10q10k10q10k.net

What changed in Avalo Therapeutics, Inc.'s 10-K — 2022 vs 2023

vs

Paragraph-level year-over-year comparison of Avalo Therapeutics, Inc.'s 2022 and 2023 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 2023 report.

+436 added−491 removedSource: 10-K (2024-03-29) vs 10-K (2023-03-29)

Top changes in Avalo Therapeutics, Inc.'s 2023 10-K

436 paragraphs added · 491 removed · 306 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

73 edited+13 added−34 removed68 unchanged
Biggest changeThese include the following: • The federal Anti-Kickback laws and implementing regulations, which prohibit persons from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce either the referral of an individual, or furnishing or arranging for a good or service, for which payment may be made under federal healthcare programs such as the Medicare and Medicaid programs; • Other Medicare laws, regulations, rules, manual provisions and policies that prescribe the requirements for coverage and payment for services performed by our customers, including the amount of such payment; • The federal False Claims Act, which imposes civil and criminal liability on individuals and entities who submit, or cause to be submitted, false or fraudulent claims for payment to the government; • The Foreign Corrupt Practices Act (“FCPA”), which prohibits certain payments made to foreign government officials; • State and foreign law equivalents of the foregoing and state laws regarding pharmaceutical company marketing compliance, reporting and disclosure obligations; • The Patient Protection and Affordable Care Act of 2010, as amended by the Health Care and Education Affordability Reconciliation Act of 2010 (collectively, the “Affordable Care Act” or “ACA”), which among other things: changes access to healthcare products and services; creates new fees for the pharmaceutical and medical device industries; changes rebates and prices for health care products and services; and requires additional reporting and disclosure; • The Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, and its implementing regulations (collectively, “HIPAA”), which creates federal criminal laws that prohibit executing a scheme to defraud any healthcare benefit program and which also imposes certain obligations on entities with respect to the privacy, security and transmission of individually identifiable health information; and • The federal Physician Payment Sunshine Act, which requires certain pharmaceutical and biological manufacturers to engage in extensive tracking of payments or transfers of value to physicians and teaching hospitals and public reporting of the payment data.
Biggest changeThese include the following: • The federal Anti-Kickback laws and implementing regulations, which prohibit persons from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce either the referral of an individual, or furnishing or arranging for a good or service, for which payment may be made under federal healthcare programs such as the Medicare and Medicaid programs; • Other Medicare laws, regulations, rules, manual provisions and policies that prescribe the requirements for coverage and payment for pharmaceutical products and services, including the amount of such payment; • The federal False Claims Act, which imposes civil and criminal liability on individuals and entities who submit, or cause to be submitted, false or fraudulent claims for payment to the government; • The Foreign Corrupt Practices Act (“FCPA”), which prohibits certain payments made to foreign government officials; and • State and foreign law equivalents of the foregoing and state laws regarding pharmaceutical company marketing compliance, reporting and disclosure obligations. 6 Table of Contents If our operations are found to be in violation of any of these laws, regulations, rules or policies or any other law or governmental regulation, or if interpretations of the foregoing change, we may be subject to civil and criminal penalties, damages, fines, exclusion from the Medicare and Medicaid programs and the curtailment or restructuring of our operations.
Other Regulations of the Healthcare Industry In addition to FDA regulations governing the marketing of pharmaceutical products, there are various other state and federal laws that may restrict business practices in the biopharmaceutical industry.
Other Regulations of the Healthcare Industry In addition to FDA regulations governing the marketing of pharmaceutical products, there are various state and federal laws that may restrict business practices in the biopharmaceutical industry.
These restrictions and limitations influence the purchase of healthcare services and products. Legislative proposals to reform healthcare or reduce costs under government programs may result in lower reimbursement for our products and product candidates or exclusion of our products and product candidates from coverage.
These restrictions and limitations influence the purchase of healthcare services and products. Legislative proposals to reform healthcare or reduce costs under government programs may result in lower reimbursement for our product candidates or exclusion of our product candidates from coverage.
In addition, the Tax Cuts and Jobs Act (the “TCJA”), enacted on December 22, 2017, repealed the shared responsibility payment for individuals who fail to maintain minimum essential coverage under section 5000A of the Internal Revenue Code of 1986, as amended (the “IRC”), as amended, commonly referred to as the individual mandate.
In addition, the Tax Cuts and Jobs Act (the “TCJA”), enacted on December 22, 2017, repealed the shared responsibility payment for individuals who fail to maintain minimum essential coverage under section 5000A of the Internal Revenue Code of 1986, as amended (the “IRC”), commonly referred to as the individual mandate.
We expect that additional federal, state and foreign healthcare reform measures will be adopted in the future, any of which could limit the amounts that federal and state governments will pay for healthcare products and services, which could result in limited coverage and reimbursement and reduced demand for our products, once approved, or additional pricing pressures.
We expect that additional federal, state and foreign healthcare reform measures could be adopted in the future, any of which could limit the amounts that federal and state governments will pay for healthcare products and services, which could result in limited coverage and reimbursement and reduced demand for our products, once approved, or additional pricing pressures.
In the mutual recognition procedure, a medicine is first authorized in one European Union Member State, in accordance with the national procedures of that country. Following this, further marketing authorizations can be sought from other European Union countries in a procedure whereby the countries concerned agree to recognize the validity of the original, national marketing authorization.
In the mutual recognition procedure, a medicine is first authorized in one European Union Member State, in accordance with the national procedures of that country. Following this, further marketing authorizations can be sought from other European Union countries in a procedure whereby the countries agree to recognize the validity of the original, national marketing authorization.
We hold ownership, trademark rights and/or exclusivity to develop and commercialize our products and product candidates covered by patents and patent applications. Our portfolio of patents includes patents or patent applications with claims directed to compositions of matter, including compounds, pharmaceutical formulations, methods of use, methods of manufacturing the compounds, or a combination of these claims.
We hold ownership, trademark rights and/or exclusivity to develop and commercialize our product candidates covered by patents and patent applications. Our portfolio of patents includes patents or patent applications with claims directed to compositions of matter, including compounds, pharmaceutical formulations, methods of use, methods of manufacturing the compounds, or a combination of these claims.
FDA Post ‑ Approval Considerations Drugs manufactured or distributed pursuant to FDA approvals are subject to continuing regulation by the FDA, including, among other things, requirements relating to recordkeeping, manufacturing, periodic reporting, product sampling and distribution, advertising and promotion, and reporting of adverse experiences with the product and drug shortages.
FDA Post ‑ Approval Considerations Drugs manufactured or distributed pursuant to FDA approval are subject to continuing regulation by the FDA, including, among other things, requirements relating to recordkeeping, manufacturing, periodic reporting, product sampling and distribution, advertising and promotion, and reporting of adverse experiences with the product and drug shortages.
Our competitors, either alone or with their collaborators, may succeed in developing technologies or drugs that are more effective, safer, and more affordable or more easily administered than ours and may achieve patent protection or commercialize drugs sooner than us. Developments by others may render our product candidates or our technologies obsolete.
Our competitors, either alone or with their collaborators, may succeed in developing technologies or drugs that are more effective, safer, and more affordable or more easily administered than our product candidates and may achieve patent protection or commercialize drugs sooner than us. Developments by others may render our product candidates or our technologies obsolete.
FDA Marketing Approval Obtaining FDA marketing approval for new products may take many years and require the expenditure of substantial financial resources. In order for the FDA to determine that a product is safe and effective for the proposed indication, the product must first undergo testing in animals (nonclinical studies).
FDA Marketing Approval Obtaining FDA marketing approval for new products may take many years and require the expenditure of substantial financial resources. For the FDA to determine that a product is safe and effective for the proposed indication, the product must first undergo testing in animals (nonclinical studies).
In addition, the increased emphasis on managed healthcare in the United States and on country and regional pricing and reimbursement controls in the European Union will put additional pressure on product pricing, reimbursement and utilization, which may adversely affect our future product sales and results of operations.
In addition, the increased emphasis on managed healthcare in the United States and on country and regional pricing and reimbursement controls in the European Union will put additional pressure on product pricing, reimbursement and utilization, which may adversely affect any future product sales and our results of operations.
In addition, at the state level, legislatures have passed and may pass legislation and implemented regulations designed to control pharmaceutical product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.
In addition, at the state level, legislatures have passed and implemented, and may in the future pass and implement legislation and regulations designed to control pharmaceutical product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.
The development and approval of new drugs requires substantial time, effort and financial resources. Data obtained from the development program are not always conclusive and may be susceptible to varying interpretations. These instances may delay, limit or prevent regulatory approval. The FDA may not grant approval on a timely basis, or at all.
The development and approval of new drugs requires substantial time, effort and financial resources. Data obtained from a development program is not always conclusive and may be susceptible to varying interpretations. These instances may delay, limit or prevent regulatory approval. The FDA may not grant approval on a timely basis, or at all.
Overall Competitive Climate and Risks Other competitors may have a variety of drugs in development or may be awaiting FDA approval that could reach the market and become established before we have an approved product to sell. Our competitors may also develop alternative therapies that could limit the market for any approved drugs that we may develop.
Overall Competitive Climate and Risks Competitors may have a variety of drugs in development or awaiting FDA approval that could reach the market and become established before we have an approved product to sell. Our competitors may also develop alternative therapies that could limit the market for any approved drugs that we may develop.
In the United States, the European Union and other potentially significant markets for our product candidates, government authorities and third‑party payers are increasingly imposing additional requirements and restrictions on coverage, attempting to limit reimbursement levels or regulate the price of drugs and other medical products and services, particularly for new and innovative products and therapies, which often has resulted in average selling prices lower than they would otherwise be.
In the United States, the European Union and other potentially significant markets for our product candidates, government authorities and third‑party payers are increasingly imposing more stringent requirements and restrictions on coverage, attempting to limit reimbursement levels or regulate the price of drugs and other medical products and services, particularly for new and innovative products and therapies, which often has resulted in average selling prices lower than they would otherwise be.
Sales and Marketing For our clinical stage pipeline assets, we may retain or partner in the United States with third parties on the commercialization rights and develop sales and marketing capabilities when needed. If we develop our own United States sales force we may complement it with co‑promotion agreements with partners in and outside the United States.
Sales and Marketing For our clinical stage assets, we may retain or partner in the United States with third parties on the commercialization rights and develop sales and marketing capabilities, when needed. If we develop our own United States sales force we may complement it with co‑promotion agreements with partners in and outside of the United States.
A CRL generally contains a statement of specific conditions that must be met in order to secure final approval of the NDA or BLA and may require additional clinical or preclinical studies, or other information, in order for FDA approval.
A CRL generally contains a statement of specific conditions that must be met to secure final approval of the NDA or BLA and may require additional clinical or nonclinical studies, or other information, in order for FDA approval.
The filing of a patent infringement lawsuit within 45 days after the receipt of notice of the Paragraph IV certification automatically prevents the FDA from approving the ANDA or 505(b)(2) NDA until the earlier of 30 months, 9 Table of Contents expiration of the patent, settlement of the lawsuit, a decision in the infringement case that is favorable to the ANDA applicant or other period determined by a court.
The filing of a patent infringement lawsuit within 45 days after the receipt of notice of the Paragraph IV certification automatically prevents the FDA from approving the ANDA or 505(b)(2) NDA until the earlier of 30 months, expiration of the patent, settlement of the lawsuit, a decision in the infringement case that is favorable to the ANDA applicant or other period determined by a court.
In addition, many of our competitors and their collaborators have substantially greater advantages in the following areas: • capital resources; • research and development resources; • manufacturing capabilities; and • sales and marketing resources. Smaller companies might also prove to be significant competitors, particularly through proprietary research discoveries and collaborative arrangements with large pharmaceutical and established biotechnology companies.
In addition, many of our competitors and their collaborators have substantially greater advantages in the following areas: • capital resources; • research and development resources; • manufacturing capabilities; and • sales and marketing resources. 4 Table of Contents Smaller companies might also prove to be significant competitors, particularly through proprietary research discoveries and collaborative arrangements with large pharmaceutical and established biotechnology companies.
Our Strategy Our strategy for increasing stockholder value includes: • Advancing our pipeline of compounds through development and to regulatory approval; • Developing the go-to-market strategy to quickly and effectively market, launch, and distribute each of our compounds that receive regulatory approval; • Opportunistically out-licensing rights to indications or geographies; and • Acquiring or licensing rights to targeted, complementary differentiated preclinical and clinical stage compounds.
Our Strategy Our strategy for increasing stockholder value includes: • Advancing our pipeline of compounds through development to regulatory approval; • Developing the go-to-market strategy to quickly and effectively market, launch, and distribute each of our compounds that receive regulatory approval; • Opportunistically out-licensing rights to indications or geographies; and • Acquiring or in-licensing rights to targeted, complementary differentiated preclincal and clinical stage compounds.
Similar extensions to patent term may be available in other countries for particular patents in our portfolio. We plan to augment our portfolio of compounds by focusing on the development (when possible) of new chemical entities (“NCEs”) or biologics, which have not previously received FDA approval.
Similar extensions to patent term may be available in other countries for particular patents in our portfolio. 3 Table of Contents We plan to augment our portfolio of compounds by focusing on the development (when possible) of new chemical entities (“NCEs”) or biologics, which have not previously received FDA approval.
We may encounter difficulties or unanticipated costs in our efforts to secure necessary governmental approvals, which could delay or preclude us from marketing our products. The FDA may limit the indications for use or place other conditions on any approvals that could restrict the commercial application of the product.
We may encounter difficulties or unanticipated costs in our efforts to secure necessary governmental approvals, which could delay or preclude us from marketing any approved product candidates. The FDA may limit the indications for use or place other conditions on any approvals that could restrict the commercial application of the approved product.
The ACA was intended to broaden access to health insurance, reduce or constrain the growth of healthcare spending, enhance remedies against healthcare fraud and abuse, add new transparency requirements for healthcare and health insurance industries, impose new taxes and fees on pharmaceutical and medical device manufacturers, and impose additional health policy reforms.
The ACA was intended to broaden access to health insurance, reduce or constrain the growth of healthcare spending, enhance remedies against healthcare fraud and abuse, add new transparency requirements for healthcare and health insurance industries, impose new 7 Table of Contents taxes and fees on pharmaceutical and medical device manufacturers, and impose additional health policy reforms.
Using the decentralized procedure, an applicant may apply for simultaneous authorization in more than one European Union country of medicinal products that have not yet been authorized in any European Union country and that do not fall within the mandatory scope of the centralized procedure. 11 Table of Contents • Mutual recognition procedure.
Using the decentralized procedure, an applicant may apply for simultaneous authorization in more than one European Union country of medicinal products that have not yet been authorized in any European Union country and that do not fall within the mandatory scope of the centralized procedure. • Mutual recognition procedure.
The data exclusivity period prevents generic applicants from relying on the preclinical and clinical trial data contained in the dossier of the reference product when applying for a generic marketing authorization in the EU during a period of eight years from the date on which the reference product was first authorized in the EU.
The data exclusivity period prevents generic applicants from relying on the preclinical and clinical trial data contained in the dossier of the reference 10 Table of Contents product when applying for a generic marketing authorization in the EU during a period of eight years from the date on which the reference product was first authorized in the EU.
Under the BPCIA, a reference biologic is granted 12 years of exclusivity from the time of first licensure of the reference product. This 12-year period includes 4 years before the FDA may accept for filing an application for a biologic that references a branded (reference) product. Pediatric Exclusivity.
Under the BPCIA, a reference biologic is granted 12 9 Table of Contents years of exclusivity from the time of first licensure of the reference product. This 12-year period includes 4 years before the FDA may accept for filing an application for a biologic that references a branded (reference) product. Pediatric Exclusivity.
Intellectual Property Overview Our success depends in part on our ability to obtain and maintain proprietary protection for the technology and know-how upon which our products are based, to operate without infringing the proprietary rights of others and to prevent others from infringing our proprietary rights.
Intellectual Property Overview Our success depends in part on our ability to obtain and maintain proprietary protection for the technology and know-how upon which our product candidates are based, to operate without infringing the proprietary rights of others and to prevent others from infringing our proprietary rights.
The Securities and Exchange Commission maintains a website ( www.sec.gov ) that includes our reports, proxy statements and other information. 12 Table of Contents
The Securities and Exchange Commission maintains a website ( www.sec.gov ) that includes our reports, proxy statements and other information. 11 Table of Contents
The Biden administration has signaled that it plans to build on the ACA and expand the number of people who are eligible for subsidies under it. The Inflation Reduction Act of 2022, enacted on August 16, 2022, includes several provision to lower prescription drug costs for Medicare patients and reduce drug spending by the federal government.
The Biden administration has signaled that it plans to build on the ACA and has expanded the number of people who are eligible for subsidies under it. The Inflation Reduction Act of 2022, enacted on August 16, 2022, includes several provisions to lower prescription drug costs for Medicare patients and reduce drug spending by the federal government.
Specifically, the applicant must certify with respect to each patent that: • the required patent information has not been filed; • the listed patent has expired; • the listed patent has not expired, but will expire on a particular date and approval is sought after patent expiration; or • the listed patent is invalid, unenforceable, or will not be infringed by the new product.
Specifically, the applicant must certify with respect to each patent that: • the required patent information has not been filed; • the listed patent has expired; • the listed patent has not expired, but will expire on a particular date and approval is sought after patent expiration; or 8 Table of Contents • the listed patent is invalid, unenforceable, or will not be infringed by the new product.
Avalo is responsible for the development and commercialization of AVTX-002 in all indications worldwide (other than the option in the KKC License Agreement that, upon exercise by KKC, allows KKC to develop, manufacture and commercialize AVTX-002 in Japan).
Avalo is responsible for the development and commercialization of quisovalimab in all indications worldwide (other than the option in the KKC License Agreement that, upon exercise by KKC, allows KKC to develop, manufacture and commercialize quisovalimab in Japan).
Hatch ‑ Waxman Non ‑ Patent Exclusivity Market and data exclusivity provisions under the FDCA also can delay the submission or the approval of certain applications for competing products. The FDCA provides a five‑year period of non‑patent data exclusivity within the United States to the first applicant to gain approval of an NDA for a new chemical entity.
Hatch ‑ Waxman Non ‑ Patent Exclusivity Market and data exclusivity provisions under the FDCA also can delay the submission or the approval of certain applications for competing products. The FDCA provides a five‑year period of non‑patent data exclusivity within the United States to the first applicant to gain approval of an NDA for a NCE.
Coverage and Reimbursement 7 Table of Contents The commercial success of our product candidates and our ability to commercialize any approved product candidates successfully will depend in part on the extent to which governmental authorities, private health insurers and other third‑party payers provide coverage for and establish adequate reimbursement levels for our therapeutic product candidates.
Coverage and Reimbursement Our ability to commercialize and, the commercial success of, any approved product candidates will depend in part on the extent to which governmental authorities, private health insurers and other third‑party payers provide coverage for and establish adequate reimbursement levels for our therapeutic product candidates.
After evaluating the NDA or BLA 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 (“CRL”).
After evaluating the NDA or BLA and all related information, including if there is an advisory committee recommendation, and inspection reports regarding the manufacturing or laboratory facilities and clinical trial sites, the FDA may issue an approval letter, or, in some cases, a complete response letter (“CRL”).
A drug is a new chemical entity if the FDA has not previously approved any other new drug containing the same active moiety, which is the molecule or ion responsible for the therapeutic activity of the drug substance.
A drug is a NCE if the FDA has not previously approved any other new drug containing the same active moiety, which is the molecule or ion responsible for the therapeutic activity of the drug substance.
Failure to comply with the applicable United States requirements at any time during the product development process, approval process or after 5 Table of Contents approval, may subject an applicant to a variety of administrative or judicial sanctions, or other actions, such as the FDA’s delay in review of or refusal to approve a pending NDA or BLA, withdrawal of an approval, imposition of a clinical hold or study termination, issuance of Warning Letters or Untitled Letters, mandated modifications to promotional materials or issuance of corrective information, requests for product recalls, consent decrees, corporate integrity agreements, deferred prosecution agreements, product seizures or detentions, refusal to allow product import or export, total or partial suspension of or restriction of or imposition of other requirements relating to production or distribution, injunctions, fines, debarment from government contracts and refusal of future orders under existing contracts, exclusion from participation in federal and state healthcare programs, FDA debarment, restitution, disgorgement or civil or criminal penalties, including fines and imprisonment.
Failure to comply with the applicable United States requirements at any time during the product development process, approval process or after approval, may subject an applicant to a variety of administrative or judicial sanctions, or other actions, such as the FDA’s delay in review of or refusal to approve a pending new drug application (“NDA”) or biologics license application (“BLA”), withdrawal of an approval, imposition of a clinical hold or study termination, issuance of Warning Letters or Untitled Letters, mandated modifications to promotional materials or issuance of corrective information, requests for product recalls, consent decrees, corporate integrity agreements, deferred prosecution agreements, product seizures or detentions, refusal to allow product import or export, total or partial suspension, restriction, or imposition of other requirements relating to production or distribution, injunctions, consent decrees, fines, debarment from government contracts and refusal of future orders under existing contracts, exclusion from participation in federal and state healthcare programs, FDA debarment, restitution, disgorgement or civil or criminal penalties, including fines and imprisonment.
We value diversity and inclusiveness at all levels. Corporate Information We were incorporated in Delaware in 2011 and commenced operations in the second quarter of 2011. Our principal executive offices are located at 540 Gaither Road, Suite 400, Rockville, Maryland 20850, and our phone number is (410) 522-8707. Our website address is www.avalotx.com .
Corporate Information We were incorporated in Delaware in 2011 and commenced operations in the second quarter of 2011. Our principal executive offices are located at 540 Gaither Road, Suite 400, Rockville, Maryland 20850, and our phone number is (410) 522-8707. Our website address is www.avalotx.com .
The FDA and other agencies actively enforce the laws and regulations prohibiting the promotion of off‑label uses, and a company that is found to have improperly marketed or promoted off‑label uses may be subject to significant liability, including criminal and civil penalties under the FDCA and False Claims Act, exclusion from participation in federal healthcare programs, debarment from government contracts, refusal of future orders under existing contracts and mandatory compliance programs under corporate integrity agreements or deferred prosecution agreements.
The FDA and other agencies actively enforce the laws and regulations prohibiting the promotion of off‑label uses, and a company that improperly markets or promotes off‑label uses may be subject to significant liability, including criminal and civil penalties under the FDCA and False Claims Act, exclusion from participation in federal healthcare programs, debarment from government contracts, refusal of future orders under existing contracts and mandatory compliance programs under corporate integrity agreements or deferred prosecution agreements.
Similarly, upon approval by the FDA, biologics are entitled to reference product exclusivity for a period of twelve years from the date of FDA approval, even if the related patents have expired. Intellectual property for specific pipeline assets, if applicable, are discussed above within the “Pipeline Assets” section.
Similarly, upon approval by the FDA, biologics are entitled to reference product exclusivity for a period of twelve years from the date of FDA approval, even if the related patents have expired. Intellectual property for specific pipeline assets, if applicable, are discussed above within the “Pipeline - Overview, Competition and Intellectual Property” section.
To the extent that any of our products are sold in a foreign country, we may be subject to similar foreign laws and regulations, which may include, for instance, applicable post‑marketing requirements, including safety surveillance, anti‑fraud and abuse laws, and implementation of corporate compliance programs and reporting of payments or transfers of value to healthcare professionals.
To the extent that any of our product candidates are approved for sale in a foreign country, we may be subject to similar foreign laws and regulations, which may include, for instance, applicable post‑marketing requirements, including safety surveillance, anti‑fraud and abuse laws, and implementation of corporate compliance programs and reporting of payments or transfers of value to healthcare professionals.
During the approval process, the FDA and the sponsor may agree that specific studies or clinical trials should be conducted as post- 6 Table of Contents marketing commitments, but they are not required. The FDA may also impose post-marketing requirements as a condition of approval of an NDA or BLA.
During the approval process, the FDA and the sponsor may agree that specific studies or clinical trials should be conducted as post-marketing commitments, but they are not required by statute or regulation. The FDA may also impose post-marketing requirements as a condition of approval of an NDA or BLA.
Market, Data, and Patent Exclusivity: Patents exclusively licensed from KKC may provide exclusivity in the United States through 2028 absent any extension, and additional patent applications filed by us covering certain methods of using AVTX-002, if issued and properly maintained, should provide additional exclusivity through 2043, absent any extension.
Additionally, patents exclusively licensed from KKC may provide exclusivity in the United States through 2028 absent any extension, and additional patent applications filed by us covering certain methods of using quisovalimab, if issued and properly maintained, should provide additional exclusivity in certain indications through 2043, absent any extension.
The preparation of an NDA or BLA requires the expenditure of substantial funds and the commitment of substantial resources. Additionally, at the time of an NDA or BLA submission a user fee is required (unless the product has ODD) to be paid.
The preparation of a NDA or BLA requires the expenditure of substantial funds and the commitment of substantial resources. Additionally, at the time of a NDA or BLA submission a user fee is required to be paid unless the product has orphan drug designation (“ODD”).
These have, among other things, reduced Medicare payments to several types of providers, including hospitals, imaging centers and cancer treatment centers, and increased the statute of limitations period for the government to recover overpayments to providers. 8 Table of Contents Further legislative and regulatory changes under the ACA remain possible.
Other legislative changes have been proposed and adopted since passage of the ACA. These have, among other things, reduced Medicare payments to several types of providers, including hospitals, imaging centers and cancer treatment centers, and increased the statute of limitations period for the government to recover overpayments to providers. Further legislative and regulatory changes under the ACA remain possible.
Complexities associated with the larger, and often more complex, structures of biological products, as well as the process by which such products are manufactured, pose significant hurdles to implementation that are still being evaluated by the FDA.
Complexities associated with the larger, and often more complex, structures of biological products, as well as the process by which such products are manufactured, can pose significant hurdles to implementation.
Overview: AVTX-002 is a fully human mAb, directed against human LIGHT. There is increasing evidence that the dysregulation of the LIGHT-signaling network which includes LIGHT, its receptor HVEM and LTβR and the downstream checkpoint BTLA, is a disease-driving mechanism in autoimmune and inflammatory reactions in barrier organs.
There is increasing evidence that the dysregulation of the LIGHT-signaling network which includes LIGHT, its receptor HVEM and LTβR and the downstream checkpoint BTLA, is a disease-driving mechanism in autoimmune and inflammatory reactions in barrier organs.
The cumulative safety and efficacy data generated from the clinical trials described above, chemistry, manufacturing and control (“CMC”) information, nonclinical study data and proposed labeling are used as the basis to support approval of a marketing application (NDA or BLA) to the FDA.
In addition to the cumulative safety and efficacy data generated from the clinical trials described above, chemistry, manufacturing and control (“CMC”) information, nonclinical study data and proposed labeling form the basis to support approval of a NDA or BLA to the FDA.
In addition to human testing, the manufacturing process of the potential product must be developed in accordance with cGMP regulations. Prior to the approval of a new product, the FDA will inspect the facilities at which the proposed drug product is manufactured to ensure cGMP compliance.
In addition to human testing, the manufacturing process of the potential product must be developed in accordance with cGMP regulations. Prior to the approval of a new product, the FDA may inspect the facilities at which the proposed drug product is to be manufactured to ensure cGMP compliance. FDA may also inspect clinical trial sites and applicable laboratories.
LIGHT ( L ymphotoxin-like, exhibits I nducible expression, and competes with HSV G lycoprotein D for H erpesvirus Entry Mediator (“HVEM”), a receptor expressed by T lymphocytes; also referred to as TNFSF14) is an immunoregulatory cytokine.
Overview: Quisovalimab is a fully human mAb, directed against human LIGHT ( L ymphotoxin-like, exhibits I nducible expression, and competes with HSV G lycoprotein D for H erpesvirus Entry Mediator (“HVEM”), a receptor expressed by T lymphocytes; also referred to as TNFSF14).
The data generated from nonclinical studies is used to support the filing of an IND under which human studies are conducted.
The data generated from nonclinical studies is used to support the filing of an investigational new drug application (“IND”) under which human studies are conducted.
The FDA conducts a preliminary administrative review upon receipt of the NDA or BLA submission, the FDA either accepts the NDA or BLA submission or does not. If the application is not accepted for review by FDA, the Sponsor of the application must resolve the deficiencies and re-submit the application, re-starting the review clock.
The FDA conducts a preliminary administrative review upon receipt 5 Table of Contents of the NDA or BLA submission and decides whether to accept the NDA or BLA submission. If the application is not accepted for review by the FDA, the Sponsor of the application must resolve the deficiencies and re-submit the application, re-starting the review clock.
Upon approval of a BLA, the biologic is listed in the Purple Book along with the date it was licensed; whether the biological product licensed has been determined by the FDA to be biosimilar to or interchangeable with a reference biological product (an already-licensed FDA biological product) and the date of expiration of applicable exclusivity.
Upon approval of a BLA, the biologic is listed by the FDA in its Approved Drug Products with Therapeutic Equivalence Evaluations, commonly known as the Purple Book, along with the date it was licensed; whether the FDA has determined that the licensed biological product is biosimilar to or interchangeable with a reference biological product (an already-licensed FDA biological product) and the date of expiration of applicable exclusivity.
Some of these competitors are pursuing the development of pharmaceuticals that target the same diseases and conditions that our research and development programs target or might target. Some of these competitors also have greater resources and more experience than we do in regulatory development and marketing. Competition for specific pipeline assets are discussed above within the “Pipeline Assets” section.
Some of these competitors are pursuing the development of pharmaceuticals that target the same diseases and conditions that our research and development programs target or might target. Some of these competitors also have greater resources and more experience than we do in research and development development and marketing.
Government Regulation and Product Approval Government authorities in the United States, at the federal, state and local level, and in other countries extensively regulate, among other things, the research, development, testing, manufacture, packaging, storage, recordkeeping, labeling, advertising, promotion, distribution, marketing, import and export, pricing, and government contracting related to pharmaceutical products such as those we sell and are developing.
Government Regulation and Product Approval Government authorities in the United States and in other countries extensively regulate, among other things, the research, development, testing, manufacturing, packaging, storage, recordkeeping, labeling, advertising, promoting, distributing, marketing, importing and exporting, pricing, and government contracting related to pharmaceutical products such as those we are developing.
The Company is required to pay KKC a double-digit percentage (less than 30%) of the payments that the Company receives from sublicensing of its rights under the KKC License Agreement, subject to certain exclusions.
Additionally, the Company is required to pay KKC royalties during a country-by-country royalty term equal to a mid-teen percentage of annual net sales. The Company is required to pay KKC a double-digit percentage (less than 30%) of the payments that the Company receives from sublicensing its rights under the KKC License Agreement, subject to certain exclusions.
Legacy Programs Due to our focus on AVTX-002, AVTX-008 and AVTX-803, we are not currently actively pursuing the development of the following programs and are exploring strategic alternatives: AVTX-006 : AVTX-006 is a dual mTORc1/c2 small molecule inhibitor for the treatment of complex lymphatic malformations.
Legacy Programs We are not currently pursuing the development of the following programs and are exploring strategic alternatives: AVTX-006 : AVTX-006 is a dual mTORc1/c2 small molecule inhibitor for the treatment of complex lymphatic malformations. AVTX-913 : AVTX-913 is a nucleotide prodrug for the treatment of a mitochondrial disorder and is a preclinical asset.
We believe that our future success largely depends upon our continued ability to attract and retain highly skilled and qualified personnel. We believe that we provide our employees with competitive salaries and bonuses, opportunities for equity ownership, and an employment package that promotes well-being across all aspects of their lives, including health care, retirement planning and paid time off.
We believe that we provide our employees with competitive salaries and bonuses, opportunities for equity ownership, and an employment package that promotes well-being across all aspects of their lives, including health care, retirement planning and paid time off. We value diversity and inclusiveness at all levels.
Manufacturing 4 Table of Contents We do not have any manufacturing facilities or personnel. We rely on contract manufacturing organizations to produce our drug candidates in accordance with applicable provisions of the FDA’s current good manufacturing practices (“cGMP”) regulations for use in our clinical studies.
Competition for specific pipeline assets is discussed above within the “Pipeline Assets” section. Manufacturing We do not have any manufacturing facilities. We rely on contract manufacturing organizations to produce our drug candidates in accordance with applicable provisions of the FDA’s and EMA’s current good manufacturing practices (“cGMP”) regulations for use in our clinical studies.
It is used to treat conditions such as arthritis, blood disorders, immune system disorders, skin and eye conditions, respiratory disorders, cancer, and severe allergies. Prednisolone decreases an individual's immune response to various diseases to reduce symptoms such as pain, swelling and allergic-type reactions. Millipred ® is supplied in 5mg tablets. Millipred ® tablets primarily compete in the generic prednisolone market.
Prednisolone is a man-made form of a natural substance (corticosteroid hormone) made by the adrenal gland. It is used to treat conditions such as arthritis, blood disorders, immune system disorders, skin and eye conditions, respiratory disorders, cancer, and severe allergies. Prednisolone decreases an individual's immune response to various diseases to reduce symptoms such as pain, swelling and allergic-type reactions.
Upon commercialization, the Company is required to pay KKC sales-based milestones aggregating up to $75 million tied to the achievement of annual net sales targets. Additionally, the Company is required to pay KKC royalties during a country-by-country royalty term equal to a mid-teen percentage of annual net sales.
Upon commercialization, the Company is required to pay sales-based milestones aggregating up to $720 million. Additionally, Avalo 1 Table of Contents is required to pay royalties during a country-by-country royalty term equal to a mid-single digit-to-low double digit of Avalo or its sublicensees’ annual net sales.
Regulatory approval in one country does not ensure regulatory approval in another, but a failure or delay in obtaining regulatory approval in one country may negatively impact the regulatory process in others. The processes for obtaining marketing approvals in foreign countries, along with subsequent compliance with applicable statutes and regulations, require the expenditure of substantial time and financial resources.
The processes for obtaining marketing approvals in foreign countries, along with subsequent compliance with applicable statutes and regulations, require the expenditure of substantial time and financial resources.
Market, Data, and Patent Exclusivity: Patents exclusively licensed from Sanford Burnham Prebys Medical Discover Institute may provide exclusivity in the United States through 2036 absent any extension.
Market, Data, and Patent Exclusivity: If we receive marketing approval, we expect to receive biologics data exclusivity in the United States, which may provide twelve years of data exclusivity in the United States from the date of FDA approval. Additionally, patents exclusively licensed from Sanford Burnham Prebys may provide exclusivity in the United States through 2036 absent any extension.
Under the KKC License Agreement, the Company paid KKC an upfront license fee of $10 million. Avalo is also required to pay KKC up to an aggregate of $112.5 million based on the achievement of specified development and regulatory milestones.
Avalo is also required to pay KKC up to an aggregate of $112.5 million based on the achievement of specified development and regulatory milestones. Upon commercialization, the Company is required to make milestone payments to KKC aggregating up to $75 million tied to the achievement of annual net sales targets.
Under the PRV program, any drug that is granted RPDD by September 30, 2024 and receives approval by September 30, 2026 may qualify for a PRV. Foreign Regulation In order to market any product outside of the United States, we would need to comply with numerous and varying regulatory requirements of other countries regarding drug development, approval and commercialization.
Foreign Regulation In order to market any product outside of the United States, we would need to comply with numerous and varying regulatory requirements of other countries regarding drug development, approval and commercialization. The approval process varies by country and can involve additional product testing and additional administrative review periods.
License: On March 25, 2021, the Company entered into a license agreement with Kyowa Kirin Co., Ltd. (“KKC”) for exclusive worldwide rights to develop, manufacture and commercialize AVTX-002 for all indications (the “KKC License Agreement”). The KKC License Agreement replaced the Amended and Restated Clinical Development and Option Agreement between the Company and KKC dated May 28, 2020.
Competition: As of the date of this report, and to our knowledge, quisovalimab is the only anti-LIGHT mAb in clinical development in the United States. License: On March 25, 2021, the Company entered into a license agreement with Kyowa Kirin Co., Ltd. (“KKC”) for exclusive worldwide rights to develop, manufacture and commercialize quisovalimab for all indications (the “KKC License Agreement”).
Employees and Human Capital Management As of December 31, 2022, we had twenty employees, all of whom are full-time. Eleven of our employees were primarily engaged in research and development activities. None of our employees are represented by a labor union or covered by a collective bargaining agreement. We consider our relationship with our employees to be good.
Eleven of our employees are primarily engaged in research and development activities. None of our employees are represented by a labor union or covered by a collective bargaining agreement. We consider our relationship with our employees to be good. We believe that our future success largely depends upon our ability to attract and retain highly skilled and qualified personnel.
It is unknown what form any future changes or any law would take, and how or whether it may affect our business in the future.
Pursuant to this, the CMS announced in August 2023 that it had selected the first ten drugs covered under Medicare Part D for negotiation. It is unknown what this negotiation will yield or what form any future changes or any law would take, and how or whether it may affect our business in the future.
The ACA substantially changed the way healthcare is financed by both governmental and private insurers, and significantly impacts the pharmaceutical industry.
The Patient Protection and Affordable Care Act of 2010, as amended by the Health Care and Education Affordability Reconciliation Act of 2010 (collectively, the “Affordable Care Act” or “ACA”), substantially changed the way healthcare is financed by both governmental and private insurers, and significantly impacts the pharmaceutical industry.
Additionally, if we receive marketing approval, we expect to receive biologics data exclusivity in the United States, which may provide twelve years of data exclusivity in the United States from the date of FDA approval. Other AVTX-803: Monosaccharide therapy for treatment of Leukocyte Adhesion Deficiency Type II.
Avalo is responsible for the development and commercialization of the AVTX-009 program. Market, Data, and Patent Exclusivity: If we receive marketing approval, we expect to receive biologics data exclusivity in the United States, which may provide twelve years of data exclusivity in the United States from the date of FDA approval. Quisovalimab (AVTX-002): Anti-LIGHT mAb targeting immune-inflammatory diseases.
The approval process varies from country to country and can involve additional product testing and additional administrative review periods. The time required to obtain approval in other countries might differ from and be longer than that required to obtain FDA approval.
The time required to obtain approval in other countries might differ from and be longer than that required to obtain FDA approval. Regulatory approval in one country does not ensure regulatory approval in another, but a failure or delay in obtaining regulatory approval in one country may negatively impact the regulatory process in others.
Item 1. Business. Overview Avalo Therapeutics, Inc. (the “Company”, “Avalo” or “we”) is a clinical stage biotechnology company focused on the treatment of immune dysregulation by developing therapies that target the LIGHT-signaling network.
Item 1. Business. Overview Avalo Therapeutics, Inc. (the “Company”, “Avalo” or “we”) is a clinical stage biotechnology company focused on the treatment of immune dysregulation. Avalo’s lead asset is AVTX-009, an anti-IL-1β monoclonal antibody (“mAb”), targeting inflammatory diseases. Avalo’s pipeline also includes quisovalimab (anti-LIGHT mAb) and AVTX-008 (BTLA agonist fusion protein).
In addition to the KKC License Agreement, Avalo is subject to additional royalties upon commercialization of up to an amount of less than 10% of net sales.
In addition to the KKC License Agreement, Avalo is responsible for making additional royalty payments upon commercialization of up to an amount of less than 10% of net sales. 2 Table of Contents Market, Data, and Patent Exclusivity: If we receive marketing approval, we expect to receive biologics data exclusivity in the United States, which would provide twelve years of data exclusivity in the United States from the date of FDA approval.
Commercially Marketed Product The Company currently has one marketed product, Millipred ® , an oral prednisolone indicated across a wide variety of inflammatory conditions and indications. Prednisolone is a man-made form of a natural substance (corticosteroid hormone) made by the adrenal gland.
Former Commercially Marketed Product Prior to October 2023, we had one commercially marketed product, Millipred ® . We considered Millipred ® a non-core asset. Our supply and license agreement for Millipred ® ended on September 30, 2023. Millipred ® is an oral prednisolone indicated across a wide variety of inflammatory conditions and indications.
Removed
LIGHT and its signaling receptors, HVEM (TNFRSF14), and lymphotoxin β receptor (TNFRSF3), form an immune regulatory network with two co-receptors of herpesvirus entry mediator, checkpoint inhibitor B and T Lymphocyte Attenuator (“BTLA”), and CD160 (collectively, the “LIGHT-signaling network” or the “LIGHT network”).
Added
Avalo was incorporated in Delaware and commenced operation in 2011, and completed its initial public offering in October 2015.
Removed
Accumulating evidence points to the dysregulation of the LIGHT-signaling network as a disease-driving mechanism in autoimmune and inflammatory reactions in barrier organs. Therefore, we believe reducing LIGHT levels can moderate immune dysregulation in many acute and chronic inflammatory disorders. Avalo was incorporated in Delaware and commenced operation in 2011, and completed its initial public offering in October 2015.
Added
Pipeline — Overview, Competition, and Intellectual Property AVTX-009: Anti-IL-1β monoclonal antibody (“mAb”) targeting inflammatory diseases. Overview: AVTX-009 is a humanized monoclonal antibody (IgG4) that binds to interleukin-1β (“IL-1β”) with high affinity and neutralizes its activity. IL-1β is a central driver in the inflammatory process. Overproduction or dysregulation of IL-1β is implicated in many autoimmune and inflammatory diseases.
Removed
Pipeline — Overview, Competition and Intellectual Property The following chart summarizes key information about our pipeline and is followed by further detail for each program, including an overview, competition, licenses (if applicable), and market, data, and patent exclusivity/intellectual property: 1 Table of Contents Core Programs: Immune Dysregulation Disorders AVTX-002: Anti-LIGHT monoclonal antibody for treatment of Non-Eosinophilic Asthma.
Added
IL-1β is a major, validated target for therapeutic intervention. There is evidence that inhibition of IL-1β could be effective in HS and a variety of inflammatory diseases in dermatology, gastroenterology, and rheumatology. Competition: As of the date of this report, and to our knowledge, AVTX-009 is one of three anti-IL-1β antibodies in clinical development worldwide.
Removed
Therefore, Avalo believes reducing LIGHT levels can moderate immune dysregulation in many acute and chronic inflammatory disorders. Avalo is currently developing AVTX-002 for the treatment of non-eosinophilic asthma (“NEA”).

… 40 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

195 edited+67 added−91 removed250 unchanged
Biggest changeOur future funding requirements, both short and long term, will depend on many factors, including: • The initiation, progress, timing, costs and results of preclinical and clinical studies for our product candidates and any future Product candidates we may develop; • The outcome, timing and cost of seeking and obtaining regulatory approvals from the FDA and other regulatory authorities, including the potential for such authorities to require that we perform more studies than currently expected; • The cost to establish, maintain, expand and defend the scope of our intellectual property portfolio, including the amount and timing of any payments we may be required to make, or that we may receive, in connection with licensing, preparing, filing, prosecuting, defending and enforcing any patents or other intellectual property rights; • The effect of competing technological and market developments; • Market acceptance of any approved product candidates; • The cost and timing of selecting, auditing and potentially validating a manufacturing site for commercial‑scale manufacturing; and • The cost of developing our sales, marketing and distribution capabilities to accommodate any of our product candidates for which we receive marketing approval and that we determine to commercialize ourselves or in collaboration with our partners; and • The costs of acquiring, licensing or investing in additional businesses, products, product candidates and technologies.
Biggest changeOur future funding requirements, both short and long term, will depend on many factors, including: • The initiation, progress, timing, costs and results of preclinical and clinical studies for our product candidates and any future product candidates we may develop; 12 Table of Contents • The level of research and development investment required to develop product candidates; • The rate and level of patient recruitment into clinical trials; • The timing and amount of milestone payments we are required to make under license agreements; • Changes in product development plans needed to address any difficulties that may arise in manufacturing, preclinical activities, clinical trials or commercialization; • The outcome, timing and cost of seeking and obtaining regulatory approvals from the FDA and other regulatory authorities, including the potential for such authorities to require that we perform more studies than currently expected; • The cost to establish, maintain, expand and defend the scope of our intellectual property portfolio and patent claims, including the amount and timing of any payments we may be required to make, or that we may receive, in connection with licensing, preparing, filing, prosecuting, defending and enforcing any patents or other intellectual property rights; • The effect of competing technological and market developments; • The cost and timing of selecting, auditing and potentially validating a manufacturing site for commercial‑scale manufacturing; and • The cost of future commercialization activities including, developing our sales, marketing. manufacturing and distribution capabilities to accommodate any of our product candidates for which we receive marketing approval and that we determine to commercialize ourselves or in collaboration with our partners; • Market acceptance of any approved product candidates; • The effect of competing product and market developments; • The ability and willingness to enter into new agreements with strategic partners, and the terms of these agreements; and • The costs of acquiring, licensing or investing in additional businesses, products, product candidates and technologies.
Similarly, changes in the location of manufacturing or addition of manufacturing facilities may increase our costs and require additional studies and FDA approval. This may require us to ensure that the new facility meets all applicable regulatory requirements, is adequately validated and qualified, and to conduct additional studies of product candidates manufactured at the new location.
Similarly, changes in the location of manufacturing or addition of manufacturing facilities may increase our costs and require additional studies and FDA approval. This may require us to ensure that the new facility meets all applicable regulatory requirements, is adequately validated and qualified, and conduct additional studies of product candidates manufactured at the new location.
We expect that any of our product candidates, if approved, would be priced at a significant premium over competitive generic, including branded generic, products, but, any new product that competes with an approved product must demonstrate compelling advantages in efficacy, convenience, tolerability and safety in order to overcome price competition and to be commercially successful.
We expect that any of our product candidates, if approved, would be priced at a significant premium over competitive generic, including branded generic, products, but, any new product that competes with an approved product must demonstrate compelling advantages in efficacy, convenience, tolerability and safety in order to overcome price competition and be commercially successful.
Additional delays may result if the FDA, an FDA Advisory Committee or other regulatory authority recommends non‑approval or restrictions on approval. In addition, we may experience delays or rejections based upon additional government regulation from future legislation or administrative action, or changes in regulatory agency policy during the period of product development, clinical trials and the review process.
Additional delays may result if the FDA or other regulatory authority, or an FDA Advisory Committee recommends non‑approval or restrictions on approval. In addition, we may experience delays or rejections based upon additional government regulation from future legislation or administrative action, or changes in regulatory agency policy during the period of product development, clinical trials and the review process.
We cannot be sure that coverage and reimbursement will be available for any product that we commercialize and, if coverage is available, what the level of reimbursement will be. Coverage and reimbursement may impact the demand for, or the price of, any product candidate for which we obtain marketing approval.
We cannot be sure that coverage and reimbursement will be available for any product candidate that we commercialize and, if coverage is available, what the level of reimbursement will be. Coverage and reimbursement may impact the demand for, or the price of, any product candidate for which we obtain marketing approval.
Regardless of merit or eventual outcome, liability claims may result in: • Decreased demand for any product candidates or approved products; • Termination of clinical trial sites or entire trial programs; • Injury to our reputation and significant negative media attention; • Withdrawal of clinical trial participants; • Significant costs to defend the related litigation; • Substantial monetary awards to trial subjects or patients; • Loss of revenue; • Product recalls, withdrawals or labeling, marketing or promotional restrictions; • Diversion of management and scientific resources from our business operations; • The inability to commercialize any products that we may develop; and • A decline in our stock price.
Regardless of merit or eventual outcome, liability claims may result in: • Decreased demand for any product candidates or approved products; • Termination of clinical trial sites or entire trial programs; • Injury to our reputation and significant negative media attention; • Withdrawal of clinical trial participants; • Significant costs to defend the related litigation; • Substantial monetary awards to trial subjects or patients; • Loss of revenue; • Product recalls, withdrawals or labeling, marketing or promotional restrictions; • Diversion of management and scientific resources from our business operations; • The inability to commercialize any product candidates that we may develop; and • A decline in our stock price.
The market price of our shares of our common stock has been highly volatile and subject to wide fluctuations in response to various factors, some of which we cannot control.
The market price of our shares of common stock has been highly volatile and subject to wide fluctuations in response to various factors, some of which we cannot control.
Restrictions under applicable federal and state healthcare related laws and regulations include but are not limited to the following: • The federal Anti-Kickback Statute, which prohibits any person from, among other things, knowingly and willfully soliciting, offering, receiving or providing anything of value, directly or indirectly, overtly or covertly, in cash or in kind, to induce or reward, or in return for, the referral of an individual for the furnishing or arranging for the furnishing, or the purchase, lease or order, or arranging for or recommending purchase, lease or order, of any good or service for which payment may be made under a federal healthcare program; • The Veterans Health Care Act, which requires manufacturers of covered drugs to offer them for sale on the Federal Supply Schedule and requires compliance with applicable federal procurement laws and regulations; • The civil monetary penalties statute, which imposes penalties against any person or entity who, among other things, is determined to have presented or caused to be presented a claim to a federal health program that the person knows or should know is for an item or service that was not provided as claimed or is false or fraudulent; 37 Table of Contents • The false claims act, which imposes liability and significant civil penalties on any person who submits or causes to be submitted a claim to the federal government that he or she knows (or should know) is false; • Federal transparency laws, including the federal Physician Sunshine Act (PSA), which requires manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) to report annually to the Centers for Medicare and Medicaid Services (CMS), information related to payments or other “transfers of value” made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors) and teaching hospitals, and requires applicable manufacturers and applicable group purchasing organizations to report annually to CMS ownership and investment interests held by physicians (as defined above) and their immediate family members; and • Analogous or similar state, federal, and foreign laws, regulations, and requirements which may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third party payors, including private insurers; state and foreign laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the applicable compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers; state and foreign laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; laws, regulations, and requirements applicable to the award and performance of federal contracts and grants and state, federal and foreign laws that govern the privacy and security of health and other information in certain circumstances, many of which differ from each other in significant ways and often are not preempted by federal law, thus complicating compliance efforts.
Restrictions under applicable federal and state healthcare related laws and regulations include but are not limited to the following: • The federal Anti-Kickback Statute, which prohibits any person from, among other things, knowingly and willfully soliciting, offering, receiving or providing anything of value, directly or indirectly, overtly or covertly, in cash or in kind, to induce or reward, or in return for, the referral of an individual for the furnishing or arranging for the furnishing, or the purchase, lease or order, or arranging for or recommending purchase, lease or order, of any good or service for which payment may be made under a federal healthcare program; • The Veterans Health Care Act, which requires manufacturers of covered drugs to offer them for sale on the Federal Supply Schedule and requires compliance with applicable federal procurement laws and regulations; • The civil monetary penalties statute, which imposes penalties against any person or entity who, among other things, is determined to have presented or caused to be presented a claim to a federal health program that the person knows or should know is for an item or service that was not provided as claimed or is false or fraudulent; • The false claims act, which imposes liability and significant civil penalties on any person who submits or causes to be submitted a claim to the federal government that he or she knows (or should know) is false; • Federal transparency laws, including the federal Physician Sunshine Act (PSA), which requires manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) to report annually to the Centers for Medicare and Medicaid Services (CMS), information related to payments or other “transfers of value” made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors) and teaching hospitals, and requires applicable manufacturers and applicable group purchasing organizations to report annually to CMS ownership and investment interests held by physicians (as defined above) and their immediate family members; and • Analogous or similar state, federal, and foreign laws, regulations, and requirements which may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third party payors, including private insurers; state and foreign laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the applicable compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers; state and foreign laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; laws, regulations, and requirements applicable to the award and performance of federal contracts and grants and state, federal and foreign laws that govern the privacy and security of health and other information in certain circumstances, many of which differ from each other in significant ways and often are not preempted by federal law, thus complicating compliance efforts.
In addition, even if we were to obtain approval, regulatory authorities may approve any or all of our product candidates for fewer or more limited indications than we request, may require that contraindications, warnings or precautions be included in the product labeling, including a black‑box warning, may grant approval with a requirement of post‑marketing clinical trials or other post‑market requirements, or may approve a product candidate with a label that does not include the labeling claims necessary or desirable for the successful commercialization of that product candidate.
In addition, even if we were to obtain approval, regulatory authorities may approve any or all of our product candidates for fewer or more limited indications than we request, may require that contraindications, warnings or precautions be included in the product labeling, including a black‑box warning, may grant approval with a requirement of post‑marketing clinical trials or other post‑market requirements, or post-marketing commitments or may approve a product candidate with a label that does not include the labeling claims necessary or desirable for the successful commercialization of that product candidate.
Our research efforts may initially show promise in identifying potential therapeutic targets or candidates, yet fail to yield product candidates for clinical development for a number of reasons, including: • Our methodology, including our screening technology, might not successfully identify medically relevant potential product candidates; • Our competitors may develop alternatives that render our product candidates obsolete; • We may encounter product manufacturing difficulties that limit yield or produce undesirable characteristics that increase the cost of goods, cause delays or make the product candidates unmarketable; • Our product candidates may cause adverse effects in subjects, even after successful initial toxicology studies, which may make the product candidates unmarketable; • Other drugs in the same drug class as our products could develop unforeseen adverse effects that could negatively impact development, approval and/or future sales of our product; • Our product candidates might not be capable of being produced in commercial quantities at an acceptable cost, or at all; • Our product candidates might not demonstrate a meaningful benefit to subjects; • Our potential collaboration partners may change their development profiles or plans for potential product candidates or abandon a therapeutic area or the development of a partnered product; and • Our reliance on third party clinical trials may cause us to be denied access to clinical results that may be significant to further clinical development.
Our research efforts may initially show promise in identifying potential therapeutic targets or candidates, yet fail to yield product candidates for clinical development for a number of reasons, including: • Our methodology, including our screening technology, might not successfully identify medically relevant potential product candidates; • Our competitors may develop alternatives that render our product candidates obsolete; • We may encounter product manufacturing difficulties that limit yield or produce undesirable characteristics that increase the cost of goods, cause delays or make the product candidates unmarketable; • Our product candidates may cause adverse effects in subjects, even after successful initial toxicology studies, or not be tolerable, which may make the product candidates unmarketable; • Other drugs in the same drug class as our product candidates could develop unforeseen adverse effects that could negatively impact development, approval and/or future sales of our product candidates; • Our product candidates might not be capable of being produced in commercial quantities at an acceptable cost, or at all; • Our product candidates might not demonstrate a meaningful benefit to subjects; • Our potential collaboration partners may change their development profiles or plans for potential product candidates or abandon a therapeutic area or the development of a partnered product candidates; and • Our reliance on third party clinical trials may cause us to be denied access to clinical results that may be significant to further clinical development.
Our relationship with any future collaborations may pose several risks, including the following: • Collaborators have significant discretion in determining the amount and timing of the efforts and resources that they will apply to these collaborations; • Collaborators might not perform their obligations as expected; • The nonclinical studies and clinical trials conducted as part of these collaborations might not be successful; • Collaborators might not pursue development and commercialization of any product candidates that achieve regulatory approval or may elect not to continue or renew development or commercialization programs based on nonclinical study or clinical trial results, changes in the collaborators’ strategic focus or available funding or external factors, such as an acquisition, that divert resources or create competing priorities; • Collaborators may delay nonclinical studies and clinical trials, provide insufficient funding for nonclinical studies and clinical trials, stop a nonclinical study or clinical trial or abandon a product candidate, repeat or conduct new nonclinical studies or clinical trials or require a new formulation of a product candidate for nonclinical studies or clinical trials; • Collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our product candidates if the collaborators believe that competitive products are more likely to be successfully developed or can be commercialized under terms that are more economically attractive than ours; • Product candidates developed in collaboration with us may be viewed by our collaborators as competitive with their own product candidates or products, which may cause collaborators to cease to devote resources to the commercialization of our product candidates; • A collaborator with marketing and distribution rights to one or more of our product candidates that achieve regulatory approval might not commit sufficient resources to the marketing and distribution of any such product candidate; • Disagreements with collaborators, including disagreements over proprietary rights, contract interpretation or the preferred course of development of any product candidates, may cause delays or termination of the research, development or 31 Table of Contents commercialization of such product candidates, may lead to additional responsibilities for us with respect to such product candidates or may result in litigation or arbitration, any of which would be time consuming and expensive; • Collaborators might not properly maintain or defend our intellectual property rights or may use our proprietary information in such a way as to invite litigation that could jeopardize or invalidate our intellectual property or proprietary information or expose us to potential litigation; • Disputes may arise with respect to the ownership or inventorship of intellectual property developed pursuant to our collaborations; • Collaborators may infringe the intellectual property rights of third parties, which may expose us to litigation and potential liability; • The terms of our collaboration agreement may restrict us from entering into certain relationships with other third parties, thereby limiting our options; and • Collaborations may be terminated for the convenience of the collaborator and, if terminated, we could be required to raise additional capital to pursue further development or commercialization of the applicable product candidates.
Our relationship with any future collaborations may pose several risks, including the following: 28 Table of Contents • Collaborators have significant discretion in determining the amount and timing of the efforts and resources that they will apply to these collaborations; • Collaborators might not perform their obligations as expected; • The nonclinical studies and clinical trials conducted as part of these collaborations might not be successful; • Collaborators might not pursue development and commercialization of any product candidates that achieve regulatory approval or may elect not to continue or renew development or commercialization programs based on nonclinical study or clinical trial results, changes in the collaborators’ strategic focus or available funding or external factors, such as an acquisition, that divert resources or create competing priorities; • Collaborators may delay nonclinical studies and clinical trials, provide insufficient funding for nonclinical studies and clinical trials, stop a nonclinical study or clinical trial or abandon a product candidate, repeat or conduct new nonclinical studies or clinical trials or require a new formulation of a product candidate for nonclinical studies or clinical trials; • Collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our product candidates if the collaborators believe that competitive products are more likely to be successfully developed or can be commercialized under terms that are more economically attractive than ours; • Product candidates developed in collaboration with us may be viewed by our collaborators as competitive with their own product candidates or products, which may cause collaborators to cease to devote resources to the commercialization of our product candidates; • A collaborator with marketing and distribution rights to one or more of our product candidates that achieve regulatory approval might not commit sufficient resources to the marketing and distribution of any such product candidate; • Disagreements with collaborators, including disagreements over proprietary rights, contract interpretation or the preferred course of development of any product candidates, may cause delays or termination of the research, development or commercialization of such product candidates, may lead to additional responsibilities for us with respect to such product candidates or may result in litigation or arbitration, any of which would be time consuming and expensive; • Collaborators might not properly maintain or defend our intellectual property rights or may use our proprietary information in such a way as to invite litigation that could jeopardize or invalidate our intellectual property or proprietary information or expose us to potential litigation; • Disputes may arise with respect to the ownership or inventorship of intellectual property developed pursuant to our collaborations; • Collaborators may infringe the intellectual property rights of third parties, which may expose us to litigation and potential liability; • The terms of our collaboration agreement may restrict us from entering into certain relationships with other third parties, thereby limiting our opportunities; and • Collaborations may be terminated for the convenience of the collaborator and, if terminated, we could be required to raise additional capital to pursue further development or commercialization of the applicable product candidates.
If we, our product candidates, our contractors, the manufacturing facilities for our product candidates or others working on our behalf fail to comply with applicable regulatory requirements, either before or after marketing approval, a regulatory agency may: • Issue Warning Letters, Untitled Letters, or Form 483s, all of which document compliance issues identified by FDA; • Mandate modifications to promotional materials or labeling, or require us to provide corrective information to healthcare practitioners; • Require us to enter into a consent decree, which can include imposition of various fines, reimbursements for inspection costs, required due dates for specific actions and penalties for noncompliance; 24 Table of Contents • Seek an injunction or impose civil or criminal penalties or monetary fines, restitution or disgorgement, as well as imprisonment; • Suspend or withdraw marketing approval; • Suspend or terminate any ongoing clinical studies; • Refuse to approve pending applications or supplements to applications filed by us; • Debar us from submitting marketing applications, exclude us from participation in federal healthcare programs, require a corporate integrity agreement or deferred prosecution agreements, debar us from government contracts and refuse future orders under existing contracts; • Suspend or impose restrictions on operations, including restrictions on marketing, distribution or manufacturing of the product, or the imposition of costly new manufacturing requirements or use of alternative suppliers; or • Seize or detain products, refuse to permit the import or export of products, or request that we initiate a product recall.
If we, our product candidates, our contractors, the manufacturing facilities for our product candidates or others working on our behalf fail to comply with applicable regulatory requirements, either before or after marketing approval, a regulatory agency may: • Issue Warning Letters, Untitled Letters, or FDA Form 483s, all of which document compliance issues identified by the FDA; • Mandate modifications to promotional materials or labeling, or require us to provide corrective information to healthcare practitioners; • Require us to enter into a consent decree, which can include imposition of various fines, reimbursements for inspection costs, required due dates for specific actions and penalties for noncompliance; • Seek an injunction or impose civil or criminal penalties or monetary fines, restitution or disgorgement, as well as imprisonment; • Suspend or withdraw marketing approval; • Suspend or terminate any ongoing clinical studies; • Refuse to approve pending applications or supplements to applications filed by us; • Debar us from submitting marketing applications, exclude us from participation in federal healthcare programs, require a corporate integrity agreement or deferred prosecution agreements, debar us from government contracts and refuse future orders under existing contracts; • Suspend or impose restrictions on operations, including restrictions on marketing, distribution or manufacturing of the product, or the imposition of costly new manufacturing requirements or use of alternative suppliers; or • Seize or detain products, refuse to permit the import or export of products, or request that we initiate a product recall.
In addition to the factors discussed in this “Risk Factors” section and elsewhere in this Annual Report on Form 10-K, these factors that could negatively affect or result in fluctuations in the market price of shares of our common stock include: • Our ability to generate significant product revenues, cash flows and a profit; • The success of competitive products or technologies; • Actual or anticipated changes in our growth rate relative to our competitors; • Announcements by our competitors of significant acquisitions, strategic collaborations, joint ventures, collaborations or capital commitments; • Regulatory or legal developments in the United States and other countries; • The results of our efforts to discover, develop, in‑license or acquire additional product candidates or products; • Actual or anticipated changes in estimates as to financial results, development timelines or recommendations by securities analysts; • Variations in our financial results or those of companies that are perceived to be similar to us; • Variations in the level of expenses related to our product candidates or preclinical and clinical development programs, including relating to the timing of invoices from, and other billing practices of, our CROs and clinical trial sites; • Fluctuations in the valuation of companies perceived by investors to be comparable to us; • Warrant or stock price and volume fluctuations attributable to inconsistent trading volume levels of our warrants or shares; • Announcement or expectation of additional financing efforts; • Changes in operating performance and stock market valuations of other pharmaceutical companies; • Market conditions in the pharmaceutical and biotechnology sectors; • The public’s response to press releases or other public announcements by us or third parties, including our filings with the U.S.
In addition to the factors discussed in this “Risk Factors” section and elsewhere in this Annual Report on Form 10-K, these factors that could negatively affect or result in fluctuations in the market price of shares of our common stock include: • Our ability to generate significant product revenues, cash flows and a profit; • The success of competitive products or technologies; • Actual or anticipated changes in our growth rate relative to our competitors; • Announcements by our competitors of significant acquisitions, strategic collaborations, joint ventures, collaborations or capital commitments; • Regulatory or legal developments in the United States and other countries; • The results of our efforts to discover, develop, in‑license or acquire additional product candidates or products; • Actual or anticipated changes in estimates as to financial results, development timelines or recommendations by securities analysts; • Variations in our financial results or those of companies that are perceived to be similar to us; • Variations in the level of expenses related to our product candidates or preclinical and clinical development programs, including relating to the timing of invoices from, and other billing practices of, our CROs and clinical trial sites; • Fluctuations in the valuation of companies perceived by investors to be comparable to us; • Warrant or stock price and volume fluctuations attributable to inconsistent trading volume levels of our warrants or shares; 38 Table of Contents • Announcement or expectation of financing efforts; • Changes in operating performance and stock market valuations of other pharmaceutical companies; • Market conditions in the pharmaceutical and biotechnology sectors; • The public’s response to press releases or other public announcements by us or third parties, including our filings with the U.S.
Before obtaining required approvals from regulatory authorities for the sale of future product candidates, we alone, or with a partner, must conduct extensive clinical trials to demonstrate the safety and efficacy of the product candidates in humans. Clinical testing is expensive and difficult to design and implement, can take many years to complete and is uncertain as to outcome.
Before obtaining required approvals from regulatory authorities for the sale of product candidates, we alone, or with a partner, must conduct extensive clinical trials to demonstrate the safety and efficacy of the product candidates in humans. Clinical testing is expensive and difficult to design and implement, can take many years to complete and is uncertain as to outcome.
Our product candidates will require additional clinical and preclinical development, management of clinical, preclinical and manufacturing activities, regulatory approval in multiple jurisdictions, obtaining manufacturing supply on our own or from a third party, expansion of our commercial organization, and substantial investment and significant marketing efforts before we generate any revenues from sales of any of those product candidates approved for marketing.
Our product candidates will require additional clinical and preclinical development, management of clinical, preclinical and manufacturing activities, regulatory approval in multiple jurisdictions, obtaining manufacturing supply on our own or from a third party, expansion of our commercial organization, and substantial investment and significant marketing efforts before we could generate any revenues from sales of any of those product candidates approved for marketing.
Securities and Exchange Commission (“SEC”) and announcements relating to litigation or other disputes, strategic transactions or intellectual property impacting us or our business; • Announcement related to litigation; • Fluctuations in quarterly operating results, as well as differences between our actual financial and operating results and those expected by investors; • The financial projections we may provide to the public, any changes in these projections or our failure to meet these projections; • Changes in financial estimates by any securities analysts who follow our warrants or shares of common stock, our failure to meet these estimates or failure of those analysts to initiate or maintain coverage of our warrants or shares of common stock; • Ratings downgrades by any securities analysts who follow our warrants or shares of common stock; • The development and sustainability of an active trading market for our shares of common stock; • Future sales of our shares of common stock by our officers, directors and significant stockholders; • Other events or factors, including those resulting from war, incidents of terrorism, natural disasters or responses to these events; • Changes in accounting principles; and • General economic, industry and market conditions.
Securities and Exchange Commission (“SEC”) and announcements relating to litigation or other disputes, strategic transactions or intellectual property impacting us or our business; • Announcements related to litigation; • Fluctuations in quarterly operating results, as well as differences between our actual financial and operating results and those expected by investors; • The financial projections we may provide to the public, any changes in these projections or our failure to meet these projections; • Changes in financial estimates by any securities analysts who follow our shares of common stock, our failure to meet these estimates or failure of those analysts to initiate or maintain coverage of our shares of common stock; • Ratings downgrades by any securities analysts who follow our shares of common stock; • The development and sustainability of an active trading market for our shares of common stock; • Future sales of our shares of common stock by our officers, directors and significant stockholders; • Other events or factors, including those resulting from war, incidents of terrorism, natural disasters or responses to these events; • Changes in accounting principles; and • General economic, industry and market conditions.
We expect that we would be subject to additional risks related to entering into international business relationships, including: • Different regulatory requirements for approval of drugs in foreign countries; • Challenges enforcing our contractual and intellectual property rights, especially in those foreign countries that do not respect and protect intellectual property rights to the same extent as the United States; • Foreign reimbursement, pricing and insurance regimes; • Unexpected changes in tariffs, trade barriers and regulatory requirements; • Economic weakness, including inflation, or political instability in particular foreign economies and markets; • Compliance with tax, employment, immigration and labor laws for employees living or traveling abroad; • Foreign currency fluctuations, which could result in increased operating expenses and reduced revenues, and other obligations incident to doing business in another country; • Foreign taxes; • Difficulties staffing and managing foreign operations; • Workforce uncertainty in countries where labor unrest is more common than in the United States; • Potential liability under the FCPA or comparable foreign regulations; • Production shortages resulting from any events affecting raw material supply or manufacturing capabilities abroad; and • Business interruptions resulting from geopolitical actions, including war and terrorism, or natural disasters including earthquakes, typhoons, floods and fires.
We expect that we would be subject to additional risks related to entering into international business relationships, including: • Different regulatory requirements for approval, advertising and promotion of drugs in foreign countries; • Challenges enforcing our contractual and intellectual property rights, especially in those foreign countries that do not respect and protect intellectual property rights to the same extent as the United States; • Foreign reimbursement, pricing and insurance regimes; • Unexpected changes in tariffs, trade barriers and regulatory requirements; • Economic weakness, including inflation, or political instability in particular foreign economies and markets; • Compliance with tax, employment, immigration and labor laws for employees living or traveling abroad; • Foreign currency fluctuations, which could result in increased operating expenses and reduced revenues, and other obligations incident to doing business in another country; • Foreign taxes; • Difficulties staffing and managing foreign operations; • Workforce uncertainty in countries where labor unrest is more common than in the United States; • Potential liability under the FCPA or comparable foreign regulations; • Production shortages resulting from any events affecting raw material supply or manufacturing capabilities abroad; and • Business interruptions resulting from geopolitical actions, including war and terrorism, natural disasters, including earthquakes, typhoons, floods and fires, or pandemics.
If we are unable to enroll appropriate subjects in clinical trials or retain patients in the clinical trials we perform, we will be unable to complete these trials on a timely basis or at all. Identifying and qualifying subjects to participate in clinical trials of our product candidates, and retaining the subjects once qualified, is critical to our success.
If we are unable to enroll appropriate subjects in clinical trials or retain patients in the clinical trials we perform, we will be unable to complete these trials on a timely basis or at all. Identifying and qualifying subjects to participate in clinical trials of our product candidates, and retaining the subjects once qualified, is critical to our regulatory success.
Results of our trials could reveal a high and unacceptable severity and prevalence of side effects or unexpected characteristics. Should our clinical studies of our product candidates reveal undesirable side effects, we could suspend or terminate our trials or the FDA or other regulatory authorities as well as IRBs or ECs could order us to suspend or cease clinical trials.
Results of our trials could reveal a high and unacceptable severity and prevalence of side effects or unexpected characteristics. Should our clinical trials of our product candidates reveal undesirable side effects, we could suspend or terminate our trials or the FDA or other regulatory authorities as well as IRBs or ECs could order us to suspend or cease clinical trials.
If we fail to establish and maintain additional development collaborations related to our product candidates: • The development of certain of our current or future product candidates may be terminated or delayed; • Our cash expenditures related to development of certain of our current or future product candidates would increase significantly and we may need to seek additional financing, which might not be available on favorable terms, or at all; • We may be required to hire additional employees or otherwise develop expertise, such as sales and marketing expertise, for Which we have not budgeted; • We would bear all of the risk related to the development of any such product candidates; • We may have to expend unexpected efforts and funds if we are unable to obtain the results of third‑party clinical trials; and • The competitiveness of any product candidate that is commercialized could be reduced.
If we fail to establish and maintain additional development collaborations related to our product candidates: • The development of certain of our product candidates may be terminated or delayed; • Our cash expenditures related to development of certain of our product candidates would increase significantly and we may need to seek additional financing, which might not be available on favorable terms, or at all; • We may be required to hire additional employees or otherwise develop expertise, such as sales and marketing expertise, for which we have not budgeted; • We would bear all of the risk related to the development of any such product candidates; • We may have to expend unexpected efforts and funds if we are unable to obtain the results of third‑party clinical trials; and • The competitiveness of any product candidate that is commercialized could be reduced.
Undesirable side effects caused by our product candidates could cause us or regulatory authorities to issue a clinical hold and could result in a more restrictive label or the delay or denial of marketing approval by the FDA or other regulatory authorities.
Undesirable side effects caused by our product candidates in clinical trials could cause us or regulatory authorities to issue a clinical hold and could result in a more restrictive label or the delay or denial of marketing approval by the FDA or other regulatory authorities.
The time required to develop and to obtain approval from regulatory authorities to market a new drug is unique to each product. It typically takes many years in nonclinical and clinical development and depends upon numerous factors, guidance from regulatory authorities.
The time required to develop and to obtain approval from regulatory authorities to market a new drug is unique to each product. It typically takes many years in nonclinical and clinical development and depends upon numerous factors.
If for any reason we are unable to obtain adequate supplies of our product candidates or the drug substances used to manufacture them, it will be more difficult for us to develop our product candidates and compete effectively.
If for any reason we are unable to obtain adequate supplies of our product candidates or the drug substances used to manufacture them, it will be more difficult for us to develop and commercialize our product candidates and compete effectively.
Identifying, developing, obtaining regulatory approval and commercializing product candidates is prone to the risks of failure inherent in clinical development. Developing product candidates is expensive, and we expect to spend substantial amounts as we fund our product development.
Identifying, developing, obtaining regulatory approval and commercializing product candidates are prone to the risks of failure inherent in clinical development. Developing product candidates is expensive, and we expect to spend substantial amounts as we fund our product development.
The degree of market acceptance of any of our approved product candidates will depend on a number of factors, including: • The efficacy and safety profile of our product candidates, including relative to marketed products and product candidates in development by third parties; • Prevalence and severity of any side effects of our product candidates; • Relative convenience and ease of administration of our product candidates; • Cost effectiveness of our product candidates; • The claims we may make for our product candidates based on the approved label or any restrictions placed upon our marketing and distribution of our product candidates; • The time it takes for our product candidates to complete clinical development and receive marketing approval; • How quickly and effectively we alone, or with a partner, can market, launch, and distribute any of our product candidates that receive marketing approval; • The ability to commercialize any of our product candidates that receive marketing approval; • The price of our products, including in comparison to branded or generic competitors and relative to alternative treatments; • Potential or perceived advantages or disadvantages over alternative treatments; • The ability to collaborate with others in the development and commercialization of new products; • Whether coverage and adequate levels of reimbursement are available under private and governmental health insurance plans, including Medicare; • The ability to establish, maintain and protect intellectual property rights related to our product candidates; • The entry of generic versions of any of our approved products onto the market; • The number of products in the same therapeutic class as our product candidates; • The effect of current and future healthcare laws on our drug candidates; • The ability to secure favorable managed care formulary positions, including federal healthcare program formularies; • The ability to manufacture commercial quantities of any of our product candidates that receive marketing approval; • Acceptance of any of our product candidates that receive marketing approval by physicians and other healthcare providers; and • Potential post‑marketing commitments imposed on an approved product by regulatory authorities, such as patient registries.
The degree of market acceptance of any of our approved product candidates will depend on a number of factors, including: • The efficacy and safety profile of our product candidates, including relative to marketed products and product candidates in development by third parties; • Prevalence and severity of any side effects of our product candidates; • Relative convenience and ease of administration of our product candidates; • Cost effectiveness of our product candidates; • The claims we may make for our product candidates based on the approved label or any restrictions placed upon our marketing and distribution of our product candidates; • The time it takes for our product candidates to complete clinical development and receive marketing approval; • How quickly and effectively we alone, or with a partner, can market, launch, and distribute any of our product candidates that receive marketing approval; • The ability to commercialize any of our product candidates that receive marketing approval; • The price of our approved product candidates, including in comparison to branded or generic competitors and relative to alternative treatments; 19 Table of Contents • Potential or perceived advantages or disadvantages of our approved product candidates over alternative treatments; • The ability to collaborate with others in the development and commercialization of new products; • Whether coverage and adequate levels of reimbursement are available under private and governmental health insurance plans, including Medicare; • The ability to establish, maintain and protect intellectual property rights related to our product candidates; • The entry of generic versions of any of our approved products onto the market; • The number of products in the same therapeutic class as our product candidates; • The effect of current and future healthcare laws on our drug candidates; • The ability to secure favorable managed care formulary positions for our approved product candidates, including federal healthcare program formularies; • The ability to manufacture commercial quantities of any of our product candidates that receive marketing approval; • Acceptance of any of our product candidates that receive marketing approval by physicians and other healthcare providers; and • Potential post‑marketing commitments and post-marketing requirements imposed on an approved product candidate by regulatory authorities, such as patient registries.
Consequently, currently stockholders must rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investment.
Consequently, currently stockholders must rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize any gains on their investment.
Reliance on third‑party manufacturers subjects us to risks that would not affect us if we manufactured the product candidates ourselves, including: • Reliance on the third parties for regulatory compliance and quality assurance; • The possible breach of the manufacturing agreements by the third parties because of factors beyond our control; • The possible misappropriation of our proprietary information, including trade secrets and know‑how; • The possibility of termination or nonrenewal of the agreements by the third parties because of our breach of the manufacturing agreement or based on our own business priorities; • The disruption and costs associated with changing suppliers, including additional regulatory filings. • Failure to satisfy our contractual duties or obligations; • Inability to meet our product specifications and quality requirements consistently; • Delay or inability to procure or expand sufficient manufacturing capacity; • Manufacturing and/or product quality issues related to manufacturing development and scale‑up; • Costs and validation of new equipment and facilities required for scale‑up; • Failure to comply with applicable laws, regulations, and standards, including cGMP and similar foreign standards; • Deficient or improper record‑keeping; • Contractual restrictions on our ability to engage additional or alternative manufacturers; • Inability to negotiate manufacturing agreements with third parties under commercially reasonable terms; • 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 a limited number of sources, and in some cases, single sources for product components, such that if we are unable to secure a sufficient supply of these product components, we would be unable to manufacture and sell our product candidates or any future product candidate in a timely fashion, in sufficient quantities or under acceptable terms; • Lack of qualified backup suppliers for those components that are currently purchased from a sole or single source supplier; • Lack of access or licenses to proprietary manufacturing methods used by third‑party manufacturers to make 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 or regulatory sanctions related to the manufacturer; • Carrier disruptions or increased costs that are beyond our control; and • Failure to deliver our products under specified storage conditions and in a timely manner. 30 Table of Contents Our product candidates may compete with other products and product candidates for access to manufacturing facilities.
Reliance on third‑party manufacturers subjects us to risks that would not affect us if we manufactured the product candidates ourselves, including: • Reliance on the third parties for regulatory compliance and quality assurance; • The possible breach of the manufacturing agreements by the third parties because of factors beyond our control; • The possible misappropriation of our proprietary information, including trade secrets and know‑how; • The possibility of termination or nonrenewal of the agreements by the third parties because of our breach of the manufacturing agreement or based on our own business priorities; • The disruption and costs associated with changing suppliers, including additional regulatory filings. • Failure to satisfy our contractual duties or obligations; 27 Table of Contents • Inability to meet our product specifications and quality requirements consistently; • Delay or inability to procure or expand sufficient manufacturing capacity; • Manufacturing and/or product quality issues related to manufacturing development and scale‑up; • Costs and validation of new equipment and facilities required for scale‑up; • Failure to comply with applicable laws, regulations, guidance and standards, including cGMP and similar foreign standards; • Deficient or improper record‑keeping; • Contractual restrictions on our ability to engage additional or alternative manufacturers; • Inability to negotiate manufacturing agreements with third parties under commercially reasonable terms; • 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 a limited number of sources, and in some cases, single sources for product components, such that if we are unable to secure a sufficient supply of these product components, we would be unable to manufacture and sell our product candidates or any future product candidate in a timely fashion, in sufficient quantities or under acceptable terms; • Lack of qualified backup suppliers for those components that are currently purchased from a sole or single source supplier; • Lack of access or licenses to proprietary manufacturing methods used by third‑party manufacturers to make 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 or regulatory sanctions related to the manufacturer; • Carrier and import disruptions or increased costs that are beyond our control; and • Failure to deliver our products under specified storage conditions and in a timely manner.
These provisions include: • Authorizing the issuance of “blank check” preferred stock, the terms of which we may establish and shares of which we may issue without stockholder approval; • Prohibiting cumulative voting in the election of directors, which would otherwise allow for less than a majority of stockholders to elect director candidates; 44 Table of Contents • Prohibiting stockholder action by written consent, thereby requiring all stockholder actions to be taken at a meeting of our stockholders; • Eliminating the ability of stockholders to call a special meeting of stockholders; and • Establishing advance notice requirements for nominations for election to the board of directors or for proposing matters that can be acted upon at stockholder meetings.
These provisions include: • Authorizing the issuance of “blank check” preferred stock, the terms of which we may establish and shares of which we may issue without stockholder approval; • Prohibiting cumulative voting in the election of directors, which would otherwise allow for less than a majority of stockholders to elect director candidates; • Prohibiting stockholder action by written consent, thereby requiring all stockholder actions to be taken at a meeting of our stockholders; • Eliminating the ability of stockholders to call a special meeting of stockholders; and • Establishing advance notice requirements for nominations for election to the board of directors or for proposing matters that can be acted upon at stockholder meetings.
Even if we obtain marketing approval for a product candidate, we would be subject to ongoing requirements by the FDA and other regulatory authorities governing the manufacture, quality control, further development, labeling, packaging, storage, distribution, safety surveillance, import, export, advertising, promotion, recordkeeping and annual reporting of safety and other post‑market information.
Even if we obtain marketing approval for a product candidate, we would be subject to ongoing requirements by the FDA and other regulatory authorities governing the manufacturing, quality control, further development, labeling, packaging, storage, distribution, safety surveillance, import, export, advertising, promotion, recordkeeping and annual reporting of safety and other post‑market information.
Furthermore, our ability to raise capital on a timely basis through the issuance and sale of equity securities might be limited by Nasdaq’s listing rules on transactions that do not qualify as “public offerings” (as defined in Nasdaq listing rules), which might require us to obtain stockholder approval prior to the issuance of common stock (or securities convertible into or exercisable for common stock) at a price per share that is less than the "Minimum Price" if the issuance would equal 20% or more of our common stock outstanding before the issuance.
Furthermore, our ability to raise capital on a timely basis through the issuance and sale of equity securities might be limited by Nasdaq’s listing rules on transactions that do not qualify as “public offerings” (as defined in Nasdaq listing rules), which might require us to obtain stockholder approval prior to the issuance of common stock (or securities convertible into or exercisable for common stock) at a price per share that is less than the “Minimum Price” if the issuance would equal 20% or more of our common stock outstanding before the issuance.
There are now and could be future numerous approved therapies for treating the conditions our products seek to address and, consequently, competition in these markets is intense. Many of these approved drugs are or may become well established therapies or products and widely accepted by physicians, patients and third‑party payors.
There are now and could be future numerous approved therapies for treating the conditions our product candidates seek to address and, consequently, competition in these markets is intense. Many of these approved drugs are or may become well-established therapies or products and widely accepted by physicians, patients and third‑party payors.
If the FDA does not accept the data from any of our clinical trials that we determine to conduct outside the United States, it would likely result in the need for additional trials, which would be costly and time‑consuming and delay or permanently halt our development of the product candidate.
If the FDA does not accept the data from any of our clinical trials that we decide to conduct outside the United States, it would likely result in the need for additional trials, which would be costly and time‑consuming and delay or permanently halt our development of the product candidate.
Any clinical trials outside of the United States might also be subject to delays and risks surrounding geopolitical events. Our failure to obtain regulatory approval in international jurisdictions would prevent us from marketing our product candidates outside the United States, which would limit our market opportunities and adversely affect our business.
In addition, any clinical trials outside of the United States might be subject to delays and risks surrounding geopolitical events. Our failure to obtain regulatory approval in international jurisdictions would prevent us from marketing our product candidates outside the United States, which would limit our market opportunities and adversely affect our business.
If we become involved in this type of litigation, regardless of the outcome, we could incur substantial legal costs and our management’s attention could be diverted from the operation of our business, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.
If we become involved in this type of litigation, regardless of the merits or outcome, we could incur substantial legal costs and our management’s attention could be diverted from the operation of our business, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.
This may make it difficult for us to differentiate our product from currently approved therapies, which may adversely impact our business strategy. If we are not able to compete effectively against our current and future competitors, our business will not grow, and our financial condition and operations will suffer.
This may make it difficult for us to differentiate any approved product candidate from currently approved therapies, which may adversely impact our business strategy. If we are not able to compete effectively against our current and future competitors, our business will not grow, and our financial condition and operations will suffer.
In the United States, engaging in the impermissible promotion of our products for off‑label uses can also subject us to false claims litigation under federal and state statutes, which can lead to civil and criminal penalties and fines, debarment from government contracts and refusal of future orders under existing contracts, deferred prosecution agreements, and corporate integrity agreements with governmental authorities that materially restrict the manner in which a company promotes or distributes drug products.
In the United States, engaging in the impermissible promotion of any products for off‑label uses can also subject a company to false claims litigation under federal and state statutes, which can lead to civil and criminal penalties and fines, debarment from government contracts and refusal of future orders under existing contracts, deferred prosecution agreements, and corporate integrity agreements with governmental authorities that materially restrict the manner in which a company promotes or distributes drug products.
Any of these changes could cause our product candidates to perform differently and affect the results of planned clinical trials or other future clinical trials conducted with the optimized materials. Such changes may also require additional testing, FDA or other regulatory authorities notification or approval.
Any of these changes could cause our product candidates to perform differently and affect the results of planned clinical trials or other future clinical trials conducted with the optimized materials. Such changes may also require additional testing, FDA or other regulatory authorities’ notification or approval.
If we are unable to obtain, or are delayed in obtaining, state regulatory licenses for the distribution of our products, we would not be able to sell our product candidates in such states. The majority of states require manufacturer and/or wholesaler licenses for the sale and distribution of drugs into that state.
If we are unable to obtain, or are delayed in obtaining, state regulatory licenses for the distribution of our products, we would not be able to sell our product candidates in such states. Most states require manufacturer and/or wholesaler licenses for the sale and distribution of drugs into that state.
Events which may result in a delay or unsuccessful completion of clinical development include: • Delays in reaching an agreement with or failure in obtaining authorization from the FDA, other regulatory authorities or institutional review boards (“IRBs”) or ethics committees (“ECs”) to commence or amend a clinical trial; • Delays in reaching agreements with the FDA regarding requisite trial design or endpoints sufficient to establish a clinically meaningful benefit of our product candidates given there might not be well-established development paths and outcomes; • Inability to agree with the FDA on operationally viable endpoints or trial design; 17 Table of Contents • Imposition of a clinical hold or trial termination following an inspection of our clinical trial operations or trial sites by the FDA or other regulatory authorities, or due to concerns about trial design, or a decision by the FDA, other regulatory authorities, IRBs, ECs or us, or recommendation by a data safety monitoring board, to place the trial on hold or otherwise suspend or terminate clinical trials at any time for safety issues or for any other reason; • Delays in reaching agreement on acceptable terms with prospective contract research organizations (“CROs”) and clinical trial sites; • Deviations from the trial protocol by clinical trial sites and investigators, or failing to conduct the trial in accordance with regulatory requirements; • Failure of our third parties, such as CROs, to satisfy their contractual duties or meet expected deadlines; • Failure to enter into agreements with third parties to obtain the results of clinical trials; • Delays in the importation and manufacture of clinical supply; • Delays in the testing, validation and delivery of the clinical supply of the product candidates to the clinical sites; • For clinical trials in selected subject populations, delays in identification and auditing of central or other laboratories and the transfer and validation of assays or tests to be used to identify selected subjects; • Delays due to the world-wide shortage of animal testing subjects, including monkeys; • Delays in recruiting suitable subjects to participate in a trial; • Delays in having subjects complete participation in a trial or return for post‑treatment follow‑up; • Delays caused by subjects dropping out of a trial due to side effects or disease progression; • Delays in adding new investigators and clinical trial sites; • Delays resulting from the ongoing COVID-19 pandemic; • Withdrawal of clinical trial sites from our clinical trials as a result of changing standards of care or the ineligibility of a site to participate in our clinical trials; or • Changes in government regulations or administrative actions or lack of adequate funding to continue the clinical trials.
Events which may result in a delay or unsuccessful completion of clinical development include: • Delays in reaching an agreement with or failure in obtaining authorization from the FDA, other regulatory authorities or institutional review boards (“IRBs”) or ethics committees (“ECs”) to commence or amend a clinical trial; • Delays in reaching agreements with the FDA or other regulatory authorities regarding requisite trial design or endpoints sufficient to establish a clinically meaningful benefit of our product candidates given there might not be well-established development paths and outcomes; 15 Table of Contents • Inability to agree with the FDA or other regulatory authorities on operationally viable endpoints or trial design; • Imposition of a clinical hold or trial termination following an inspection of our clinical trial operations or trial sites by the FDA or other regulatory authorities, or due to concerns about trial design, or a decision by the FDA, other regulatory authorities, IRBs, ECs or us, or recommendation by a data safety monitoring board, to place the trial on hold or otherwise suspend or terminate clinical trials at any time for safety issues or for any other reason; • Delays in reaching agreement on acceptable terms with prospective contract research organizations (“CROs”) and clinical trial sites; • Deviations from the trial protocol by clinical trial sites and investigators, or failing to conduct the trial in accordance with regulatory requirements; • Failure of our third parties, such as CROs, to satisfy their contractual duties or meet expected deadlines; • Failure to enter into agreements with third parties to obtain the results of clinical trials; • Delays in the importation and manufacture of clinical supply; • Delays in the testing, validation and delivery of the clinical supply of the product candidates to the clinical sites; • For clinical trials in selected subject populations, delays in identification and auditing of central or other laboratories and the transfer and validation of assays or tests to be used to identify selected subjects; • Delays due to the world-wide shortage of animal testing subjects, including monkeys; • Delays in recruiting suitable subjects to participate in a trial; • Delays in having subjects complete participation in a trial or return for post‑treatment follow‑up; • Delays caused by subjects dropping out of a trial due to side effects or disease progression; • Delays in adding new investigators and clinical trial sites; • Delays resulting from national or global health or geopolitical situations; • Withdrawal of clinical trial sites from our clinical trials as a result of changing standards of care or the ineligibility of a site to participate in our clinical trials; or • Changes in government regulations or administrative actions or lack of adequate funding to continue the clinical trials.
In the event of a de‑listing, we may take actions to restore our compliance with The Nasdaq Stock Market’s listing requirements, but we can provide no assurance that any such action taken by us would allow our common stock to become listed again, stabilize the market price or improve the liquidity of our common stock, prevent our common stock from dropping below The Nasdaq Stock Market minimum bid price requirement or prevent future non‑compliance with The Nasdaq Stock Market’s listing requirements.
In the event of a delisting, we may take actions to restore our compliance with The Nasdaq Stock Market’s listing requirements, but we can provide no assurance that any such action taken by us would allow our common stock to become listed again, stabilize the market price or improve the liquidity of our common stock, prevent our common stock from dropping below The Nasdaq Stock Market minimum bid price requirement or prevent non‑compliance with The Nasdaq Stock Market’s listing requirements.
Under the DGCL, a corporation might not, in general, engage in a business combination with any holder of 15% or more of its capital stock unless the holder has held the stock for three years or, among other things, the board of directors approved the transaction.
Under the DGCL, a corporation may not, in general, engage in a business combination with any holder of 15% or more of its capital stock unless the holder has held the stock for three years or, among other things, the board of directors has approved the transaction.
Regulatory authorities may approve a product candidate for fewer or more limited indications than requested, may impose significant limitations in the form of narrow indications, warnings, including black‑box warnings, precautions or contra‑indications with respect to conditions of use, additional adverse reactions information or may grant approval subject to the performance of post‑marketing clinical trials or other post‑marketing requirements, including a REMS.
Regulatory authorities may approve a product candidate for fewer or more limited indications than requested, may 21 Table of Contents impose significant limitations in the form of narrow indications, warnings, including black‑box warnings, precautions or contra‑indications with respect to conditions of use, additional adverse reactions information or may grant approval subject to the performance of post‑marketing clinical trials or other post‑marketing requirements, including a REMS.
Even if we are successful in continuing to build and expand our pipeline, the potential product candidates that we identify might not be suitable for clinical development and commercialization, including as a result of being shown to have harmful side effects or other characteristics that indicate that they are unlikely to be products that will receive marketing approval and achieve market acceptance.
Even if we are successful in continuing to build and expand our pipeline, the product candidates that we identify might not be suitable for clinical development and commercialization, including as a result of being shown to have harmful side effects or other characteristics that indicate that they are unlikely to receive marketing approval and achieve market acceptance.
Our amended and restated certificate of incorporation provides that unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.
Our amended and restated certificate of incorporation provides that unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for substantially all disputes between 41 Table of Contents us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.
Large judgments have been awarded in class action lawsuits based on drugs that had unanticipated side effects. A product liability claim or series of claims brought against us, whether or not successful, but particularly if judgments exceed our insurance coverage, could decrease our cash and adversely affect our reputation and business.
Large judgments have been awarded in class action lawsuits based on drugs that had unanticipated side effects. A product liability claim or series of claims brought against us, 25 Table of Contents whether or not successful, but particularly if judgments exceed our insurance coverage, could decrease our cash and adversely affect our reputation and business.
If one or more of these analysts ceases coverage of us or fails to publish reports on us regularly, demand for our securities could decrease, which could cause our securities prices and trading volume to decline. 43 Table of Contents We have never paid cash dividends on our capital stock, and we do not anticipate paying any cash dividends in the foreseeable future.
If one or more of these analysts ceases coverage of us or fails to publish reports on us regularly, demand for our securities could decrease, which could cause our securities prices and trading volume to decline. We have never paid cash dividends on our capital stock, and we do not anticipate paying any cash dividends in the foreseeable future.
To develop our internal sales, distribution and marketing capabilities for new product candidates, we will have to invest significant amounts of financial and management resources, some of which will be committed prior to any confirmation that any new product candidates will be approved.
To develop our internal sales, distribution and marketing capabilities for product candidates, we will have to invest significant financial and management resources, some of which will be committed prior to any confirmation that any product candidates will be approved.
Risks Related to Our Dependence on Third Parties We rely on third parties to conduct, supervise and monitor our clinical trials.
Risks Related to Our Dependence on Third Parties We rely on third parties to conduct and monitor our clinical trials.
Although to date, privacy and security incidents have not been material, they could expose us to significant expense, legal liability, and harm to our reputation, which might result in an adverse impact our operating results. 45 Table of Contents We are subject to certain laws and regulations governing the privacy and security of personal information, including regulations pertaining to health information.
Although to date, privacy and security incidents have not been material, they could expose us to significant expense, legal liability, and harm to our reputation, which might result in an adverse impact our operating results. We are subject to certain laws and regulations governing the privacy and security of personal information, including regulations pertaining to health information.
On January 1 of each calendar year, the aggregate number of shares that may be issued under the ESPP will automatically increase by a number equal to the lesser of (i) 1% of the total number of shares of our common stock outstanding on December 31 of the preceding calendar year, and (ii) 41,667 shares of our common stock, or (iii) a number of shares of our common stock as determined by our board of directors or compensation committee.
On January 1 of each calendar year, the aggregate number of shares that may be issued under the ESPP will automatically increase by a number equal to the lesser of (i) 1% of the total number of shares of our common stock outstanding on December 31 of the preceding calendar year, and (ii) 174 shares of our common stock, or (iii) a number of shares of our common stock as determined by our board of directors or compensation committee.
The FDA or comparable regulatory authorities could also deny approval of our product candidates for any or all targeted indications or only for a limited 19 Table of Contents indication or patient population or could require label warnings and/or precautions, contraindications, including black box warnings, additional wording regarding adverse reactions, post‑market studies, testing and surveillance programs or other conditions including distribution restrictions or other risk management mechanisms under a risk evaluation and mitigation strategy (“REMS”).
The FDA or other regulatory authorities could also deny approval of our product candidates for any or all targeted indications or only for a limited indication or patient population or could require label warnings and/or precautions, contraindications, including black box warnings, additional wording regarding adverse reactions, post‑market studies, testing and surveillance programs or other conditions including distribution restrictions or other risk management mechanisms under a risk evaluation and mitigation strategy (“REMS”).
Violations, including promotion of products for off‑label uses, are subject to enforcement letters, inquiries, investigations, civil and criminal sanctions by the government, corporate integrity agreements, deferred prosecution agreements, debarment from government contracts and refusal of future orders under existing contracts, and exclusion from participation in federal healthcare programs.
Violations, including promotion of products for off‑label uses, are subject to enforcement letters, inquiries, investigations, civil and criminal sanctions by the government, corporate integrity agreements, deferred prosecution agreements, debarment from government contracts and refusal of future orders under existing 22 Table of Contents contracts, and exclusion from participation in federal healthcare programs.
Our commercial success also depends on coverage and adequate reimbursement of our product candidates by third‑party payors, including government payors, generally, which may be difficult or 21 Table of Contents time‑consuming to obtain, may be limited in scope or might not be obtained in all jurisdictions in which we may seek to market our products.
Our commercial success also depends on coverage and adequate reimbursement of our product candidates by third‑party payors, including government payors, generally, which may be difficult or time‑consuming to obtain, may be limited in scope or might not be obtained in all jurisdictions in which we may seek to market our products.
Obtaining foreign regulatory approvals and compliance with foreign regulatory requirements could result in significant delays, difficulties and costs for us and could delay or prevent the introduction of our products in certain countries. Further, clinical trials conducted in one country might not be accepted by regulatory authorities in other countries.
Obtaining foreign regulatory approvals and compliance with foreign regulatory requirements could result in significant delays, difficulties and costs for us and could delay or prevent the introduction of our products in certain countries. Further, clinical 23 Table of Contents trials conducted in one country might not be accepted by regulatory authorities in other countries.
If we, any of our CROs or clinical trial sites fail to comply with applicable GCP requirements, the clinical data generated in our clinical trials may be deemed unreliable and the FDA or comparable foreign regulatory authorities may require us to perform additional clinical trials before approving our marketing applications, if at all.
If we, any of our CROs or clinical trial sites fail to comply with applicable GCP requirements, the clinical data generated in our clinical trials may be deemed unreliable and the FDA or other regulatory authorities may require us to perform additional clinical trials before approving our marketing applications, if at all.
Risks Related to the Discovery and Development of Our Product Candidates If clinical trials of our product candidates fail to demonstrate safety and efficacy to the satisfaction of regulatory authorities or do not otherwise produce positive results, we may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of our product candidates.
If clinical trials of our product candidates fail to demonstrate safety and efficacy to the satisfaction of regulatory authorities or do not otherwise produce positive results, we may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of our product candidates.
While an inadvertent lapse can in many cases be cured by payment of a late fee or by other means in accordance with the applicable rules, there are situations in which noncompliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction.
While an inadvertent lapse can often be cured by payment of a late fee or by other means in accordance with the applicable rules, there are situations in which noncompliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction.
If we do not raise additional capital when required or on acceptable terms, we may need to: • Significantly delay, scale back or discontinue the development or commercialization of one or more of our product candidates or cease operations altogether; 14 Table of Contents • Seek strategic alliances for research and development programs at an earlier stage than we would otherwise desire or on terms less favorable than might otherwise be available; or • Relinquish, or license on unfavorable terms, our rights to technologies or any future product candidates that we otherwise would seek to develop or commercialize itself.
If we do not raise additional capital when required or on acceptable terms, we may need to: • Significantly delay, scale back or discontinue the development or commercialization of one or more of our product candidates or cease operations altogether; • Seek strategic alliances for research and development programs at an earlier stage than we would otherwise desire or on terms less favorable than might otherwise be available; or • Relinquish, or license on unfavorable terms, our rights to technologies or any future product candidates that we otherwise would seek to develop or commercialize ourself.
These measures could reduce the ultimate demand for our product and potential products, if approved, and/or may constrain the prices that we are able to charge for such products.
These measures could reduce the ultimate demand for our product candidates, if approved, and/or may constrain the prices that we are able to charge for such products.
If, in the future, we are unable to grow our own sales, or establish marketing and distribution capabilities or enter into licensing or collaboration agreements for these purposes, we might not be successful in commercializing our product candidates. We do not currently have a robust sales or marketing infrastructure.
If, in the future, we are unable to establish sales, marketing and distribution capabilities or enter into licensing or collaboration agreements for these purposes, we might not be successful in commercializing our product candidates. We do not currently have a sales or marketing infrastructure.
In addition, we may be subject to claims that former employees, collaborators, or other third parties have an ownership interest in our patents or other intellectual property.
In addition, we may be subject to claims that former employees, collaborators, or other third parties of ours have an ownership interest in our patents or other intellectual property.
The FDA also might not agree with the various disease or quality of life scales and other evaluation tools that we may use in a clinical trial to assess the efficacy of a product candidate; • The FDA or comparable foreign regulatory authorities may disagree with our development plans, specifically the number of studies and types of studies planned to support approval for each product and indication; • Our failure to demonstrate to the satisfaction of the FDA or comparable regulatory authorities that a product candidate is safe and effective for each proposed indication; • Our clinical trials may fail to meet statistical significance required for a positive study; • We may fail to demonstrate that a product candidate’s benefits outweigh its risks; • The FDA or comparable foreign regulatory authorities may disagree with our interpretation of data from preclinical studies or clinical trials; • Data collected from clinical trials of our product candidates may be insufficient to support the submission of a marketing application, other submission or to obtain marketing approval, and the FDA or comparable foreign regulatory authority may require additional studies to show product candidate is safe and/or effective; • We may fail to obtain approval of the manufacturing processes or facilities of third‑party manufacturers with whom we contract for clinical and commercial supplies; or • There may be changes in the approval policies or regulations that render our preclinical and clinical data insufficient for approval.
The FDA also might not agree with the proposed quality of life scales and other evaluation tools that we may use in a clinical trial to assess the efficacy of a product candidate; • The FDA or other regulatory authorities may disagree with our development plans, specifically the number of studies and types of studies planned to support approval for each product and indication; • Our failure to demonstrate to the satisfaction of the FDA or other regulatory authorities that a product candidate is safe and effective for each proposed indication; • Our clinical trials may fail to meet statistical significance required for a positive study; • We may fail to demonstrate that a product candidate’s benefits outweigh its risks; • The FDA or other regulatory authorities may disagree with our interpretation of data from preclinical studies or clinical trials; • Data collected from clinical trials of our product candidates may be insufficient to support the submission of a marketing application, other submission or to obtain marketing approval, and the FDA or other regulatory authority may require additional studies to show a product candidate is safe and/or effective; • We may fail to obtain approval of the manufacturing processes or facilities of third‑party manufacturers with whom we contract for clinical and commercial supplies; or • There may be changes in precedence, regulatory guidance, laws and regulations that render our preclinical and clinical data insufficient for approval.
Changes in patent law could diminish the value of patents in general, thereby impairing our ability to protect our product candidates. As is the case with other biotechnology and pharmaceutical companies, our success is heavily dependent on intellectual property, particularly patents.
Changes in patent law could diminish the value of patents in general, thereby impairing our ability to protect our product candidates. 32 Table of Contents As is the case with other biotechnology and pharmaceutical companies, our success is heavily dependent on intellectual property, particularly patents.
We cannot assure you that upon inspection by a given regulatory authority, such regulatory authority will determine that any of our clinical trials comply with GCP requirements. In addition, we must conduct our clinical trials with product produced under applicable cGMP requirements.
We cannot assure you that upon inspection by a given regulatory authority, such regulatory authority will determine that any of our clinical trials comply with GCP requirements. In addition, we must conduct our clinical trials with product produced under applicable cGMP requirements for drug manufacturing.
Risks Related to Intellectual Property As appropriate, we intend to seek all available periods of regulatory exclusivity for our product candidates. However, there is no guarantee that we will be granted these periods of regulatory exclusivity or that we will be able to maintain these periods of exclusivity.
Risks Related to Intellectual Property 29 Table of Contents As appropriate, we intend to seek all available periods of regulatory exclusivity for our product candidates. However, there is no guarantee that we will be granted these periods of regulatory exclusivity or that we will be able to maintain these periods of exclusivity.
We may be subject to future litigation against us, which could be costly and time‑consuming to defend. We may become subject, from time to time, to legal proceedings and claims that arise in the ordinary course of business such as claims brought by our clients in connection with commercial disputes, or employment claims made by our current or former associates.
We may be subject to future litigation against us, which could be costly and time‑consuming to defend. We may become subject, from time to time, to legal proceedings and claims that arise in the ordinary course of business such as claims brought by our collaborators in connection with commercial disputes, or employment claims made by our current or former employees.
Our ability to commercialize any products successfully will depend in part on the extent to which coverage and adequate reimbursement for these products will be available from government authorities, private health insurers, health maintenance organizations and other entities.
Our ability to commercialize any product candidates successfully will depend in part on the extent to which coverage and adequate reimbursement for these product candidates will be available from government authorities, private health insurers, health maintenance organizations and other entities.
In addition, federal programs impose penalties on drug manufacturers in certain instances, in the form of mandatory additional rebates and/or discounts, which can be substantial, and could impact our ability to raise commercial prices.
In addition, federal programs impose penalties on drug manufacturers in 24 Table of Contents certain instances, in the form of mandatory additional rebates and/or discounts, which can be substantial, and could impact our ability to raise commercial prices.
Any of these occurrences may harm our business, financial condition and prospects significantly. 33 Table of Contents We may be required to make significant payments in connection with our license and development agreements. We are party to license and development agreements with various third parties.
Any of these occurrences may harm our business, financial condition and prospects significantly. We may be required to make significant payments in connection with our license and development agreements. We are party to license and development agreements with various third parties.
Our Chief Executive Officer has interests in the development of AVTX-006 pursuant to a royalty agreement that may conflict with interests of stockholders. Entities affiliated with Dr. Garry Neil, our Chief Executive Officer, are parties to a Royalty Agreement with us relating to AVTX-006.
Our Chief Executive Officer has interests in the development of AVTX-006 pursuant to a royalty agreement that may conflict with interests of stockholders. 37 Table of Contents Entities affiliated with Dr. Garry Neil, our Chief Executive Officer, are parties to a Royalty Agreement with us relating to AVTX-006.
Competitors may use our and our licensors’ or collaborators’ technologies in jurisdictions where we or our licensors or collaborators have not obtained patent protection to develop their own products and further, may export otherwise infringing products to territories where we and our licensors or collaborators have patent protection, but enforcement is not 35 Table of Contents as strong as that in the United States.
Competitors may use our and our licensors’ or collaborators’ technologies in jurisdictions where we or our licensors or collaborators have not obtained patent protection to develop their own products and further, may export otherwise infringing products to territories where we and our licensors or collaborators have patent protection, but enforcement is not as strong as that in the United States.
The FDA or comparable foreign regulatory authority may require more information, including additional preclinical or clinical studies to support approval, which may delay or prevent approval and our commercialization plans, or we may decide to abandon the development program.
The FDA or other regulatory authority may require more information, including additional preclinical or clinical studies to support approval, which may delay or prevent approval and our commercialization plans, or we may decide to abandon the development program.
In the United States, there are numerous federal and state privacy and data security laws and regulations that govern the collection, use, disclosure, and protection of personal information, including federal and state health information privacy laws, federal and state security breach notification laws, and federal and state consumer protection laws.
In the United States, there are numerous federal and state privacy and data security laws and regulations that govern the collection, use, disclosure, and protection of personal 43 Table of Contents information, including federal and state health information privacy laws, federal and state security breach notification laws, and federal and state consumer protection laws.
In some circumstances, changes in manufacturing operations, including to our protocols, processes, materials or facilities used, may require us to perform additional preclinical or comparability studies, or to collect additional clinical data from patients prior to undertaking additional clinical studies or filing for regulatory approval for a product candidate.
In some circumstances, changes in manufacturing operations, including to our protocols, processes, materials or facilities used, may require us to perform additional preclinical or comparability studies, or to collect additional clinical data from 18 Table of Contents patients prior to undertaking additional clinical studies or filing for regulatory approval for a product candidate.
Additionally, if one or more of our product candidates receives marketing approval, and we or others (regulatory agencies, consumers, etc.) later identify undesirable side effects caused by such products, a number of potentially significant negative consequences could result, including: • We may suspend marketing of, or withdraw or recall, such product; • Regulatory authorities may withdraw approvals of such product; • Regulatory authorities may require additional warnings on the label or other label modifications; • Regulatory authorities may issue safety alerts, Dear Healthcare Provider letters, press releases or other communications containing warnings about such product; • Regulatory authorities may require the establishment or modification of a REMS or other restrictions on marketing and distribution, or may require the establishment or modification of a similar strategy that may, for instance, require us to issue a medication guide outlining the risks of such side effects for distribution to patients or restrict distribution of our products and impose burdensome implementation requirements on us; • Regulatory authorities may require that we conduct post‑marketing studies; and • We could be sued and held liable for harm caused to subjects or patients.
Any of these occurrences may harm our business, financial condition and prospects significantly. 17 Table of Contents Additionally, if one or more of our product candidates receives marketing approval, and we or others (regulatory agencies, consumers, etc.) later identify undesirable side effects caused by such products, a number of potentially significant negative consequences could result, including: • We may suspend marketing of, or withdraw or recall, such product; • Regulatory authorities may withdraw approvals of such product; • Regulatory authorities may require additional warnings on the label or other label modifications; • Regulatory authorities may issue safety alerts, Dear Healthcare Provider letters, press releases or other communications containing warnings about such product; • Regulatory authorities may require the establishment or modification of a REMS or other restrictions on marketing and distribution, or may require the establishment or modification of a similar strategy that may, for instance, require us to issue a medication guide outlining the risks of such side effects for distribution to patients or restrict distribution of our products and impose burdensome implementation requirements on us; • Regulatory authorities may require that we conduct post‑marketing studies; and • We could be sued and held liable for harm caused to subjects or patients.
We may be required to make significant payments in connection with our license and development agreements including (but not limited to): • Under the KKC License Agreement, we will incur development costs for AVTX-002 and are required to make significant payments in connection with the achievement of specified development and regulatory milestones.
We may be required to make significant payments in connection with our license and development agreements including (but not limited to): • Under the Lilly License Agreement, we will incur development costs for AVTX-009 and are required to make significant payments in connection with the achievement of specified development and regulatory milestones.
We expect that additional capital may be needed in the future to continue our planned operations, including conducting clinical trials, commercialization efforts, and expanded research and development activities. To raise capital, we may sell common stock, convertible securities or other equity securities in one or more transactions at prices and in a manner we determine from time to time.
We expect to need to raise additional capital in the future to continue our planned operations, including conducting clinical trials, commercialization efforts, and expanded research and development activities. To raise capital, we expect to sell common stock, convertible securities or other equity securities in one or more transactions at prices and in a manner we determine from time to time.
If we or our licensors or collaborators fail to maintain the patents and patent applications covering our product candidates, our competitors might be able to enter the market, which would have a material adverse effect on our business.
If we or our licensors or collaborators fail to maintain the patents and patent 31 Table of Contents applications covering our product candidates, our competitors might be able to enter the market, which would have a material adverse effect on our business.
If any of the following risks actually occurs, our business, financial condition, results of operations and future growth prospects would likely be materially and adversely affected. In these circumstances, the market price of our common stock would likely decline.
If any of the following risks actually occurs, our business, financial condition, results of operations and future growth prospects would likely be materially and adversely affected. In these circumstances, the market price and value of our securities would likely decline.
Risks Related to Regulatory Approval of Our Product Candidates The marketing approval processes of the FDA and comparable other regulatory authorities are lengthy, time‑consuming, costly and inherently unpredictable. Our inability to obtain regulatory approval for our product candidates would substantially harm our business.
Risks Related to Regulatory Approval of Our Product Candidates 20 Table of Contents The marketing approval processes of the FDA and other regulatory authorities are lengthy, time‑consuming, costly and inherently unpredictable. Our inability to obtain regulatory approval for our product candidates would substantially harm our business.

… 273 more changes not shown on this page.

Item 2. Properties

Properties — owned and leased real estate

1 edited+0 added−0 removed1 unchanged
Biggest changeWe believe that our existing facilities are adequate to meet our current needs, and that suitable spaces will be available in the future on commercially reasonable terms. Item 3. Legal Proceedings. None.
Biggest changeWe believe that our existing facilities are adequate to meet our current needs, and that suitable spaces will be available in the future on commercially reasonable terms. 45 Table of Contents Item 3. Legal Proceedings. None.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

2 edited+0 added−0 removed0 unchanged
Biggest changeItem 3. Legal Proceedings 48 Item 4. Mine Safety Disclosures 48 PART II 49 Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 49 Item 6. Reserved 50 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 51 Item 7A.
Biggest changeItem 3. Legal Proceedings 46 Item 4. Mine Safety Disclosures 46 PART II 47 Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 47 Item 6. Reserved 48 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 49 Item 7A.
Quantitative and Qualitative Disclosures About Market Risk 59 Item 8. Financial Statements and Supplementary Data 59
Quantitative and Qualitative Disclosures About Market Risk 57 Item 8. Financial Statements and Supplementary Data 57

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

2 edited+0 added−0 removed4 unchanged
Biggest changeEquity Compensation Plans Information regarding securities authorized for issuance under equity compensation plans as required by Item 12 of this report is incorporated by reference to the information under the sections of the proxy statement captioned “Equity Compensation Plan Information” and “Security Ownership of Certain Beneficial Owners and Management”. 49 Table of Contents
Biggest changeEquity Compensation Plans Information regarding securities authorized for issuance under equity compensation plans is set forth in Item 12 of this report is under the section captioned “Equity Compensation Plan Information”. 47 Table of Contents
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information Our common stock is listed and publicly traded on The Nasdaq Capital Market under the symbol “AVTX.” Holders As of March 24, 2023, there were approximately 103 holders of record of our common stock.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information Our common stock is listed and publicly traded on The Nasdaq Capital Market under the symbol “AVTX.” Holders As of March 27, 2024, there were approximately 157 holders of record of our common stock.

Item 7. Management's Discussion & Analysis

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

33 edited+50 added−60 removed16 unchanged
Biggest changeCash Flows The following table summarizes our cash flows for the years ended December 31, 2022 and 2021: Year Ended December 31, 2022 2021 (in thousands) Net cash (used in) provided by: Operating activities $ (26,751) $ (70,892) Investing activities (95) (113) Financing activities (14,699) 106,762 Net (decrease) increase in cash and cash equivalents $ (41,545) $ 35,757 Net cash used in operating activities Net cash used in operating activities decreased $44.1 million for the year ended December 31, 2022, as compared to the prior year, which was mainly driven by a $42.7 million decrease in net loss.
Biggest changeCash Flows The following table summarizes our cash flows for the years ended December 31, 2023 and 2022: Year Ended December 31, 2023 2022 (in thousands) Net cash (used in) provided by: Operating activities $ (30,680) $ (26,751) Investing activities (133) (95) Financing activities 25,042 (14,699) Net decrease in cash and cash equivalents $ (5,771) $ (41,545) Net cash used in operating activities Net cash used in operating activities in 2023 consisted primarily of a net loss of $31.5 million and non-cash adjustments to reconcile net loss to net cash used in operating activities including goodwill impairment of $3.9 million, stock-based compensation of $3.5 million, accretion of debt discount of $1.8 million and increase in fair value of the derivative liability of $0.7 million.
Net cash used in operating activities in 2022 consisted primarily of a net loss of $41.7 million, and non-cash adjustments to reconcile net loss to net cash used in operating activities including stock-based compensation of $7.6 million, accretion of debt discount of $1.4 million, and the full $1.0 million reserve on the Aytu receivable due from Aytu in December 2024.
Net cash used in operating activities in 2022 consisted primarily of a net loss of $41.7 million, and non-cash adjustments to reconcile net loss to net cash used in operating activities including stock-based compensation of $7.6 million, accretion of debt discount of $1.4 million, and the full $1.0 million reserve on the receivable due from Aytu in December 2024.
If the Company raises additional funds through collaborations, strategic alliances or licensing arrangements with third parties, the Company might have to relinquish valuable rights to its technologies, future revenue streams, research programs or product candidates.
Further if the Company raises additional funds through collaborations, strategic alliances or licensing arrangements with third parties, the Company might have to relinquish valuable rights to its technologies, future revenue streams, research programs or product candidates.
While our significant accounting policies are more fully described in Note 2 to the audited consolidated financial statements appearing at the end of this Annual Report on Form 10-K, we believe the following accounting policy is critical to the understanding of our financial condition and results.
While our significant accounting policies are more fully described in Note 2 to the consolidated financial statements appearing at the end of this Annual Report on Form 10-K, we believe the following accounting policies are critical to the understanding of our financial condition and results.
As discussed above, these unobservable inputs were estimated by Avalo based on limited publicly available information and therefore could differ from Janssen and Apollo’s internal development plans. Any changes to these inputs may result in significant changes to the fair value measurement.
As discussed above, these unobservable inputs were estimated by Avalo based on limited publicly available information and therefore could differ from Janssen’s and Apollo’s respective internal development plans. Any changes to these inputs may result in significant changes to the fair value measured.
However, given Avalo is no longer entitled to collect these payments, the potential ultimate settlement of the payments in the future from Janssen and/or Apollo to ES Therapeutics (and the future mark-to-market activity each reporting period) will not impact Avalo’s future cash flows.
However, given Avalo is no longer entitled to collect these payments, the potential ultimate settlement of the payments in the future from Janssen and/or Apollo to ES Therapeutics (and the future mark-to-market activity each reporting period) will not impact Avalo’s future cash flows. Goodwill Impairment The Company consists of one reporting unit.
The assumptions we used to determine the fair value of stock options granted to employees and members of the board of directors are as follows: Year Ended December 31, Service-based options 2022 2021 Expected term of options (in years) 5 — 6.25 0.76 — 6.25 Expected stock price volatility 84.0% — 93.5% 73.0% — 86.5% Risk-free interest rate 1.50% — 4.25% 0.07% — 1.34% Expected annual dividend yield 0% 0% The estimates involved in the valuations include inherent uncertainties and the application of our judgment.
The assumptions we used to determine the fair value of stock options granted to employees and members of the board of directors are as follows: Year Ended December 31, Service-based options 2023 2022 Expected term of options (in years) 5 — 6.25 5 — 6.25 Expected stock price volatility 89.8% — 146.0% 84.0% — 93.5% Risk-free interest rate 3.43% — 4.13% 1.50% — 4.25% Expected annual dividend yield 0% 0% The estimates involved in the valuations include inherent uncertainties and the application of our judgment.
The fair value of the derivative liability as of the transaction date was approximately $4.8 million, of which $3.5 million was attributable to the AVTX-501 Milestone and $1.3 million was attributable to the AVX-007 Milestones and Royalties.
The fair value of the derivative liability as of the transaction date was approximately $4.8 million, of which $3.5 million was attributable to the AVTX-501 Milestone and $1.3 million was attributable to the AVX-007 Milestones and Royalties. Subsequent to the transaction date, at each reporting period, the derivative liability is remeasured at fair value.
Results of Operations Comparison of the Years Ended December 31, 2022 and 2021 Product Revenue, net Net product revenue was $3.4 million for the year ended December 31, 2022, compared to $4.8 million for the year ended December 31, 2021.
Results of Operations 49 Table of Contents Comparison of the Years Ended December 31, 2023 and 2022 Product Revenue, net Net product revenue was $1.4 million for the year ended December 31, 2023, compared to $3.4 million for the year ended December 31, 2022.
The economic rights sold include (a) rights to a milestone payment of $20.0 million upon the filing and acceptance of an NDA for AVTX-501 pursuant to an agreement with Janssen Pharmaceutics, Inc., (the “AVTX-501 Milestone”) and (b) rights to any future 57 Table of Contents milestone payments and royalties relating to AVTX-007 under a license agreement with Apollo AP43 Limited, including up to $6.25 million of development milestones, up to $67.5 million in sales-based milestones, and royalty payments of a low single digit percentage of annual net sales (which percentage increases to another low single digit percentage if annual net sales exceed a specified threshold) (the “AVTX-007 Milestones and Royalties”).
(the “AVTX-501 Milestone”) and (b) rights to any future milestone payments and royalties relating to AVTX-007 under a license agreement with Apollo AP43 Limited, including up to $6.25 million of development milestones, up to $67.5 million in sales-based milestones, and royalty payments of a low single digit percentage of annual net sales (which percentage increases to another low single digit percentage if annual net sales exceed a specified threshold) (the “AVTX-007 Milestones and Royalties”).
Armistice is a significant stockholder of the Company and whose chief investment officer, Steven Boyd, and managing director, Keith Maher, served on Avalo’s Board until August 8, 2022. The ES Transaction was approved in accordance with Avalo’s related party transaction policy.
At the time of the transaction, Armistice was a significant stockholder of the Company and whose chief investment officer, Steven Boyd, and managing director, Keith Maher, served on Avalo’s Board until August 8, 2022.
The fair value of the AVTX-501 Milestone was primarily driven by an approximate 23% probability of success to reach the milestone in approximately 5 years. The fair value of AVTX-007 Milestones and Royalties were primarily driven by an approximate 17% probability of success, time to commercialization of 6 years, and sales forecasts with peak annual net sales reaching $300 million.
The fair value of AVTX-007 Milestones and Royalties were primarily driven by approximately 17% probability of success, time to commercialization of approximately 4.8 years, and sales forecasts with peak annual net sales reaching $300 million.
Research and Development Expenses The following table summarizes our research and development expenses for the years ended December 31, 2022 and 2021: Year Ended December 31, 2022 2021 (in thousands) Preclinical expenses $ 2,439 $ 6,673 Clinical expenses 12,030 14,055 CMC expenses 8,087 17,000 License and milestone expenses — 10,900 Internal expenses: Salaries, benefits and related costs 7,218 9,114 Stock-based compensation expense 1,249 1,775 Other 285 318 $ 31,308 $ 59,835 Research and development expenses decreased $28.5 million for the year ended December 31, 2022, compared to the year ended December 31, 2021.
Research and Development Expenses The following table summarizes our research and development expenses for the years ended December 31, 2023 and 2022: Year Ended December 31, 2023 2022 (in thousands) Nonclinical expenses $ 1,029 $ 2,439 Clinical expenses 5,780 12,030 CMC expenses 1,855 8,087 License and milestone expenses — — Internal expenses: Salaries, benefits and related costs 3,576 7,218 Stock-based compensation expense 1,318 1,249 Other 226 285 $ 13,784 $ 31,308 Research and development expenses decreased $17.5 million for the year ended December 31, 2023, compared to the year ended December 31, 2022.
Income Tax Expense The following table summarizes our income tax expense for the years ended December 31, 2022 and 2021: Year Ended December 31, 2022 2021 (in thousands) Income tax expense (benefit) 28 (196) $ 28 $ (196) The Company recognized minimal income tax expense for the year ended December 31, 2022 compared to an income tax benefit of $0.2 million for the year ended December 31, 2021.
Income Tax Expense The following table summarizes our income tax expense for the years ended December 31, 2023 and 2022: Year Ended December 31, 2023 2022 (in thousands) Income tax expense 14 28 $ 14 $ 28 The Company recognized minimal income tax expense for the years ended December 31, 2023 and 2022.
We believe the ability to achieve the anticipated milestones as presented in the section entitled “Business” in Item 1 of this Annual Report on Form 10-K represents our most immediate evaluation points.
We believe the ability to achieve the anticipated milestones as presented in the section entitled “Business” in Item 1 of this Annual Report on Form 10-K represents our most immediate evaluation points as to the progress of our goal to move the pipeline forward. 2023 Financial Operations Overview Net loss for the year ended December 31, 2023 decreased $10.1 million as compared to the prior year.
Selling, General and Administrative Expenses The following table summarizes our selling, general and administrative expenses for the years ended December 31, 2022 and 2021: 53 Table of Contents Year Ended December 31, 2022 2021 (in thousands) Salaries, benefits and related costs $ 6,152 $ 5,202 Legal, consulting and other professional expenses 6,611 10,029 Stock-based compensation expense 6,305 6,397 Advertising and marketing expenses 76 1,657 Other 1,567 1,373 $ 20,711 $ 24,658 Selling, general and administrative expenses decreased $3.9 million for the year ended December 31, 2022, compared to the year ended December 31, 2021.
Selling, General and Administrative Expenses The following table summarizes our selling, general and administrative expenses for the years ended December 31, 2023 and 2022: Year Ended December 31, 2023 2022 (in thousands) Salaries, benefits and related costs $ 2,003 $ 6,152 Legal, consulting and other professional expenses 4,852 6,611 Stock-based compensation expense 2,157 6,305 Advertising and marketing expenses 33 76 Other 1,255 1,567 $ 10,300 $ 20,711 Selling, general and administrative expenses decreased $10.4 million for the year ended December 31, 2023, compared to the year ended December 31, 2022 due to severance and stock-based compensation expense recognized in the first quarter of 2022 from headcount reductions, paired with decreased headcount and cost savings initiatives realized in 2023.
Off‑Balance Sheet Arrangements The Company does not have any off‑balance sheet arrangements, as defined by applicable SEC rules and regulations. Recently Adopted Accounting Pronouncements For a discussion of new accounting standards please see Note 2 to consolidated financial statements contained in this Annual Report on Form 10-K. 58 Table of Contents
Recently Adopted Accounting Pronouncements For a discussion of new accounting standards, see Note 2 to consolidated financial statements contained in this Annual Report on Form 10-K. 56 Table of Contents
Inherent in the nature of an estimate or assumption is the fact that actual results may differ from estimates, and estimates may vary as new facts and circumstances arise.
The Company believes, given current facts and circumstances, our estimates and assumptions are reasonable, adhere to U.S. generally accepted accounting principles (“GAAP”) and are consistently applied. Inherent in the nature of an estimate or assumption is the fact that actual results may differ from estimates, and estimates may vary as new facts and circumstances arise.
Avalo’s license and supply agreement for Millipred ® expires on September 30, 2023. Therefore, we expect cost of product sales to decrease for the year ended December 31, 2023.
Avalo’s license and supply agreement for Millipred ® expired on September 30, 2023. Therefore, we do not expect material cost of product sales going forward.
As of December 31, 2022, Avalo had $13.2 million in cash and cash equivalents. For the year ended December 31, 2022, Avalo generated a net loss of $41.7 million and negative cash flows from operations of $26.8 million. As of December 31, 2022, Avalo had an accumulated deficit of $303.8 million.
For the year ended December 31, 2023, Avalo generated a net loss of $31.5 million and negative cash flows from operations of $30.7 million. As of December 31, 2023, Avalo had $7.4 million in cash and cash equivalents. For the year ended December 31, 2023, the Company raised approximately $46.2 million of net proceeds from equity offerings.
Uses of Liquidity The Company uses cash to primarily fund the ongoing development of our research and development pipeline assets and costs associated with its organizational infrastructure.
Uses of Liquidity The Company uses cash to primarily fund the ongoing development of our research and development pipeline assets and costs associated with its organizational infrastructure. As of December 31, 2023, Avalo had $7.4 million in cash and cash equivalents, representing a $5.8 million decrease compared to December 31, 2022.
Cost of Product Sales Cost of product sales were $3.4 million for the year ended December 31, 2022, as compared to $1.5 million for the year ended December 31, 2021.
In the prior year, Avalo recognized $14.7 million of revenue for the upfront consideration received pursuant to the out-license of AVTX-007. Cost of Product Sales Cost of product sales were $1.3 million for the year ended December 31, 2023, as compared to $3.4 million for the year ended December 31, 2022.
Other Expense, net The following table summarizes our other expense, net for the years ended December 31, 2022 and 2021: Year Ended December 31, 2022 2021 (in thousands) Interest expense, net (4,170) (2,391) Other expense, net (20) (20) $ (4,190) $ (2,411) Other expense, net was comprised of interest expense related to the venture loan and security agreement for the year ended December 31, 2022 and 2021.
Other Expense, net 51 Table of Contents The following table summarizes our other expense, net for the years ended December 31, 2023 and 2022: Year Ended December 31, 2023 2022 (in thousands) Interest expense, net (3,417) (4,170) Change in fair value of derivative liability (720) — Other expense, net (42) (20) $ (4,179) $ (4,190) Other expense, net was consistent for the years ended December 31, 2023 and 2022.
The increase was partially offset by decreased headcount and cost savings initiatives in 2022. Although stock-based compensation expense was consistent compared to the prior year, in 2022 the Company recognized $4.3 million of expense related to the modification and acceleration of certain separated employees’ stock options.
Notably, we recognized $4.3 million of stock-based compensation expense in 2022 from the acceleration and modification of certain separated employees’ stock options that did not repeat.
The decrease was largely driven by cost savings initiatives in 2022. Notably legal, consulting and other professional expenses, decreased $3.4 million. Similarly, advertising and marketing expenses decreased $1.6 million from the prior year. Salaries, benefits and related costs increased $1.0 million as a result of severance expense recognized in the year ended December 31, 2022.
Additionally, salaries, benefits and related costs decreased $4.1 million due to $2.4 million of severance expense recognized in 2022 from headcount reductions that did not repeat, paired with lower salary costs in 2023 driven by the reduced headcount. Legal, consulting and other professional expenses decreased $1.8 million due to cost savings initiatives.
Management’s primary evaluation of Avalo’s success is the ability to progress its programs towards commercialization or opportunistically out-licensing rights to indications or geographies. This success depends on the operational execution of the programs and the ability to secure sufficient funding to support the programs.
We expect future research and development expenses and cash used in operating activities to increase in 2024 as a result of our development plans to initiate and progress a Phase 2 trial in HS. Management’s primary evaluation of Avalo’s success is the ability to progress its programs towards commercialization or opportunistically out-licensing rights to indications or geographies.
These estimates can also affect supplemental information disclosed by us, including information about contingencies, risk and financial condition. The Company believes, given current facts and circumstances, our estimates and assumptions are reasonable, adhere to GAAP and are consistently applied.
Critical Accounting Estimates and Assumptions In preparing the financial statements, the Company makes estimates and assumptions that have an impact on assets, liabilities, revenue and expenses reported. These estimates can also affect supplemental information disclosed by us, including information about contingencies, risk and financial condition.
Net cash used in operating activities was $70.9 million for the year ended December 31, 2021, and consisted primarily of a net loss of $84.4 million and non-cash adjustments to reconcile net loss to net cash used in operating activities including in stock-based compensation of $8.2 million. Additionally, changes in net liabilities increased by $2.8 million.
Additionally, changes in net liabilities increased by $4.8 million. We expect future cash used in operating activities to increase in 2024 as a result of acquiring AVTX-009 in March 2024 and our associated development plans. Net cash used in investing activities Net cash used in investing activities was minimal for the years ended December 31, 2023 and 2022.
License and Other Revenue Avalo recognized $14.7 million of license and other revenue for the year ended December 31, 2022, compared to $0.6 million for the year ended December 31, 2021.
License and Other Revenue Avalo recognized $0.5 million of license and other revenue for the year ended December 31, 2023 as a result of the sale of its rights, title and interest in assets relating to the 800 Series to AUG Therapeutics, LLC (“AUG”).
We recognized the expense in the cost of product sales for the year ended December 31, 2022. We continue to assess collectability of the receivable due from Aytu in December 2024 each reporting period. The remainder of the increase was driven by timing of the fifty percent net profit share with the supplier, which began July 1, 2021.
The decrease was mainly attributable to a decrease in Millipred ® units sold, as discussed above. Additionally, for the year ended December 31, 2022, we fully reserved the $1.0 million receivable due from Aytu in December 2024, which was recognized in cost of product sales.
Net cash (used in) provided by financing activities 56 Table of Contents Net cash used in financing activities was $14.7 million for the year ended December 31, 2022, as opposed to net cash provided by financing activities of $106.8 million for the year ended December 31, 2021.
Avalo fully retired its debt and therefore it does not expect future principal payment outflows. Net cash used in financing activities was $14.7 million for the year ended December 31, 2022 and was driven by Avalo’s $14.8 million principal prepayment under its loan agreement.
(the “Company,” “Avalo” or “we”) is a clinical stage biotechnology company focused on the treatment of immune dysregulation by developing therapies that target the LIGHT network.
(the “Company,” “Avalo” or “we”) is a clinical stage biotechnology company focused on the treatment of immune dysregulation. Avalo’s lead asset is AVTX-009, an anti-IL-1β monoclonal antibody (“mAb”), targeting inflammatory diseases. Avalo’s pipeline also includes quisovalimab (anti-LIGHT mAb) and AVTX-008 (BTLA agonist fusion protein).
These decreases were mainly attributable to a $32.0 million decrease in operating expenses driven by significantly reduced research and development expenses (discussed further below) and an $14.1 million increase in license and other revenue from upfront consideration received from out-license and business development transactions executed during the year.
The decrease in net loss was primarily attributable to a $26.2 million decrease in operating expenses driven by significantly reduced research and development expenses and selling, general and administrative expenses, partially offset by a decrease of $14.2 million in license and other revenue.
Removed
LIGHT ( L ymphotoxin-like, exhibits I nducible expression, and competes with HSV G lycoprotein D for H erpesvirus Entry Mediator (“HVEM”), a receptor expressed by T lymphocytes; also referred to as TNFSF14) is an immunoregulatory cytokine.
Added
Our focus in 2023 was completing and delivering topline data from our phase 2 trial evaluating AVTX-002 in poorly controlled non-eosinophilic asthma (the “PEAK Trial”), strengthening our balance sheet to enable us to execute our strategy to progress our immunology drug candidates, and continuing to evaluate new opportunities to augment our immunology pipeline.
Removed
LIGHT and its signaling receptors, HVEM (TNFRSF14), and lymphotoxin β receptor (TNFRSF3), form an immune regulatory network with two co-receptors of herpesvirus entry mediator, checkpoint inhibitor B and T Lymphocyte Attenuator (“BTLA”), and CD160 (collectively, the “LIGHT-signaling network” or the “LIGHT network”).
Added
In the second quarter of 2023, we announced the PEAK Trial did not meet its primary endpoint, however the drug candidate showed strong target engagement in the trial, as well as in previous trials in other acute and chronic inflammatory diseases.
Removed
Accumulating evidence points to the dysregulation of the LIGHT network as a disease-driving mechanism in autoimmune and inflammatory reactions in barrier organs. Therefore, we believe reducing LIGHT levels can moderate immune dysregulation in many acute and chronic inflammatory disorders.
Added
In the second half of 2023, we strengthened our balance sheet to pave the way for future growth and innovation. This included raising $46.2 million from equity financings during the year and paying off the remaining $14.3 million of the original $35 million debt owed to Horizon Technology Finance Corporation in September of 2023.
Removed
We have two drug candidates that modulate the LIGHT-signaling network, AVTX-002, an anti-LIGHT monoclonal antibody (“mAb”) in Phase 2, and AVTX-008, a BTLA agonist fusion protein in lead optimization. In 2022, we sharpened our strategy to focus on our drug candidates that target dysregulated inflammation via the LIGHT network.
Added
Further, we completed the divestiture of our rights, titles, and interests in AVTX-801, AVTX-802 and AVTX-803 (collectively, the “800 Series”) to AUG Therapeutics, LLC, further focusing our pipeline while also maintaining substantial upside for Avalo upon any 800 Series program’s successes, including up to an aggregate of $45 million of contingent milestone payments.
Removed
We made significant progress advancing our core programs, including our lead development asset, AVTX-002, toward achievement of our next anticipated milestones.
Added
Finally, we evaluated new opportunities to augment our immunology pipeline, including identifying and acquiring a new lead asset that targets autoimmune indications, which we acquired in March 2024 through our acquisition of AlmataBio, Inc. (“AlmataBio”). Our new lead asset, AVTX-009, is a Phase 2-ready anti-IL-1β mAb.
Removed
Most notably, in the first quarter of 2023, we completed enrollment of the Phase 2 PEAK Trial of evaluating the safety and efficacy of AVTX-002 (anti-LIGHT mAb) in 91 patients with Non-Eosinophilic Asthma (“NEA”) and expect to release topline data in the second quarter of 2023.
Added
There is evidence that inhibition of IL-1β could be effective in hidradenitis suppurativa (“HS”) and a variety of inflammatory diseases in dermatology, gastroenterology, and rheumatology. In March 2024, we closed a private placement financing for up to $185 million in gross proceeds, including initial upfront gross investment of $115.6 million.
Removed
We also identified a lead molecule for AVTX-008 (BTLA agonist fusion protein) and continue to evaluate several immune dysregulation disorders, with a target IND submission in 2024. Additionally, we raised approximately $20 million of funding from out-license and business development activity, which meaningfully improved our financial position and supported the development of our programs.
Added
Avalo estimates upfront net proceeds of approximately $105 million after deducting estimated transaction fees and expenses from both the private placement financing and the acquisition of AlmataBio. The Company could receive an additional $69.4 million of gross proceeds upon the exercise of warrants issued in the financing. Our focus in 2024 is executing operationally on the development of AVTX-009.
Removed
In 2023, our focus is continuing to develop our core programs toward their anticipated milestones and raising capital to support the development. In February 2023, we closed an equity financing in which we raised approximately $13.7 million in net proceeds, which will support our ongoing development of key assets in our pipeline.
Added
We intend to pursue the development of AVTX-009 in HS and we expect topline data from a planned Phase 2 trial in 2026. In addition to HS, Avalo intends to pursue AVTX-009 in at least one other chronic inflammatory indication.
Removed
We look forward to completing the Phase 2 PEAK Trial and expect to release topline data in the second quarter of 2023. Upon positive trial results, we are eager to advance AVTX-002 in treating NEA, asthma broadly and other dysregulated inflammatory disease. We also look forward to progressing AVTX-008 towards IND submission.
Added
The significant reduction of research and development expenses was driven by fewer development programs ongoing during 2023 (due to divestitures in both 2022 and 2023), the AVTX-002 PEAK Trial reading out in June of 2023 with no new trials initiated in the second half of the year, and a reduction of manufacturing costs due to the timing of manufacturing runs.
Removed
Recent Updates On February 7, 2023, the Company closed an underwritten public offering of 3,770,000 shares of its common stock and warrants to purchase up to an aggregate 3,770,000 shares of common stock resulting in net proceeds of approximately $13.7 million, after deducting the underwriting discounts and commissions and offering expenses payable by us.
Added
Selling, general and administrative expenses decreased due to a smaller infrastructure to support the focused pipeline, severance in 2022 that did not repeat, as well as cost savings initiatives. As of December 31, 2023, Avalo had $7.4 million in cash and cash equivalents, representing a $5.8 million decrease compared to December 31, 2022.
Removed
The warrants were immediately exercisable at an exercise price of $5.00 per share and are exercisable for one year from the issuance date. COVID-19 We did not experience significant financial impact directly related to the COVID-19 pandemic in either fiscal 2021 or 2022.
Added
We raised approximately $46.2 million of net proceeds from equity financings during the year. We fully retired our original $35 million of debt with principal payments of $21.2 million in 2023.
Removed
However, we did experience some disruptions to clinical operations and manufacturing of drug supply for use in clinical trials during those periods, primarily in fiscal 2021.
Added
The $2.0 million decrease was attributable to a decrease in units sold, mainly driven by the planned expiration of our license and supply agreement for our only commercially marketed product, Millipred ® on September 30, 2023. We do not expect future gross product revenue for Millipred ® , which the Company considered a non-core asset.
Removed
We continue to evaluate the impact of the COVID-19 pandemic on the industry and our company 51 Table of Contents and have concluded that while it is reasonably possible that the virus could have a negative effect on our financial position and results of our operations, the specific impact is not readily determinable as of the date of this filing.
Added
However, the Company will continue to monitor estimates for commercial liabilities, such as sales returns. As additional information becomes available, the Company could recognize expense (or benefit) for differences between actuals or updated estimates to the reserves previously recognized.
Removed
Our financial statements do not include any adjustments that might result from the outcome of this uncertainty. 2022 Financial Operations Overview Net loss for the year ended December 31, 2022 decreased $42.7 million as compared to the prior year and our net cash used in operations decreased by $44.1 million.
Added
As of December 31, 2023, the total receivable balance was approximately $0.7 million and remains fully reserved. We continue to assess collectability of the receivable each reporting period and any change in our assessment of collectability could impact cost of product sales. Refer to Note 3 of the consolidated financial statements for more information.
Removed
In 2022, we primarily focused on the progression of our lead development asset, AVTX-002, as opposed to progressing multiple programs in the prior year, contributing to the significant reduction in reduced research and development expenses. Additionally, in 2021, we completed AVTX-002 manufacturing activities in advance of enrolling patients in the PEAK Trial that did not repeat in 2022.
Added
Notably, clinical expenses and chemistry, manufacturing, and control (“CMC”) expenses decreased $6.3 million and $6.2 million, respectively.
Removed
We also recognized a $10.0 million upfront license fee in 2021 for the AVTX-002 expanded indication license agreement, thus contributing to the decrease year over year. As a result of the focused pipeline, Avalo executed a cost reduction plan, including reducing its headcount and supporting infrastructure.
Added
Such decreases were driven by reduced clinical trial activities and manufacturing for AVTX-002 due to timing of study completion in June of 2023, paired with decreased expenses as a result of the out-license of AVTX-007 in July of 2022 and the divestiture of the 800 Series in the fourth quarter of 2023. 50 Table of Contents Salaries, benefits and related costs decreased $3.6 million due to severance expense recognized in the first quarter of 2022 from headcount reductions that did not repeat, paired with lower salary costs in 2023 driven by the reduced headcount.
Removed
Selling, general and administrative expenses decreased as a result, however, these decreases were partially offset by severance and stock-based compensation expense from separations during the year. We expect to incur similar operating expenses in early 2023 as we incurred in late 2022.
Added
We expect future research and development expenses to increase in 2024 as a result of acquiring AVTX-009 in March 2024 and our associated development plans.
Removed
Operating expenses beyond early 2023 are difficult to predict because it will be highly dependent on trial outcomes, potential financings and business development initiatives. As of December 31, 2022, Avalo had $13.2 million in cash and cash equivalents, representing a $41.4 million decrease compared to December 31, 2021.
Added
We do not expect major changes to selling, general and administrative expenses in the near-term given we expect that the majority of operating expense increases from the acquisition and development of AVTX-009 will be focused on research and development activities. However, there could be increases if the development of AVTX-009 requires more supporting general and administrative infrastructure needs than anticipated.
Removed
We raised approximately $20 million through transactions in 2022, while we raised $105 million through debt and equity financings in 2021.
Added
Goodwill Impairment The Company recognized $3.9 million of goodwill impairment loss for its sole reporting unit for the year ended December 31, 2023 as part of its annual goodwill impairment test performed on the last day of the fiscal year.
Removed
Additionally, in 2022, we prepaid $15.0 million under the venture loan and security agreement (the “Loan Agreement”) with Horizon Technology Finance Corporation (“Horizon”) and Powerscourt Investments XXV, LP (“Powerscourt”, and together with Horizon, the “Lenders”), and our remaining principal payments are $21.2 million as of December 31, 2022.
Added
The Company’s market capitalization decreased 69% from September 30, 2023 to December 31, 2023, which occurred primarily in the second half of the fourth quarter and on December 28, 2023, Avalo effected a reverse stock split of the Company’s common stock.
Removed
These factors contributed to the decrease in cash and cash equivalents year over year. Subsequent to December 31, 2022, we closed an equity financing in which we raised approximately $13.7 million in net proceeds.
Added
Additionally, cash runway continued to decline in the fourth quarter and, as of December 31, 2023, the Company needed to raise additional funds to execute its strategy. The impairment loss recognized represents the difference between the reporting unit’s carrying value and its fair value as of December 31, 2023.
Removed
We plan to use our current cash on hand along with cash inflows from financing activities and/or business development initiatives to support the ongoing development of our pipeline and supporting general corporate purposes.
Added
The fair value of the reporting unit was estimated using the market approach. The Company utilized its closing stock price on the last day of the fiscal year, which is considered a Level 1 input pursuant to ASC 820, Fair Value Measurements and Disclosures (“ASC 820”), to calculate the reporting unit’s fair value.
Removed
The decrease was mainly attributable to a decrease in units sold, which may have been caused by disruptions to the sales channel as a result of the transition of commercial operations from Aytu Biosciences, Inc. (“Aytu”) to Avalo in the second half of 2021.
Added
Refer to the “Critical Accounting Estimates and Assumptions” section below and Note 7 to the consolidated financial statements for more information. No expense related to impairment of goodwill or intangible assets was recognized for the year ended December 31, 2022.
Removed
Avalo’s license and supply agreement for Millipred ® , the Company’s sole commercial product, expires on September 30, 2023. Therefore, we expect product revenue to decrease for the year ending December 31, 2023.

… 63 more changes not shown on this page.

Other AVTX 10-K year-over-year comparisons