognized in other income (expense) within our statement of operations.
Venrock Warrant Exchange ​ On October 12, 2023, we entered into an exchange agreement with entities affiliated with Venrock Healthcare Capital Partners, pursuant to which we exchanged an aggregate of 5,658,034 shares of common stock, owned by the Exchanging Stockholders for pre-funded warrants to purchase an aggregate of 5,658,034 shares of common stock (subject to adjustment in the event of stock splits, recapitalizations and other similar events affecting common stock), with an exercise price of $0.001 per share. ​ March 2024 Private Placement ​ On March 1, 2024, the Company completed its sale of a total of 12,285,714 common shares, at a purchase price of $7.00 per share, and 2,000,000 Pre-Funded Warrants at a purchase price of $6.999 per Pre-Funded Warrant, in a private placement to a select group of purchasers (the “2024 Purchasers”) pursuant to a Securities Purchase Agreement (the “Securities Purchase Agreement”) (the transaction, the “March 2024 Private Placement”).
Venrock Warrant Exchange On October 12, 2023, we entered into the Exchange Agreement with entities affiliated with Venrock Healthcare Capital Partners, pursuant to which we exchanged an aggregate of 5,658,034 shares of common stock, owned by the Exchanging Stockholders for pre-funded warrants to purchase an aggregate of 5,658,034 shares of common stock 90 Table of Contents (subject to adjustment in the event of stock splits, recapitalizations and other similar events affecting common stock), with an exercise price of $0.001 per share.
Other Income (Expense), Net Other income (expense), net consists of interest income (expense), net, other income (expense), net and changes in fair value of warrant liabilities. Interest income (expense), net consists primarily of our interest income on our cash and cash equivalents and marketable securities.
Interest income (expense), net consists primarily of our interest income on our cash and cash equivalents and marketable securities. Other income (expense), net consists primarily of realized gains and losses on sales of marketable securities. Changes in fair value of warrant liabilities consists of mark to market changes on our common warrants that are classified as liabilities.
Cash Flows The following table summarizes our cash flows for each of the periods presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ December 31, (in thousands) 2023 2022 Net cash used in operating activities ​ $ (55,173) ​ $ (78,093) Net cash provided by investing activities ​ 13,872 ​ ​ 13,170 Net cash provided by financing activities ​ 74,542 ​ ​ 27,692 Net increase (decrease) in cash and cash equivalents ​ $ 33,241 ​ $ (37,231) ​ Operating Activities During the year ended December 31, 2023, operating activities used cash of $55.2 million, due to our net losses of $119.8 million, a decrease in operating lease liability of $0.4 million, a decrease in financed insurance premium of $1.5 million, and a decrease of $2.8 million in accounts payable.
Cash Flows The following table summarizes our cash flows for each of the periods presented: Year Ended December 31, (in thousands) 2024 2023 Net cash used in operating activities $ (84,305 ) $ (55,173 ) Net cash provided by investing activities — 13,872 Net cash provided by financing activities 113,805 74,542 Net increase in cash and cash equivalents $ 29,500 $ 33,241 Operating Activities During the year ended December 31, 2024, operating activities used cash of $84.3 million, due to our net losses of $105.6 million,an increase in prepaid expenses of $0.6 million, a decrease in operating lease liability of $0.4 million, and a decrease of $0.8 million in other liabilities.
If we raise additional capital through debt financing, we may be subject to covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends.
If we raise additional capital through debt financing, we may be subject to covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. Contractual Obligations and Commitments We lease certain assets under noncancelable operating leases, which expire through 2029. The leases relate primarily to office space.
While our significant accounting policies are described in greater detail in Note 1 to our financial statements appearing elsewhere in this Annual Report, we believe that the following accounting policies are those most critical to the judgments and estimates used in the preparation of our financial statements. 93 Table of Contents Revenue Recognition Under ASU 2014-09, Revenue from Contracts with Customers (Topic 606) , or ASC 606, as amended by ASU 2016-08, 2016-10, 2016-12 and 2016-20, we recognize revenue in an amount that reflects the consideration to which we expect to be entitled in exchange for the transfer of promised goods or services to customers.
Revenue Recognition Under ASU 2014-09, Revenue from Contracts with Customers (Topic 606) , or ASC 606, as amended by ASU 2016-08, 2016-10, 2016-12 and 2016-20, we recognize revenue in an amount that reflects the consideration to which we expect to be entitled in exchange for the transfer of promised goods or services to customers.
To determine revenue recognition for contracts with customers that are within the scope of ASC 606, the Company performs the following steps: (1) identifies the contract with the customer, (2) identifies the performance obligations in the contract, (3) determines the transaction price, (4) allocates the transaction price to the performance obligations in the contract, and (5) recognizes revenue when (or as) the entity satisfies a performance obligation. ​ We have entered into an agreement (Advanz Agreement) to license our intellectual property, or IP, related to Galactosemia and SORD to develop, manufacture and/or commercialize drug products with Mercury Pharma Group Limited, trading as Advanz Pharma Holdings, (“Advanz Pharma”).
To determine revenue 97 Table of Contents recognition for contracts with customers that are within the scope of ASC 606, the Company performs the following steps: (1) identifies the contract with the customer, (2) identifies the performance obligations in the contract, (3) determines the transaction price, (4) allocates the transaction price to the performance obligations in the contract, and (5) recognizes revenue when (or as) the entity satisfies a performance obligation.
Historically, we have incurred research and development expenses that primarily relate to the development of AT-007, AT-001 and 87 Table of Contents our ARI program. As we advance our product candidates, we expect to allocate our direct external research and development costs across each of the indications or product candidates.
As we advance our product candidates, we expect to allocate our direct external research and development costs across each of the indications or product candidates.
We expect that our general and administrative expenses will increase in the future as we increase our general and administrative headcount to support our continued research and development and potential commercialization of our product candidates.
We expect that our general and administrative expenses will remain a significant expense in the future as we may increase our general and administrative headcount to support our continued research and development and potential commercialization of our product candidates. 92 Table of Contents Other Income (Expense), Net Other income (expense), net consists of interest income (expense), net, other income (expense), net and change in fair value of warrant liabilities.
Payments to us under this agreement may include nonrefundable fees, payments for research activities, payments based upon the achievement of certain milestones and royalties on any resulting net product sales. ​ The transaction price is the amount of consideration that we expect to be entitled to in exchange for transferring promised goods or services to the customer based on the contract terms at inception of a contract.
The transaction price is the amount of consideration that we expect to be entitled to in exchange for transferring promised goods or services to the customer based on the contract terms at inception of a contract.
Certain inputs used in this Black-Scholes pricing model may fluctuate in future periods based upon factors that are outside of our control, including a potential change in control.
We utilized a Black-Scholes option pricing model to estimate the fair value of our warrant liabilities, which utilizes certain unobservable inputs and is therefore considered a Level 3 fair value measurement. Certain inputs used in this Black-Scholes pricing model may fluctuate in future periods based upon factors that are outside of our control, including a potential change in control.
We believe this method most faithfully depicts performance in transferring the promised services while research and development services are ongoing. ​ Accrued Research and Development Expenses We expense all costs incurred in performing research and development activities. Research and development expenses include materials and supplies, preclinical expenses, manufacturing expenses, contract services and other outside expenses.
Legal defense costs associated with loss contingencies are expensed in the period incurred. Accrued Research and Development Expenses We expense all costs incurred in performing research and development activities. Research and development expenses include materials and supplies, preclinical expenses, manufacturing expenses, contract services and other outside expenses.
The result of this unique multifaceted approach to drug development is a portfolio of highly specific and selective product candidates that we believe are significantly de-risked and can move quickly through the development process. ​ AT- 007 (also called govorestat) is a novel central nervous system, or CNS, penetrant ARI that we are developing for the treatment of rare metabolic diseases, including Galactosemia and SORD Deficiency.
Our lead candidate, AT‑007 (also called govorestat) is a novel central nervous system, or CNS, penetrant ARI that we are developing for the treatment of rare metabolic diseases, including Galactosemia and SORD Deficiency.
Other Expense Other expense was a $27,000 loss for the year ended December 31, 2023, compared to $0.2 million for the year ended December 31, 2022.
Other Expense Other expense was $0.1 million for the year ended December 31, 2024, compared to $27,000 for the year ended December 31, 2023. The increase is primarily due to fluctuation in foreign exchange rates.
We expect to continue to incur significant expenses and increasing operating losses for the foreseeable future in connection with our ongoing activities. Furthermore, we expect 84 Table of Contents to incur additional costs associated with operating as a public company, including significant legal, accounting, investor relations and other expenses.
Furthermore, we expect to incur additional costs associated with operating as a public company, including significant legal, accounting, investor relations and other expenses. As of December 31, 2024, we had cash and cash equivalents of $79.4 million.
During the year ended December 31, 2022, net cash provided by financing activities was $27.7 million, primarily from the cash proceeds from the June 2022 offering of $27.8 million, $49,000 from the exercise of stock options for common stock under the 2019 Plan, and $3.1 million from the proceeds from financed insurance premium.
Financing Activities During the year ended December 31, 2024, net cash provided by financing activities was $113.8 million, primarily from proceeds from the issuance of shares and pre-funded warrants of $104.7 million, $9.0 million from the exercise of common warrants, $0.3 million from exercise of stock options for common stock under the equity incentive plan, partially offset by repayment of short-term borrowings of $0.3 million.
Since inception in 2016, our operations have focused on developing our product candidates, organizing and staffing our company, business planning, raising capital, establishing our intellectual property portfolio and conducting clinical trials. We do not have any product candidates approved for sale and have not generated any product revenue. We have incurred significant operating losses since inception in 2016.
The compound and all rights associated with the technology were returned to Columbia University. 89 Table of Contents Since inception in 2016, our operations have focused on developing our product candidates, organizing and staffing our company, business planning, raising capital, establishing our intellectual property portfolio and conducting clinical trials.
Interest Income Interest income was $1.4 million for the year ended December 31, 2023, as compared to $0.7 million for the year ended December 31, 2022. The overall increase was related to a combination of an increase in average cash balance and an increase in interest rates during 2023.
Interest Income Interest income was $3.5 million for the year ended December 31, 2024, as compared to $1.4 million for the year ended December 31, 2023.
The decrease in other expense related to the gains recognized on the sale of all marketable securities during the year ended December 31, 2023. 90 Table of Contents Liquidity and Capital Resources Since our inception and through December 31, 2023, we have not generated any revenue and have incurred significant operating losses and negative cash flows from our operations.
Liquidity and Capital Resources Since our inception and through December 31, 2024, we have not generated any product revenue and have incurred significant operating losses and negative cash flows from our operations. The accompanying financial statements have been prepared assuming the continuation of the Company as a going concern.
The Company intends to use the net proceeds to fund research and development and registration of its pipeline candidates, and for working capital and general corporate purposes. ​ ​ 86 Table of Contents Components of Our Results of Operations Revenue Since inception, we have not generated any product revenue and do not expect to generate any revenue from the sale of products in the near future.
Components of Our Results of Operations Revenue Since inception, we have not generated any product revenue and do not expect to generate any revenue from the sale of products until after we receive regulatory approval. We have generated revenue solely from licensing of intellectual property and sale of research and development services.
Change in Fair Value of Warrant Liabilities Change in the fair value of warrant liabilities was $56.6 million for the year ended December 31,2023, as compared to $0.1 million for the year ended December 31, 2022. The increase in the fair value of warrant liabilities is primarily related to changes in our common share price throughout 2023.
The decrease in the fair value of warrant liabilities is primarily related to an overall decrease in our common share price and a change in the number of warrants outstanding at December 31, 2024 compared to December 31, 2023. Warrants outstanding at December 31, 2024 was 10,725,000 compared to 19,750,000 at December 31, 2023.
Our ability to generate product revenue sufficient to achieve profitability will depend on the successful development and commercialization of one or more of our product candidates. Our net loss was $119.8 million for the year ended December 31, 2023. As of December 31, 2023, we had an accumulated deficit of $468.6 million.
We do not have any product candidates approved for sale and have not generated any product revenue. We have incurred significant operating losses since inception in 2016. Our ability to generate product revenue sufficient to achieve profitability will depend on the successful development and commercialization of one or more of our product candidates.
If actualization of these milestones aligns with the projected timelines, and product approvals are received in the timeframes expected, this source of capital may be sufficient to cover operating expenses through expected product approvals. However, there are no guarantees that this will materialize, and delays or unexpected data could disrupt this potential source of liquidity.
The exclusive licensing agreement with Advanz Pharma for commercialization rights to AT-007 in Europe may provide additional sources of capital after the potential resubmission of the NDA and the marketing authorization application in Europe. However, there are no guarantees that this will materialize, and additional delays or unexpected data could disrupt this potential source of liquidity.
This is partially offset by increases of $0.4 million in prepaid expense, $0.4 million of issuance of options in-lieu of bonus, $9.2 million in non-cash stock-based compensation expense, and $3.6 million of amortization of insurance premium, an increase of $0.1 million in change in fair value of warrant liability, and $0.4 million in amortization of operating lease right-of-use assets. ​ 91 Table of Contents Investing Activities Net cash provided by investing activities for the year ended December 31, 2023, was $13.9 million relating to the proceeds from the sale of available-for-sale securities of $4.9 million and maturities of available-for-sale securities of $8.9 million.
This is offset by an increase of $2.7 million in accounts payable, $13.5 million in stock-based compensation expense, $1.2 million in accrued expenses and other current liabilities, $0.6 million amortization of insurance premium, $4.8 million in changes in fair value of our warrant liabilities, and $0.4 million in amortization of operating lease right-of-use assets.
The decrease of approximately $6.7 million was primarily related to: ● a decrease in commercial expenses of $2.1 million related to decreased spend relating to commercial operations; ● a decrease in personnel expenses of $1.8 million related to a decrease in headcount; ● a decrease in stock-based compensation of $1.2 million related to a decrease in headcount, which resulted in options and restricted stock units being forfeited during the current period; ● a decrease in insurance expenses of $1.4 million related to decreased director and officers’ liability insurance costs; and ● a decrease in other expenses of $0.1 million.
The increase of approximately $35.4 million was primarily related to: • an increase in legal and professional fees of $8.1 million related to higher external legal fees to support planned commercialization; • an increase in commercial expenses of $18.3 million related to planned commercialization; • an increase in personnel expenses of $4.7 million, primarily related to severance paid to former executives and an increase in headcount, partially offset by an overall decrease in accrued bonuses; • an increase in stock-based compensation of $3.9 million related to acceleration of former executive stock based compensation, an overall increase in headcount and additional award grants to employees in 2024 ; • a decrease in insurance expenses of $0.8 million related to decreased director and officers’ liability insurance costs; and • an increase in other expenses of $1.2 million due to an overall increase in data storage costs to support planned commercialization.
The decrease of approximately $1.7 million was primarily related to: ● a decrease in clinical and pre-clinical expense of $3.1 million, primarily due to decreased expense related to CROs ; ● an increase in drug manufacturing and formulation costs of $1.5 million primarily related to purchases of raw materials, offset by the release of legacy accruals; ● a decrease in personnel expenses of $0.4 million related to a decrease in headcount; ● a decrease in stock-based compensation of $0.6 million related to a decrease in headcount, which resulted in forfeitures of stock options and restricted stock units; and ● an increase in regulatory and other expenses of $0.9 million primarily related to an overall increase in consulting fees. 89 Table of Contents General and Administrative Expenses The following table summarizes our general and administrative expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ ​ December 31, ​ ​ ​ (in thousands) 2023 2022 Increase/(Decrease) Legal and professional fees ​ $ 6,780 ​ $ 6,854 ​ $ (74) Commercial expenses ​ ​ 123 ​ ​ 2,193 ​ ​ (2,070) Personnel expenses ​ ​ 3,714 ​ ​ 5,537 ​ ​ (1,823) Stock-based compensation ​ ​ 4,355 ​ ​ 5,543 ​ ​ (1,188) Insurance expenses ​ ​ 2,274 ​ ​ 3,682 ​ ​ (1,408) Other expenses ​ 3,377 ​ ​ 3,507 ​ (130) Total general and administrative expenses ​ $ 20,623 ​ $ 27,316 ​ $ (6,693) ​ General and administrative expenses were $20.6 million for the year ended December 31, 2023, compared to $27.3 million for the year ended December 31, 2022.
General and Administrative Expenses The following table summarizes our general and administrative expenses: Year Ended December 31, (in thousands) 2024 2023 Increase/(Decrease) Legal and professional fees $ 14,923 $ 6,780 $ 8,143 Commercial expenses 18,381 123 $ 18,258 Personnel expenses 8,385 3,714 $ 4,671 Stock-based compensation 8,227 4,355 $ 3,872 Insurance expenses 1,503 2,274 $ (771 ) Other expenses 4,591 3,377 $ 1,214 Total general and administrative expenses $ 56,010 $ 20,623 $ 35,387 General and administrative expenses were $56.0 million for the year ended December 31, 2024, compared to $20.6 million for the year ended December 31, 2023.
The agreement contains multiple performance obligations, including licenses of IP, research and development services, and the manufacturing and supply material right.
We have entered into an agreement ("Advanz Agreement") to license our intellectual property, or IP, related to Galactosemia and SORD to develop, manufacture and/or commercialize drug products with Mercury Pharma Group Limited, trading as Advanz Pharma Holdings, (“Advanz Pharma”). The agreement contains multiple performance obligations, including licenses of IP, research and development services, and the manufacturing and supply material right.
Removed
Galactitol is a toxic metabolite of galactose, which is formed in Galactosemia patients by aberrant activity of AR when galactose is present at high levels.
Added
The result of this multifaceted approach to drug development is a portfolio of highly specific and selective product candidates that we believe may be able to move quickly through the development process.
Removed
In a study in children with Galactosemia ages 2-17, we demonstrated that the galactitol reduction induced by AT-007 treatment resulted in clinical benefit on activities of daily living, behavioral symptoms, cognition, fine motor skills and tremor over 18 months of treatment.
Added
On November 27, 2024, the FDA issued a Complete Response Letter (Complete Response Letter) for the NDA for the treatment of Classic Galactosemia, indicating that the agency was unable to approve the NDA in its current form, citing deficiencies in the clinical application.
Removed
Change in clinical outcome measures correlated with galactitol level. ​ We submitted a Marketing Authorization Application (MAA) to the European Medicines Agency (EMA) in the fourth quarter of 2023, which was subsequently validated and accepted for review in December 2023.
Added
On the same day, the FDA also issued warning letters to both Applied and a clinical investigator (Warning Letter and the Clinical Investigator Warning Letter, respectively) related to the Phase 2/3, ACTION-Galactosemia Kids study.
Removed
The NDA was granted Priority Review status, and the FDA assigned a Prescription Drug User Free Act (PDUFA) target action date of August 28, 2024. The FDA also noted that it is planning to hold an advisory committee meeting to discuss the application .

… 52 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

5 edited+0 added−2 removed2 unchanged
Biggest changeDollars, however, certain service agreements with third parties are denominated in currencies other than the U.S. Dollar, primarily the Euro. As such, we are subject to foreign exchange risk and therefore, fluctuations in the value of the U.S. Dollar against the Euro may impact the amounts reported for expenses and obligations incurred under such agreements.
Biggest changeDollar, primarily the Euro. As such, we are subject to foreign exchange risk and therefore, fluctuations in the value of the U.S. Dollar against the Euro may impact the amounts reported for expenses and obligations incurred under such agreements. We do not participate in any foreign currency hedging activities and we do not have any other derivative financial instruments.
To minimize this risk, we intend to maintain a portfolio which may include cash, cash equivalents and short-term investment securities available-for-sale in a variety of securities. ​ We do not believe that our cash has significant risk of default or illiquidity.
To minimize this risk, we intend 100 Table of Contents to maintain a portfolio which may include cash, cash equivalents and short-term investment securities available-for-sale in a variety of securities. We do not believe that our cash has significant risk of default or illiquidity.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. We are exposed to market risks in the ordinary course of our business. These risks primarily include interest rate sensitivities and foreign currency sensitivities. 96 Table of Contents Interest Rate Sensitivity Our exposure to market risk relates to our cash and cash equivalents of $49.9 million as of December 31, 2023.
ITEM 7A. QUANTITATI VE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. We are exposed to market risks in the ordinary course of our business. These risks primarily include interest rate sensitivities and foreign currency sensitivities. Interest Rate Sensitivity Our exposure to market risk relates to our cash and cash equivalents of $79.4 million as of December 31, 2024.
A hypothetical 10% change in foreign exchange rates during any of the periods presented would not have a material impact on our financial condition or results of operations.
We did not recognize any significant exchange rate loss during the year ended December 31, 2024. A hypothetical 10% change in foreign exchange rates during any of the periods presented would not have a material impact on our financial condition or results of operations.
Inflation generally affects us by increasing our cost of labor and clinical trial costs. We do not believe that inflation has had a material effect on our results of operations during the periods presented. As of December 31, 2023, we had $0.3 million of outstanding short-term debt relating to our financed directors’ and officers’ insurance premium.
Inflation generally affects us by increasing our cost of labor and clinical trial costs. We do not believe that inflation has had a material effect on our results of operations during the periods presented. Foreign Currency Sensitivity Our primary operations are transacted in U.S. Dollars, however, certain service agreements with third parties are denominated in currencies other than the U.S.
Removed
The interest rate on this short-term loan is fixed at 5.39% per annum, and when considering the remaining outstanding balance and the remaining term of the agreement ending in the second quarter of 2024, we do not believe that the loan is subject to material interest rate risk. Foreign Currency Sensitivity Our primary operations are transacted in U.S.
Removed
We do not participate in any foreign currency hedging activities and we do not have any other derivative financial instruments. We did not recognize any significant exchange rate loss during the year ended December 31, 2023.