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

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

+602 added−668 removedSource: 10-K (2025-03-27) vs 10-K (2024-03-25)

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

602 paragraphs added · 668 removed · 428 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

108 edited+54 added−128 removed222 unchanged
Biggest changeThe terms of the Biocon License are discussed above in “Business—Partnerships—Collaboration and License Agreement with Biocon”. 22 Specifically, as of March 15, 2024, our licensed rights from Biocon relating to itolizumab included nine issued patents in the United States, six issued patents in Australia, five issued patents in Canada, six issued patents in New Zealand, and pending patent applications in the United States, Australia, Canada, and New Zealand.
Biggest changeThe terms of the Biocon License are discussed above in “Business—Partnerships—Collaboration and License Agreement with Biocon”.
Other potential consequences include, among other things: ▪ restrictions on the marketing or manufacturing of a product, mandated modification of promotional materials or issuance of corrective information, issuance by FDA or other regulatory authorities of safety alerts, Dear Healthcare Provider letters, press releases or other communications containing warnings or other safety information about the product, or complete withdrawal of the product from the market or product recalls; 30 ▪ fines, warning or untitled letters or holds on post-approval clinical studies; ▪ refusal of the FDA to approve pending applications or supplements to approved applications, or suspension or revocation of existing product approvals; ▪ product seizure or detention, or refusal of the FDA to permit the import or export of products; or ▪ injunctions, consent decrees or the imposition of civil or criminal penalties.
Other potential consequences include, among other things: ▪ restrictions on the marketing or manufacturing of a product, mandated modification of promotional materials or issuance of corrective information, issuance by FDA or other regulatory authorities of safety alerts, Dear Healthcare Provider letters, press releases or other communications containing warnings or other safety information about the product, or complete withdrawal of the product from the market or product recalls; ▪ fines, warning or untitled letters or holds on post-approval clinical studies; ▪ refusal of the FDA to approve pending applications or supplements to approved applications, or suspension or revocation of existing product approvals; ▪ product seizure or detention, or refusal of the FDA to permit the import or export of products; or ▪ injunctions, consent decrees or the imposition of civil or criminal penalties.
HIPAA created additional federal civil and criminal statutes that prohibit, among other things, knowingly and willfully executing, or attempting to execute, a scheme to defraud or to obtain, by means of false or fraudulent pretenses, representations or promises, any money or property owned by, or under the control or custody of, any healthcare benefit program, including private third-party payors, willfully obstructing a criminal investigation of a healthcare offense, and knowingly and willfully falsifying, concealing or covering up by trick, scheme or device, a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services.
HIPAA created additional federal civil and criminal statutes that prohibit, among other things, knowingly and willfully executing, or attempting to execute, a scheme to defraud or to obtain, by means of false or fraudulent pretenses, representations or promises, any money or property owned by, or under the control or custody of, any healthcare benefit 26 program, including private third-party payors, willfully obstructing a criminal investigation of a healthcare offense, and knowingly and willfully falsifying, concealing or covering up by trick, scheme or device, a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services.
It selectively blocks those three key pathogenic cytokines while preserving non-pathogenic signaling related to the other g C cytokine family members, IL-4, IL-7 and IL-21 ( Figure 2). EQ101 has demonstrated clinical proof-of-concept as a novel tri-specific cytokine inhibitor through a completed Phase 1/2 clinical study in cutaneous T cell lymphoma, or CTCL, a dermato-oncology indication.
It selectively blocks those three key pathogenic cytokines while preserving non-pathogenic signaling related to the other g C cytokine family members, IL-4, IL-7 and IL-21 . EQ101 has demonstrated clinical proof-of-concept as a novel tri-specific cytokine inhibitor through a completed Phase 1/2 clinical study in cutaneous T cell lymphoma, or CTCL, a dermato-oncology indication.
Government Regulation and Product Approval The FDA and other regulatory authorities at federal, state, and local levels, as well as in foreign countries, extensively regulate, among other things, the research, development, testing, manufacture, quality control, import, export, safety, 26 effectiveness, labeling, packaging, storage, distribution, record keeping, approval, advertising, promotion, marketing, post-approval monitoring, and post-approval reporting of biologics such as those we are developing.
Government Regulation and Product Approval The FDA and other regulatory authorities at federal, state, and local levels, as well as in foreign countries, extensively regulate, among other things, the research, development, testing, manufacture, quality control, import, export, safety, effectiveness, labeling, packaging, storage, distribution, record keeping, approval, advertising, promotion, marketing, post-approval monitoring, and post-approval reporting of biologics such as those we are developing.
We are also required to pay royalties on tiers of aggregate annual net sales of Biocon Products by us, our affiliates and our sublicensees in the United States and Canada at 8 percentages from the mid-single digits to sub-teen double digits and on tiers of aggregate annual net sales of Biocon Products by us and our affiliates (but not our sublicensees) in Australia and New Zealand, in each case, subject to adjustments in certain circumstances.
We are also required to pay royalties on tiers of aggregate annual net sales of Biocon Products by us, our affiliates and our sublicensees in the United States and Canada at percentages from the mid-single digits to sub-teen double digits and on tiers of aggregate annual net sales of Biocon Products by us and our affiliates (but not our sublicensees) in Australia and New Zealand, in each case, subject to adjustments in certain circumstances.
Four escalating 11 dose levels of 0.5 mg/kg, 1.0 mg/kg, 2.0 mg/kg and 4.0 mg/kg were administered weekly by IV infusion for up to 74 weeks. The study found that EQ101 was well-tolerated, with no DLTs, no infusion reactions, and no deaths, and only one subject discontinued participation due to an adverse event.
Four escalating dose levels of 0.5 mg/kg, 1.0 mg/kg, 2.0 mg/kg and 4.0 mg/kg were administered weekly by IV infusion for up to 74 weeks. The study found that EQ101 was well-tolerated, with no DLTs, no infusion reactions, and no deaths, and only one subject discontinued participation due to an adverse event.
Rationale for EQ302 for the Treatment of Celiac Disease IL-15 has been identified as a key driver of celiac disease pathogenesis. IL-15 is chronically upregulated in the lamina propria and epithelium of the intestine and directly correlates with the severity of mucosal damage. This proinflammatory cytokine acts on distinct cell types resulting in malfunction of multiple immune mechanisms.
Rationale for EQ302 for the Treatment of Celiac Disease 16 IL-15 has been identified as a key driver of celiac disease pathogenesis. IL-15 is chronically upregulated in the lamina propria and epithelium of the intestine and directly correlates with the severity of mucosal damage. This proinflammatory cytokine acts on distinct cell types resulting in malfunction of multiple immune mechanisms.
We believe itolizumab (EQ001) has the potential to be a best-in-class treatment for aGVHD based on its ability to target the underlying biology of GVHD in a 17 highly selective way. Further, this approach is also promising as we consider future development in the prevention of GVHD and the treatment of chronic GVHD, or cGVHD.
We believe itolizumab (EQ001) has the potential to be a best-in-class treatment for aGVHD based on its ability to target the underlying biology of GVHD in a highly selective way. Further, this approach is also promising as we consider future development in the prevention of GVHD and the treatment of chronic GVHD, or cGVHD.
The FDA granted itolizumab (EQ001) Fast Track designation for the treatment of aGVHD in December 2018 and Orphan Drug designations for both the prevention and treatment of aGVHD in February 2019. In March 2019, we initiated EQUATE , an open-label Phase 1b clinical study of itolizumab (EQ001) as a first-line therapy concomitant with steroids for the treatment of aGVHD.
The FDA granted itolizumab (EQ001) Fast Track designation for the treatment of aGVHD in December 2018 and Orphan Drug designations for both the prevention and treatment of aGVHD in February 2019. 10 In March 2019, we initiated EQUATE , an open-label Phase 1b clinical study of itolizumab (EQ001) as a first-line therapy concomitant with steroids for the treatment of aGVHD.
Post-Approval Requirements Any products manufactured or distributed by us pursuant to FDA approvals are subject to pervasive and continuing regulation by the FDA, including, among other things, requirements relating to quality control and quality assurance, record-keeping, reporting of adverse experiences, periodic reporting, product sampling and distribution, and advertising and promotion of the product.
Post-Approval Requirements Any products manufactured or distributed by us pursuant to FDA approvals are subject to pervasive and continuing regulation by the FDA, including, among other things, requirements relating to quality control and quality assurance, record-keeping, reporting of adverse experiences, periodic reporting, product sampling and distribution, and advertising and 24 promotion of the product.
In most countries in which we file, the patent term is 20 years from the earliest date of filing a non-provisional patent application related to the patent. A U.S. patent also may be afforded a patent term adjustment, or PTA, under certain circumstances to 24 compensate for delays in obtaining the patent from the USPTO.
In most countries in which we file, the patent term is 20 years from the earliest date of filing a non-provisional patent application related to the patent. A U.S. patent also may be afforded a patent term adjustment, or PTA, under certain circumstances to compensate for delays in obtaining the patent from the USPTO.
Like the federal Anti-Kickback Statute, the Affordable Care Act amended the intent standard for certain 32 healthcare fraud statutes under HIPAA such that a person or entity no longer needs to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation.
Like the federal Anti-Kickback Statute, the Affordable Care Act amended the intent standard for certain healthcare fraud statutes under HIPAA such that a person or entity no longer needs to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation.
The downregulation of these pathways is accompanied by decreased secretion of the pro-inflammatory T eff cytokines IFN-γ, TNF-α, IL-6 and IL-17. 13 Additionally, by inhibiting the binding of ALCAM to CD6, itolizumab modulates lymphocyte trafficking and results in reduced T eff cell infiltration into inflamed tissues.
The downregulation of these pathways is accompanied by decreased secretion of the pro-inflammatory T eff cytokines IFN-γ, TNF-α, IL-6 and IL-17. Additionally, by inhibiting the binding of ALCAM to CD6, itolizumab modulates lymphocyte trafficking and results in reduced T eff cell infiltration into inflamed tissues.
Adequate third-party reimbursement may not be available to enable us to maintain price levels sufficient to realize an appropriate return on our investment in product development. If reimbursement is not available or is available only at limited levels, we may not be able to successfully commercialize any product candidate that we successfully develop.
Adequate third-party reimbursement may not be available to enable us to maintain 28 price levels sufficient to realize an appropriate return on our investment in product development. If reimbursement is not available or is available only at limited levels, we may not be able to successfully commercialize any product candidate that we successfully develop.
Regulatory authorities, the IRB or the sponsor 27 may suspend a clinical study at any time on various grounds, including a finding that the subjects are being exposed to an unacceptable health risk or that the study is unlikely to meet its stated objectives.
Regulatory authorities, the IRB or the sponsor may suspend a clinical study at any time on various grounds, including a finding that the subjects are being exposed to an unacceptable health risk or that the study is unlikely to meet its stated objectives.
Additionally, we or our collaborators may develop companion diagnostic tests for use with our 34 product candidates. Companion diagnostic tests require coverage and reimbursement separate and apart from the coverage and reimbursement for their companion pharmaceutical or biological products. Similar challenges to obtaining coverage and reimbursement, applicable to pharmaceutical products, will apply to companion diagnostics.
Additionally, we or our collaborators may develop companion diagnostic tests for use with our product candidates. Companion diagnostic tests require coverage and reimbursement separate and apart from the coverage and reimbursement for their companion pharmaceutical or biological products. Similar challenges to obtaining coverage and reimbursement, applicable to pharmaceutical products, will apply to companion diagnostics.
This family includes three issued U.S. patents, two issued Australian patents, 24 patents in European states, one issued Hong Kong patent, one issued Japanese patent, one issued Indian patent, and one issued Korean patent. Also pending are applications in the United States, Australia, Canada, China, Europe, Hong Kong, India Japan, and Korea.
This family includes three issued U.S. patents, three issued Australian patents, 24 patents in European states, one issued Hong Kong patent, two issued Japanese patents, one issued Indian patent, and two issued Korean patents. Also pending are applications in the United States, Australia, Canada, China, Europe, Hong Kong, India, and Korea.
As a condition of accelerated approval, the FDA will generally require the sponsor to perform adequate and well-controlled post-marketing clinical studies to verify and describe the anticipated effect on irreversible morbidity or mortality or other clinical 29 benefit.
As a condition of accelerated approval, the FDA will generally require the sponsor to perform adequate and well-controlled post-marketing clinical studies to verify and describe the anticipated effect on irreversible morbidity or mortality or other clinical benefit.
Several states have enacted legislation requiring pharmaceutical and biotechnology companies to establish marketing compliance programs, file periodic reports with the state, make periodic public disclosures on sales, marketing, pricing, clinical studies and other activities, and/or register their sales and medical representatives, as well as to prohibit pharmacies and other healthcare entities from providing certain physician prescribing data to pharmaceutical and biotechnology companies for use in sales and marketing, and to prohibit 33 certain other sales and marketing practices.
Several states have enacted legislation requiring pharmaceutical and biotechnology companies to establish marketing compliance programs, file periodic reports with the 27 state, make periodic public disclosures on sales, marketing, pricing, clinical studies and other activities, and/or register their sales and medical representatives, as well as to prohibit pharmacies and other healthcare entities from providing certain physician prescribing data to pharmaceutical and biotechnology companies for use in sales and marketing, and to prohibit certain other sales and marketing practices.
Many of the companies against which we may compete have significantly greater financial resources and expertise in research and development, manufacturing, preclinical testing, conducting clinical studies, obtaining regulatory approvals and marketing approved products than we do. Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies.
Many of the companies against which we may compete have significantly greater financial resources and expertise in research and development, manufacturing, non-clinical testing, conducting clinical studies, obtaining regulatory approvals and marketing approved products than we do. Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies.
We rely on Biocon, our contract manufacturer, pursuant to the Biocon License and Biocon Supply Agreement, for all our required raw materials, drug substance and drug product needs for preclinical research, clinical studies and commercial supply of itolizumab (EQ001). Biocon manufactures itolizumab (EQ001) at commercial scale at its FDA-regulated facility in Bangalore, India.
We rely on Biocon, our contract manufacturer, pursuant to the Biocon License and Biocon Supply Agreement, for all our required raw materials, drug substance and drug product needs for non-clinical research, clinical studies and commercial supply of itolizumab (EQ001). Biocon manufactures itolizumab (EQ001) at commercial scale at its FDA-regulated facility in Bangalore, India.
The reduction of inducible T regs to dietary antigens elevates the potential 16 for an intestinal inflammatory immune response to gluten intake.
The reduction of inducible T regs to dietary antigens elevates the potential for an intestinal inflammatory immune response to gluten intake.
The BLA or NDA must include all relevant data available from pertinent preclinical and clinical studies, including negative or ambiguous results as well as positive findings, together with detailed information relating to the product’s chemistry, manufacturing, controls, and proposed labeling, among other things.
The BLA or NDA must include all relevant data available from pertinent non-clinical and clinical studies, including negative or ambiguous results as well as positive findings, together with detailed information relating to the product’s chemistry, manufacturing, controls, and proposed labeling, among other things.
Use or display by us of other parties’ trademarks, trade dress, or products in this Annual Report on Form 10-K is not intended to, and does not, imply a relationship with, or endorsements or sponsorship of, us by the trademark or trade dress owners. 38
Use or display by us of other parties’ trademarks, trade dress, or products in this Annual Report on Form 10-K is not intended to, and does not, imply a relationship with, or endorsements or sponsorship of, us by the trademark or trade dress owners. 31
We, along with third-party contractors, will be required to navigate the various preclinical, clinical and commercial approval requirements of the governing regulatory agencies of the countries in which we wish to conduct studies or seek approval or licensure of our product candidates.
We, along with third-party contractors, will be required to navigate the various non-clinical, clinical and commercial approval requirements of the governing regulatory agencies of the countries in which we wish to conduct studies or seek approval or licensure of our product candidates.
The process required by the FDA before biologic product candidates may be marketed in the United States generally involves the following: ▪ completion of preclinical laboratory tests and animal studies performed in accordance with the FDA’s current Good Laboratory Practices, or GLP, regulations; ▪ submission to the FDA of an IND, which must become effective before clinical studies may begin and must be updated annually or when significant changes are made; ▪ approval by an independent Institutional Review Board, or IRB, or ethics committee at each clinical site before the study is commenced; ▪ performance of adequate and well-controlled human clinical studies to establish the safety, purity and potency of the proposed biologic product candidate for its intended purpose; ▪ preparation of and submission to the FDA of a biologics license application, or BLA, for product candidates that are manufactured in biological systems like itolizumab (EQ001), or a New Drug Application, or NDA, for product candidates like EQ101 or EQ302 that are manufactured through chemical synthesis, after completion of all pivotal clinical studies that includes substantial evidence of safety, purity and potency from results of nonclinical testing and clinical studies; ▪ a determination by the FDA within 60 days of its receipt of a BLA or NDA to file the application for review; ▪ satisfactory completion of an FDA Advisory Committee review, if applicable; ▪ satisfactory completion of an FDA pre-approval inspection of the manufacturing facility or facilities at which the proposed product is produced to assess compliance with current good manufacturing practice, or cGMP and to assure that the facilities, methods and controls are adequate to preserve the biological product’s continued safety, purity and potency, and of selected clinical investigation sites to assess compliance with Good Clinical Practices, or GCP; and ▪ FDA review and approval, or licensure, of the BLA or NDA to permit commercial marketing of the product for particular indications for use in the United States.
The process required by the FDA before biologic product candidates may be marketed in the United States generally involves the following: ▪ completion of non-clinical laboratory tests and animal studies performed in accordance with the FDA’s current Good Laboratory Practices, or GLP, regulations; ▪ submission to the FDA of an IND, which must become effective before clinical studies may begin and must be updated annually or when significant changes are made; ▪ approval by an independent Institutional Review Board, or IRB, or ethics committee at each clinical site before the study is commenced; ▪ performance of adequate and well-controlled human clinical studies to establish the safety, purity and potency of the proposed biologic product candidate for its intended purpose; ▪ preparation of and submission to the FDA of a biologics license application, or BLA, for product candidates that are manufactured in biological systems like itolizumab (EQ001), or a New Drug Application, or NDA, for product candidates like EQ302 that are manufactured through chemical synthesis, after completion of all pivotal clinical studies that includes substantial evidence of safety, purity and potency from results of non-clinical testing and clinical studies; ▪ a determination by the FDA within 60 days of its receipt of a BLA or NDA to file the application for review; ▪ satisfactory completion of an FDA Advisory Committee review, if applicable; ▪ satisfactory completion of an FDA pre-approval inspection of the manufacturing facility or facilities at which the proposed product is produced to assess compliance with current good manufacturing practice, or cGMP and to assure that the facilities, methods and controls are adequate to preserve the biological product’s continued safety, purity and potency, and of selected clinical investigation sites to assess compliance with Good Clinical Practices, or GCP; and ▪ FDA review and approval, or licensure, of the BLA or NDA to permit commercial marketing of the product for particular indications for use in the United States. 21 Preclinical and Clinical Development Prior to beginning the first clinical study with a product candidate in the United States, we must submit an IND to the FDA.
During this 12-year period of exclusivity, another company may still market a competing version of the reference product if the FDA approves a 31 full BLA for the competing product containing that applicant’s own preclinical data and data from adequate and well-controlled clinical studies to demonstrate the safety, purity and potency of its product.
During this 12-year period of exclusivity, another company may still market a competing version of the reference product if the FDA approves a full BLA for the competing product containing that applicant’s own non-clinical data and data from adequate and well-controlled clinical studies to demonstrate the safety, purity and potency of its product.
See Note 9 of the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K for further details of the Biocon License and Clinical Supply Agreement.
See Note 8 of the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K for further details of the Biocon License and Clinical Supply Agreement.
Preclinical studies of itolizumab (EQ001) have shown that blockade of CD6 leads to a reduction in T eff cell proliferation and downregulation of several important pathways that contribute to T eff cell development such as Th1, Th2 and Th17 cells. Critically, CD6 blockade leads to the downregulation of important cellular pathways that control inflammation, including STAT3 and RORγt.
Non-clinical studies of itolizumab (EQ001) have shown that blockade of CD6 leads to a reduction in T eff cell proliferation and downregulation of several important pathways that contribute to T eff cell development such as Th1, Th2 and Th17 cells. Critically, CD6 blockade leads to the downregulation of important cellular pathways that control inflammation, including STAT3 and RORγt.
Submission, Review and Approval of a BLA or NDA Assuming successful completion of all required testing in accordance with all applicable regulatory requirements, the results of product development, nonclinical studies and clinical studies are submitted to the FDA as part of a BLA or NDA requesting approval to market the product for one or more indications.
Submission, Review and Approval of a BLA or NDA Assuming successful completion of all required testing in accordance with all applicable regulatory requirements, the results of product development, non-clinical studies and clinical studies are submitted to the FDA as part of a BLA or NDA 22 requesting approval to market the product for one or more indications.
Autoimmunity is an immune response directed against the body’s own healthy cells and tissues, and is the underlying process in many inflammatory diseases. Autoimmunity results from a loss of tolerance caused in part by an imbalance in the relationship between T effector cells, or T eff cells, and regulatory T cells, or T reg cells. See Figure 4 .
Autoimmunity is an immune response directed against the body’s own healthy cells and tissues, and is the underlying process in many inflammatory diseases. Autoimmunity results from a loss of tolerance caused in part by an imbalance in the relationship between T effector cells, or T eff cells, and regulatory T cells, or T reg cells.
This family currently includes nine issued U.S patents, three issued Australian patents, one issued Canadian patent, one issued Brazilian patent, one issued Chinese patent, 38 patents in European states, and two issued Japanese patents. Also pending are applications in the United States, China, Europe, Hong Kong, and Japan.
This family currently includes nine issued U.S patents, three issued Australian patents, one issued Canadian patent, one issued Brazilian patent, one issued Chinese patent, one issued Hong Kong patent, 53 patents in European states, and two issued Japanese patents. Also pending are applications in the United States, China, and Japan.
We have two wholly-owned subsidiaries, Bioniz Therapeutics, Inc., a Delaware corporation, and Equillium Australia Pty LTD, an Australian proprietary limited corporation. Our telephone number is (858) 240-1200. Our website address is www.equilliumbio.com .
We have three wholly-owned subsidiaries, Bioniz Therapeutics, Inc., a Delaware corporation, Ariagen, Inc., a Delaware corporation, and Equillium Australia Pty LTD, an Australian proprietary limited corporation. Our telephone number is (858) 240-1200. Our website address is www.equilliumbio.com .
Itolizumab (EQ001) contains the identical monoclonal antibody sequence produced in a Chinese hamster ovary, or CHO, cell line and may be administered by IV or SC. CHO cell lines are the industry-standard antibody therapeutic production system.
Itolizumab (EQ001) contains the identical monoclonal antibody sequence produced in a Chinese hamster ovary, or CHO, cell line and may be administered intravenously, or IV, or subcutaneously, or SC. CHO cell lines are the industry-standard antibody therapeutic production system.
We may incur significant costs to comply with such laws and regulations now or in the future. Employees As of December 31, 2023, we employed 44 employees, all of whom were full-time and engaged in research and development activities, operations, finance, business development or administration. We also engage temporary employees and consultants as needed.
We may incur significant costs to comply with such laws and regulations now or in the future. Employees As of December 31, 2024, we employed 35 employees, all of whom were full-time and engaged in research and development activities, operations, finance, business development or administration. We also engage temporary employees and consultants as needed.
Collectively, these families include pending applications in the United States, Australia, Brazil, Canada, China, Europe, Hong Kong, India, Japan, and Korea. If granted, any patents in this patent family are expected to expire in either 2040 or 2041, absent any patent term adjustments or extensions.
Collectively, these families include one issued U.S. patent and pending applications in the United States, Australia, Brazil, Canada, China, Europe, Hong Kong, India, Japan, and Korea. If granted, any patents in this patent family are expected to expire in either 2040 or 2041, absent any patent term adjustments or extensions.
Eligible subjects who receive 2 mg/kg methylprednisolone or equivalent on Day 1 will be randomized in a 1:1 ratio to the following two treatment groups: Group A: itolizumab (EQ001), 1.6 mg/kg initial dose followed by 6 doses of 0.8 mg/kg once every two weeks (Q2W), plus systemic corticosteroids (100 subjects), or Group B: placebo, 7 doses Q2W, plus systemic corticosteroids (100 subjects).
Eligible subjects who receive 2 mg/kg methylprednisolone or equivalent on Day 1 were randomized in a 1:1 ratio to the following two treatment groups: Group A: itolizumab (EQ001), 1.6 mg/kg initial dose followed by 6 doses of 0.8 mg/kg once every two weeks (Q2W), plus systemic corticosteroids (79 subjects), or Group B: placebo, 7 doses Q2W, plus systemic corticosteroids (79 subjects).
Our collaboration with Biocon includes an exclusive supply agreement for clinical and commercial drug product of itolizumab (EQ001), or the Clinical Supply Agreement. Biocon currently manufactures itolizumab (EQ001) at commercial scale in a facility in India regulated by the U.S. Food and Drug Administration, or FDA.
Our collaboration with Biocon includes an exclusive supply agreement for clinical and commercial drug product of itolizumab (EQ001), or the Clinical Supply Agreement. Biocon currently manufactures itolizumab (EQ001) at commercial scale in a facility in India regulated by the FDA.
As of March 15, 2024, our patent portfolio related to itolizumab included issued patents and pending patent applications exclusively licensed from Biocon in the United States, Australia, Canada, and New Zealand, and pending international and national stage patent applications filed under the Patent Cooperation Treaty, or PCT, that we own.
Our patent portfolio related to itolizumab included issued patents and pending patent applications exclusively licensed from Biocon in the United States, Australia, Canada, and New Zealand, and pending international and national stage patent applications filed under the Patent Cooperation Treaty, or PCT, that we own.
Itolizumab (EQ001) Product Development by Biocon Itolizumab has shown clinical activity and that it was well-tolerated in completed clinical studies conducted by Biocon in patients with rheumatoid arthritis, psoriasis, and acute respiratory distress syndrome, or ARDS, related to COVID-19.
Itolizumab (EQ001) Product Development by Biocon Itolizumab has shown clinical activity and a well-tolerated profile in completed clinical studies conducted by Biocon in patients with rheumatoid arthritis, psoriasis, and acute respiratory distress syndrome, or ARDS, related to COVID-19.
We will also leverage the collective talent within our organization to opportunistically discover, acquire or in-license other high-value therapeutic programs that may complement our core strategy or have the potential for synergistic therapeutic benefit in combination with EQ101, EQ302 or itolizumab (EQ001). • Build a commercial infrastructure.
We will also leverage the collective talent within our organization to opportunistically discover, acquire or in-license other high-value therapeutic programs that may complement our core strategy or have the potential for synergistic therapeutic benefit in combination with our pipeline assets. • Build a commercial infrastructure.
In addition, on August 16, 2022, President Biden signed the IRA into law which among other things, extends enhanced subsidies for individuals purchasing health insurance coverage in Affordable Care Act marketplaces through plan year 2025.
For example, on August 16, 2022, the IRA was signed into law, which among other things, extends enhanced subsidies for individuals purchasing health insurance coverage in Affordable Care Act marketplaces through plan year 2025.
The EQUATOR study will compare the efficacy and safety of IV administered itolizumab (EQ001) versus placebo (randomized 1:1) as a first-line therapy in up to 200 adult and adolescent patients with Grade III-IV aGVHD or Grade II aGVHD with lower GI involvement, in combination with high doses of corticosteroids, the current standard of care.
The EQUATOR study is comparing the efficacy and safety of IV administered itolizumab (EQ001) versus placebo (randomized 1:1) as a first-line therapy in adult and adolescent patients with Grade III-IV aGVHD or Grade II aGVHD with lower GI involvement, in combination with high doses of corticosteroids, the current standard of care.
Our strategy is focused on advancing the clinical development of our product candidates, including potentially pursuing additional indications and acquiring new product candidates and platforms to expand our pipeline. We intend to commercialize our product candidates either independently or through partnerships or otherwise monetize our pipeline through strategic transactions. Our current clinical-stage product candidates consist of EQ101 and itolizumab (EQ001).
Our strategy is focused on advancing the preclinical and clinical development of our product candidates, including potentially pursuing additional indications and acquiring new product candidates and platforms to expand our pipeline. We intend to commercialize our product candidates either independently or through partnerships or otherwise monetize our pipeline through strategic transactions.
In addition, we are aware of a number of companies with development programs in first-line and steroid refractory aGVHD, including AltruBio, Inc., ASC Therapeutics, CSL Behring LLC, Cynata Therapeutics Limited, ElsaLys Biotech, Evive Biotech (subsidiary of Yifan Pharmaceutical Co., Ltd.), Humanigen, Inc., Maat Pharma SA, Medac GmbH, Mesoblast Limited, Shenzhen Xbiome Biotech, Co., Ltd., TR1X Bio, VectivBio Holding AG (acquired by Ironwood Pharmaceuticals, Inc.), ViGenCell Inc., and Zelgen Biopharmaceuticals Co., Ltd.
In addition, we are aware of a number of companies with clinical development programs in first-line and steroid refractory aGVHD, including AltruBio, Inc., ASC Therapeutics, CSL Behring LLC, Cynata Therapeutics Limited, ElsaLys Biotech (acquired by Mediolanum Pharmaceutici), Evive Biotech (subsidiary of Yifan Pharmaceutical Co., Ltd.), Maat Pharma SA, Medac GmbH, Shenzhen Xbiome Biotech, Co., Ltd., TR1X Bio, ViGenCell Inc., and Zelgen Biopharmaceuticals Co., Ltd.
Bioniz also evaluated EQ101 in an open-label Phase 1/2 dose-ranging clinical study of patients with large granular lymphocyte leukemia, or LGLL, or refractory cutaneous T cell lymphoma, or rCTCL, to characterize the safety, tolerability, clinical efficacy, and PK/PD of EQ101. The study enrolled 50 subjects, 30 with rCTCL and 20 with LGLL.
The third completed human study of EQ101 conducted by Bioniz was an open-label Phase 1/2 dose-ranging clinical study of patients with large granular lymphocyte leukemia, or LGLL, or refractory cutaneous T cell lymphoma, or rCTCL, to characterize the safety, tolerability, clinical efficacy, and PK/PD of EQ101. The study enrolled 50 subjects, 30 with rCTCL and 20 with LGLL.
Additionally, on March 11, 2021, President Biden signed the American Rescue Plan Act of 2021 into law, which eliminates the statutory Medicaid drug rebate cap, currently set at 100% of a drug’s average manufacturer price, for single source and innovator multiple source drugs, beginning January 1, 2024.
Additionally, on March 11, 2021, the American Rescue Plan Act of 2021 was signed into law, which eliminated the statutory Medicaid drug rebate cap, previously set at 100% of a drug’s average manufacturer price, for single source and innovator multiple source drugs, effective January 1, 2024.
While we believe that our product candidates, technology, knowledge, experience and scientific resources provide us with competitive advantages, we face competition from major pharmaceutical and biotechnology companies, academic institutions, governmental agencies and public and private research institutions, among others.
Competition The biotechnology and pharmaceutical industries are characterized by continuing technological advancement and significant competition. While we believe that our product candidates, technology, knowledge, experience and scientific resources provide us with competitive advantages, we face competition from major pharmaceutical and biotechnology companies, academic institutions, governmental agencies and public and private research institutions, among others.
Although the above described approach is one of ex vivo CD6-expressing T cell depletion, we believe that it further supports the role of CD6-expressing T cells in aGVHD pathogenesis and validates CD6 as a potentially important target for modulation for the treatment of GVHD. Development Plan in aGVHD Our IND with the FDA for aGVHD was accepted in July 2018.
Although the above described approach is one of ex vivo CD6-expressing T cell depletion, we believe that it further supports the role of CD6-expressing T cells in aGVHD pathogenesis and validates CD6 as a potentially important target for modulation for the treatment of GVHD.
Subjects will be dosed IV once weekly for 24 weeks with EQ101 at a dose level of 2 mg/kg, and subsequently followed for an additional four weeks. The primary objective of the study is to evaluate the safety and tolerability of EQ101 in subjects with moderate to severe AA over a 24-week treatment period.
Subjects were dosed IV once weekly for 24 weeks with EQ101 at a dose level of 2 mg/kg, and subsequently followed for an additional four weeks. The primary objective of the study was to evaluate the safety profile and tolerability of EQ101 over a 24-week treatment period.
Development Plan in Celiac Disease We are currently conducting preclinical development of EQ302, including in vivo pharmacology and formulation development, to further characterize and optimize the product candidate. Pending positive findings, we expect to advance EQ302 into additional preclinical development to include GMP-manufacturing and toxicology studies capable of supporting a potential IND filing and advancement toward a first-in-human clinical study.
EQ302 Development Plan in Celiac Disease We have conducted preclinical development of EQ302, including in vivo pharmacology studies and formulation development, to further characterize and optimize the product candidate. Pending additional funding, we expect to resume the preclinical development of EQ302 including GMP-manufacturing and toxicology studies capable of supporting a potential IND filing and advancement toward a first-in-human clinical study.
Our Annual Reports on Form 10‑K, Quarterly Reports on Form 10‑Q, Current Reports on Form 8‑K and amendments to such reports filed or furnished pursuant to Section 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, are available free of charge on our website as soon as reasonably practical after we electronically file such material with, or furnish it to, the SEC. 37 We are also a "smaller reporting company" as defined in the Exchange Act and have elected to take advantage of certain of the scaled disclosures available to smaller reporting companies.
Our Annual Reports on Form 10‑K, Quarterly Reports on Form 10‑Q, Current Reports on Form 8‑K and amendments to such reports filed or furnished pursuant to Section 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, are available free of charge on our website as soon as reasonably practical after we electronically file such material with, or furnish it to, the SEC.
The risk of GVHD limits the number and type of patients receiving allo-HSCT and we believe that a therapy that can attenuate GVHD risk could significantly expand the patient population eligible for allo-HSCT.
GVHD is the leading cause of non-relapse mortality in patients receiving an allo-HSCT. The 9 risk of GVHD limits the number and type of patients receiving allo-HSCT and we believe that a therapy that can attenuate GVHD risk could significantly expand the patient population eligible for allo-HSCT.
In addition, we have agreed to co-fund an ongoing Phase 2 clinical study of itolizumab in subjects with ulcerative colitis being conducted by Biocon in India. In consideration for the rights granted to us by Biocon, we issued to Biocon 2,316,134 shares of common stock.
In addition, we collaborated on and co-funded a Phase 2 clinical study of itolizumab in subjects with ulcerative colitis conducted by Biocon in India. In consideration for the rights granted to us by Biocon, we issued to Biocon 2,316,134 shares of common stock.
With respect to any future product candidates, we expect to rely on contract manufacturers for all our required raw materials, drug substance and drug product needs for preclinical research, clinical studies and commercial supply.
If we resume development activities for EQ302, we will rely on CMOs to manufacture EQ302. With respect to any future product candidates, we expect to rely on contract manufacturers for all our required raw materials, drug substance and drug product needs for non-clinical research, clinical studies and commercial supply.
EQ302 EQ302 is a stapled peptide that uses validated hydrocarbon staple technology to stabilize the peptide while retaining its specificity and enabling an attractive drug product profile. It can be orally delivered and is both stable and permeable in the gut. We are currently performing preclinical pharmacology and formulation development of EQ302 to further characterize and optimize the product candidate.
EQ302 & EQ101 Product Development EQ302 EQ302 is a stapled peptide that uses validated hydrocarbon staple technology to stabilize the peptide while retaining its specificity and enabling an attractive drug product profile. It can be orally delivered and is both stable and permeable in the gut.
These agreements provide that all confidential information concerning our business or financial affairs developed or made known to the individual during the course of the individual’s relationship with us is to be kept confidential and not disclosed to third parties except in specific circumstances.
These agreements provide that all confidential information concerning our business or financial affairs developed or made known to the individual during the course of the individual’s relationship with us is to be kept confidential and not disclosed to third parties except in specific circumstances. 19 Our agreements with employees also provide that all inventions conceived by the employee in the course of employment with us or from the employee’s use of our confidential information are our exclusive property.
Figure 7: Phase 2 open label clinical study of EQ101 in alopecia areata Celiac Disease Market Overview Celiac disease is a chronic inflammatory intestinal disorder caused by inappropriate cellular and humoral immune responses to the dietary intake of gluten in the genetically susceptible individual.
Celiac Disease Market Overview Celiac disease is a chronic inflammatory intestinal disorder caused by inappropriate cellular and humoral immune responses to the dietary intake of gluten in the genetically susceptible individual.
Such studies and new insights into the underlying biology highlight CD6 as a resurgent target for the treatment of multiple immuno-inflammatory diseases. Activated leukocyte cell adhesion molecule, or ALCAM, is a ligand of CD6 that is expressed on hematopoietic tissues such as antigen-presenting cells, where it is important for immune synapse formation and optimal co-stimulation.
Activated leukocyte cell adhesion molecule, or ALCAM, is a ligand of CD6 that is expressed on hematopoietic tissues such as antigen-presenting cells, where it is important for immune synapse formation and optimal co-stimulation.
If granted, any patents in this patent family are expected to expire in 2038, absent any patent term adjustments or extensions. 23 The fifth and sixth patent application families include claims currently directed to EQ101 for use in methods of treating various therapeutic targets including, but not limited to, alopecia areata, cytokine release syndrome, and related disorders to each.
The fifth and sixth patent application families include claims currently directed to EQ101 for use in methods of treating various therapeutic targets including, but not limited to, alopecia areata, cytokine release syndrome, and related disorders to each.
Partnerships Option Agreement with Ono On December 5, 2022, we entered into the Asset Purchase Agreement with Ono, pursuant to which we granted Ono the exclusive right, but not the obligation, to acquire our rights to itolizumab (EQ001), or the Option.
Option Agreement with Ono In December 2022, we entered into an asset purchase agreement, or Asset Purchase Agreement, with Ono Pharmaceutical Co., Ltd., or Ono, pursuant to which we granted Ono an exclusive option to acquire our rights to itolizumab (EQ001), or the Option.
Per the study protocol, patients must receive itolizumab (EQ001) within 3 days of the first administration of high-dose corticosteroids with a treatment period from Days 1-99 and a follow-up period from Days 100-365.
With 158 patients enrolled, the EQUATOR study represents the second largest clinical study ever conducted in the first-line treatment of aGVHD. Per the study protocol, patients received itolizumab (EQ001) within 3 days of the first administration of high-dose corticosteroids with a treatment period from Days 1-99 and a follow-up period from Days 100-365.
To be eligible for a fast track designation, the FDA must determine, based on the request of a sponsor, that a product is intended to treat a serious or life-threatening disease or condition and demonstrates the potential to address an unmet medical need by providing a therapy where none exists or a therapy that may be potentially superior to existing therapy based on efficacy or safety factors.
For products containing new molecular entities, priority review designation means the FDA’s goal is to take action on the marketing application within six months of the 60-day filing date (compared with ten months under standard review). 23 To be eligible for a fast track designation, the FDA must determine, based on the request of a sponsor, that a product is intended to treat a serious or life-threatening disease or condition and demonstrates the potential to address an unmet medical need by providing a therapy where none exists or a therapy that may be potentially superior to existing therapy based on efficacy or safety factors.
Based on its broad multi-modal mechanism, we believe itolizumab (EQ001) has the potential to treat multiple immuno-inflammatory diseases, including those that are resistant or refractory to existing therapies. See Figure 6 . Figure 6: Blockade of CD6 by itolizumab (EQ001) inhibits T eff cell activation, proliferation , differentiation and trafficking.
Based on its broad multi-modal mechanism, we believe itolizumab (EQ001) has the potential to treat multiple immuno-inflammatory diseases, including those that are resistant or refractory to existing therapies.
Based on the unique mechanism of action of EQ302 and its product profile, including the advantage of oral delivery, we believe that EQ302 has the potential to be a compelling therapeutic for gastrointestinal diseases, such as inflammatory bowel disease and celiac disease. • Develop itolizumab (EQ001) for the treatment of acute graft-versus-host disease.
Based on the unique mechanism of action of EQ302 and its product profile, including the advantage of oral delivery, we believe that EQ302 has the potential to be an attractive therapeutic option for gastrointestinal diseases, such as inflammatory bowel disease and celiac disease. • Seek a partner to fund further clinical development of EQ101 .
Most patients have difficulty maintaining such a diet and many patients do not fully respond, with symptoms persisting despite avoidance of gluten. There are currently no FDA-approved therapies for treatment of celiac disease. We are aware of a number of companies with development programs targeting the condition including Amgen Inc.
Celiac Disease The only available treatment for celiac disease is lifelong adherence to a strict gluten-free diet. Most patients have difficulty maintaining such a diet and many patients do not fully respond, with symptoms persisting despite avoidance of gluten. There are currently no FDA-approved therapies for treatment of celiac disease.
Graft-Versus-Host Disease Market Overview Graft-versus-host disease, or GVHD, is a multisystem disorder that is a common complication of allogeneic hematopoietic stem cell transplants, or allo-HSCT, caused by the transplanted immune system, more specifically T eff cells, recognizing and attacking the recipient’s body. GVHD is the leading cause of non-relapse mortality in patients receiving an allo-HSCT.
Itolizumab was generally well-tolerated consistent with prior clinical experience and no safety signal was observed. Graft-Versus-Host Disease Market Overview Graft-versus-host disease, or GVHD, is a multisystem disorder that is a common complication of allogeneic hematopoietic stem cell transplants, or allo-HSCT, caused by the transplanted immune system, more specifically T eff cells, recognizing and attacking the recipient’s body.
Based on these findings and feedback from both the FDA and leading physicians in the field of hematopoietic stem cell transplantation, in March 2022 we initiated EQUATOR, a Phase 3 pivotal clinical study in first-line aGVHD. 18 EQUATOR is a randomized, double-blind clinical study that will assess the efficacy and safety of itolizumab (EQ001) versus placebo as a first-line therapy for aGVHD in combination with corticosteroids.
Based on these findings and feedback from both the FDA and leading physicians in the field of hematopoietic stem cell transplantation, in March 2022 we initiated EQUATOR, a Phase 3 pivotal clinical study in first-line aGVHD.
The central focus of an IND submission is on the general investigational plan and the protocol(s) for clinical studies.
An IND is a request for authorization from the FDA to administer an investigational new drug product to humans. The central focus of an IND submission is on the general investigational plan and the protocol(s) for clinical studies.
The FCPA also obligates companies whose securities are listed in the United States to comply with 36 accounting provisions requiring us to maintain books and records that accurately and fairly reflect all transactions of the corporation, including international subsidiaries, and to devise and maintain an adequate system of internal accounting controls for international operations.
The FCPA also obligates companies whose securities are listed in the United States to comply with accounting provisions requiring us to maintain books and records that accurately and fairly reflect all transactions of the corporation, including international subsidiaries, and to devise and maintain an adequate system of internal accounting controls for international operations. 30 Additional Regulation In addition to the foregoing, state and federal laws regarding environmental protection and hazardous substances, including the Occupational Safety and Health Act, the Resource Conservancy and Recovery Act and the Toxic Substances Control Act, affect our business.
Complexities associated with the larger, and often more complex, structures of biological products, as well as the processes by which such products are manufactured, pose significant hurdles to implementation of the abbreviated approval pathway that are still being worked out by the FDA.
Complexities associated with the larger, and often more complex, structures of biological products, as well as the processes by which such products are manufactured, pose significant hurdles to implementation of the abbreviated approval pathway that are still being worked out by the FDA. 25 Under the BPCIA, an application for a biosimilar product may not be submitted to the FDA until four years following the date that the reference product was first licensed by the FDA.
There are currently no FDA-approved therapies indicated as a first-line treatment of aGVHD. Second-line therapy consists of off-label immunosuppressives for which the therapeutic benefit has not been established, and Incyte Corporation’s ruxolitinib which was approved for the treatment of steroid refractory aGVHD in 2019.
Second-line therapy consists of off-label immunosuppressives for which the therapeutic benefit has not been established, Incyte Corporation’s Jakafi which was approved for the treatment of steroid refractory aGVHD in 2019, and Mesoblast’s Ryoncil which was approved for pediatric patients with steroid refractory aGVHD in December 2024.
Notwithstanding the submission of any requested additional information, the FDA ultimately may decide that the application does not satisfy the regulatory criteria for approval. 28 After the FDA evaluates a BLA or an NDA and conducts inspections of manufacturing facilities where the investigational product and/or its drug substance will be produced, the FDA may issue an approval letter or a Complete Response letter.
After the FDA evaluates a BLA or an NDA and conducts inspections of manufacturing facilities where the investigational product and/or its drug substance will be produced, the FDA may issue an approval letter or a Complete Response letter. An approval letter authorizes commercial marketing of the product with specific prescribing information for specific indications.
The Affordable Care Act has substantially changed healthcare financing and delivery by both governmental and private insurers.
The Affordable Care Act has substantially changed healthcare financing and delivery by both governmental and private insurers. There have been amendments and legal and political challenges to certain aspects of the Affordable Care Act.
This family includes one issued Australian patent, with pending applications in the United States, Australia, Canada, China, Europe, Hong Kong, India, Japan, and Korea.
This family includes two issued Australian patents, with pending applications in the United States, Australia, Canada, China, Europe, Hong Kong, India, Japan, and Korea. If granted, any patents in this patent family are expected to expire in 2038, absent any patent term adjustments or extensions.
Figure 2: EQ101 inhibits IL-2, IL-9 and IL-15, but not IL-4, IL-7 or IL-21 EQ302 is a first-in-class, orally delivered, selective inhibitor of IL-15 and IL-21 ( Figure 3 ). Translational and preclinical data support its potential use as a treatment for various gastrointestinal diseases including celiac disease, an immune disorder related to gluten exposure.
Equillium's Multi-Cytokine Inhibitors Selectively Block Activity of Certain Cytokines by Binding Pockets in the yC Common Receptor EQ302 is a first-in-class, orally delivered, selective inhibitor of IL-15 and IL-21. Translational and preclinical data support its potential use as a treatment for various gastrointestinal diseases including celiac disease, an immune disorder related to gluten exposure.
Acquisition 7 We acquired the exclusive worldwide rights to EQ101 and a proprietary platform for discovering additional, novel multi-cytokine targeting product candidates such as EQ302 through the acquisition of Bioniz Therapeutics, Inc., or Bioniz, in February 2022. That acquisition expanded our immunology pipeline with first-in-class immuno-inflammatory product candidates across a range of development stages.
Acquisitions Acquisitions of innovative technologies and products have played an important role in the growth of our company. For example, we acquired the exclusive worldwide rights to EQ101 and a proprietary platform for discovering additional, novel multi-cytokine targeting product candidates such as EQ302 through the acquisition of Bioniz Therapeutics, Inc., or Bioniz, in February 2022.
The high degree of selectivity for IL-15 and IL-21 inhibition aligns well with the demonstrated key involvement of these two cytokines that work synergistically in driving the pathology in celiac disease and other inflammatory gut and hepatic disorders. 10 Figure 3: EQ302 inhibits IL-15 and IL-21, but not IL-2, IL-4, IL-7 or IL-9 EQ101 & EQ302 Product Development EQ101 EQ101 is a synthetic peptide covalently conjugated to a polyethylene glycol, or PEG, molecule in a site-specific manner.
The high degree of selectivity for IL-15 and IL-21 inhibition aligns well with the demonstrated key involvement of these two cytokines that work synergistically in driving the pathology in celiac disease and other inflammatory gut and hepatic disorders. EQ101 is a first-in-class, tri-specific inhibitor of IL-2, IL-9 and IL-15, three inflammatory cytokines implicated in multiple diseases.
An independent data monitoring committee will regularly review safety data, and an interim analysis is planned after approximately 100 subjects have completed Day 29 assessments to evaluate the safety and efficacy of treatment. We anticipate that interim review occurring in the third quarter of 2024. An overview of the design of the EQUATOR study is depicted in Figure 8 .
An independent data monitoring committee is regularly reviewing safety data, and an interim analysis was conducted in July 2024 after approximately 100 subjects had completed Day 29 assessments to evaluate the safety and efficacy of treatment.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeFuture capital requirements will depend on many factors, including: • the initiation, progress, timing, costs and results of our ongoing and future clinical studies of our product candidates, including as such activities may be adversely impacted by public health epidemics or outbreaks; • the number and scope of indications we decide to pursue for our product development; • non-clinical research and toxicology studies necessary to support the successful clinical development and potential approvals of our product candidates; • formulation and device development work related to our product candidates; 40 • the cost, timing and outcome of regulatory review of any BLA or NDA we may submit for our product candidates; • the costs and timing of manufacturing our product candidates and products; • the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims; • our efforts to enhance operational systems and our ability to attract, hire and retain qualified personnel, including personnel to support the development of our product candidates; • the costs associated with being a public company; • our ability to enter into partnerships or otherwise monetize our pipeline through strategic transactions on a timely basis, on terms that are favorable to us, or at all; • the terms and timing of establishing and maintaining collaborations, licenses and other similar arrangements, including our Asset Purchase Agreement with Ono; • the extent to which we acquire or in-license other product candidates and technologies; • the legal and other transactional costs associated with our business development activities; • whether and to what extent we make repurchases of shares of our common stock under our stock repurchase program; and • the cost associated with commercializing our product candidates if any are approved for commercial sale.
Biggest changeFuture capital requirements will depend on many factors, including: • the initiation, progress, timing, costs and results of our ongoing and future non-clinical and clinical studies of our product candidates, including as such activities may be adversely impacted by public health epidemics or outbreaks; • our ability to timely implement and realize the benefit of significant expense reductions, including pausing the prosecution and renewals of patents related to itolizumab; • the potential that the data from the EQUATOR study would be insufficient to support a BLA and require further clinical studies; • the number and scope of indications we decide to pursue for our product development; • non-clinical research and toxicology studies necessary to support the successful clinical development and potential approvals of our product candidates; • formulation and device development work related to our product candidates; • the cost, timing and outcome of regulatory review of any BLA or NDA we may submit for our product candidates; • the costs and timing of manufacturing our product candidates and products; • the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims; • our efforts to enhance operational systems and our ability to attract, hire and retain qualified personnel, including personnel to support the development of our product candidates; • the costs associated with being a public company; • our ability to enter into partnerships or otherwise monetize our pipeline through strategic transactions on a timely basis, on terms that are favorable to us, or at all; • the terms and timing of establishing and maintaining collaborations, licenses and other similar arrangements; • the extent to which we acquire or in-license other product candidates and technologies; • the legal and other transactional costs associated with our business development activities; and • the cost associated with commercializing our product candidates if any are approved for commercial sale.
We have limited experience in clinical development and have not successfully completed late-stage clinical studies or obtained regulatory approval for any product candidate. We initiated our first clinical study in the first quarter of 2019, which was a Phase 1 clinical study of itolizumab (EQ001) for the treatment of aGVHD.
We have limited experience in clinical development and have not successfully completed late-stage clinical studies or obtained regulatory approval of any product candidate. We initiated our first clinical study in the first quarter of 2019, which was a Phase 1 clinical study of itolizumab (EQ001) for the treatment of aGVHD.
We, or our collaborators, will be required to obtain FDA clearance or approval for these tests, as well as coverage and reimbursement separate and apart from the approval and coverage and reimbursement we seek for our itolizumab (EQ001).
We, or our collaborators, will be required to obtain FDA clearance or approval for these tests, as well as coverage and reimbursement separate and apart from the approval, coverage and reimbursement we seek for our itolizumab (EQ001).
In September 2020, the DCGI granted approval of itolizumab produced in a Chinese hamster ovary (CHO) cell line, marketed in India under the brand name ALZUMAb-L, or ALZUMAb Lyophilized, for the treatment of chronic plaque psoriasis, as well as restricted emergency use authorization for the treatment of CRS in COVID-19 patients with moderate to severe ARDS.
In September 2020, the DCGI granted approval of itolizumab produced in a Chinese hamster ovary, or CHO, cell line, marketed in India under the brand name ALZUMAb-L, or ALZUMAb Lyophilized, for the treatment of chronic plaque psoriasis, as well as restricted emergency use authorization for the treatment of CRS in COVID-19 patients with moderate to severe ARDS.
If we are unable to establish marketing and sales capabilities or enter into agreements with contracted third parties to market and sell any of our approved products, we may not be able to generate product revenue. We have no internal sales, marketing or distribution capabilities, nor have we commercialized a product.
If we are unable to establish marketing and sales capabilities or enter into agreements with contracted third parties to market and sell any of our products, if approved, we may not be able to generate product revenue. We have no internal sales, marketing or distribution capabilities, nor have we commercialized a product.
EQ101 has been granted orphan drug designation by the FDA and the European Medicines Agency for CTCL, and itolizumab (EQ001) has been granted orphan drug designations by the FDA for both the prevention and treatment of aGVHD.
Itolizumab (EQ001) has been granted orphan drug designations by the FDA for both the prevention and treatment of aGVHD, and EQ101 has been granted orphan drug designation by the FDA and the European Medicines Agency for CTCL.
In October 2023, we entered into the 2023 ATM Facility with Jefferies, under which we may offer and sell shares of our common stock having an aggregate offering price of up to $21.95 million from time to time through Jefferies acting as our sales agent.
In October 2023, we entered into the 2023 ATM Facility with Jefferies, under which we may offer and sell shares of our common stock having an aggregate offering price of up to $21.95 million from time to time through Jefferies acting as our sales agent.
These export restrictions are indefinite and may be modified or expanded.
These export restrictions are indefinite and may be modified or expanded.
If the export restrictions are expanded to include itolizumab (EQ001), our supply of itolizumab (EQ001) may be disrupted, delayed or stopped indefinitely and our ability to continue development of itolizumab (EQ001), including our ongoing clinical studies, may be significantly impacted and may result in higher costs of drug product and adversely harm our business.
If the export restrictions are expanded to include itolizumab (EQ001), our supply of itolizumab (EQ001) may be disrupted, delayed or stopped indefinitely and our ability to continue development of itolizumab (EQ001), including our ongoing clinical studies, may be significantly impacted and may result in higher costs of drug product and adversely harm our business.
HITECH also created new tiers of civil monetary penalties, amended HIPAA to make civil and criminal penalties directly applicable to business associates, and gave state attorneys general new authority to file civil actions for damages or injunctions in U.S. federal courts to enforce the federal HIPAA laws and seek attorneys’ fees and costs associated with pursuing federal civil actions; • the U.S. federal Food, Drug and Cosmetic Act, which prohibits, among other things, the adulteration or misbranding of drugs, biologics and medical devices; • the Public Health Service Act, which prohibits, among other things, the introduction of a biological product into interstate commerce without an approved BLA; 81 • federal and state consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harm consumers; • the federal transparency requirements under the Physician Payments Sunshine Act, created under the Affordable Care Act, which requires, among other things, certain manufacturers of drugs, devices, biologics and medical supplies reimbursed under Medicare, Medicaid, or the Children’s Health Insurance Program to annually report to the Centers for Medicare & Medicaid Services information related to payments and other transfers of value provided to physicians, as defined by such law, other healthcare professionals (such as physician assistants and nurse practitioners), and teaching hospitals and physician ownership and investment interests, including such ownership and investment interests held by a physician’s immediate family members; • state and foreign law equivalents of each of the above federal laws, such as anti-kickback and false claims laws, that may impose similar or more prohibitive restrictions, and may apply to items or services reimbursed by any non-governmental third-party payors, including private insurers; and • state and foreign laws that require pharmaceutical companies to implement compliance programs and comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government; track and report gifts, compensation and other remuneration provided to physicians, other health care providers, and certain health care entities; report information related to drug pricing; and/or ensure the registration and compliance of sales personnel.
HITECH also created new tiers of civil monetary penalties, amended HIPAA to make civil and criminal penalties directly applicable to business associates, and gave state attorneys general new authority to file civil actions for damages or injunctions in U.S. federal courts to enforce the federal HIPAA laws and seek attorneys’ fees and costs associated with pursuing federal civil actions; • the U.S. federal Food, Drug and Cosmetic Act, which prohibits, among other things, the adulteration or misbranding of drugs, biologics and medical devices; • the Public Health Service Act, which prohibits, among other things, the introduction of a biological product into interstate commerce without an approved BLA; • federal and state consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harm consumers; • the federal transparency requirements under the Physician Payments Sunshine Act, created under the Affordable Care Act, which requires, among other things, certain manufacturers of drugs, devices, biologics and medical supplies reimbursed under Medicare, Medicaid, or the Children’s Health Insurance Program to annually report to the Centers for Medicare & Medicaid Services information related to payments and other transfers of value provided to physicians, as defined by such law, other healthcare professionals (such as physician assistants and nurse practitioners), and teaching hospitals and physician ownership and investment interests, including such ownership and investment interests held by a physician’s immediate family members; • state and foreign law equivalents of each of the above federal laws, such as anti-kickback and false claims laws, that may impose similar or more prohibitive restrictions, and may apply to items or services reimbursed by any non-governmental third-party payors, including private insurers; and • state and foreign laws that require pharmaceutical companies to implement compliance programs and comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government; track and report gifts, compensation and other remuneration provided to physicians, other health care providers, and certain health care entities; report information related to drug pricing; and/or ensure the registration and compliance of sales personnel.
Government enforcement agencies and private whistleblowers have investigated pharmaceutical companies for or asserted liability under the FCA for a variety of alleged promotional and marketing activities, such as providing free product to customers with the expectation that the customers would bill federal programs for the product, providing consulting fees and other benefits to physicians to induce them to prescribe products, engaging in promotion for “off-label” uses, and submitting inflated best price information to the Medicaid Rebate Program; • HIPAA, among other things, imposes criminal and civil liability for executing or attempting to execute a scheme to defraud any healthcare benefit program, including private third-party payors, knowingly and willfully embezzling or stealing from a healthcare benefit program, willfully obstructing a criminal investigation of a healthcare offense, and knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement or representation, in connection with the delivery of or payment for healthcare benefits, items or services.
Government enforcement agencies and private whistleblowers have investigated pharmaceutical companies for or asserted liability under the FCA for a variety of alleged promotional and marketing activities, such as providing free product to customers with the expectation that the customers would bill federal programs for the product, providing consulting fees and other benefits to physicians to induce them to prescribe products, engaging in promotion for “off-label” uses, and submitting inflated best price information to the Medicaid Rebate Program; 74 • HIPAA, among other things, imposes criminal and civil liability for executing or attempting to execute a scheme to defraud any healthcare benefit program, including private third-party payors, knowingly and willfully embezzling or stealing from a healthcare benefit program, willfully obstructing a criminal investigation of a healthcare offense, and knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement or representation, in connection with the delivery of or payment for healthcare benefits, items or services.
Patient enrollment is also affected by other factors, including: • severity of the disease under investigation; • our ability to recruit clinical study investigators of appropriate competencies and experience; • invasive procedures required to obtain evidence of the product candidate’s performance during the clinical study; • availability and efficacy of approved medications for the disease under investigation; • eligibility criteria defined in the protocol for the study in question; • the size of the patient population required for analysis of the study’s primary endpoints; • perceived risks and benefits; • efforts to facilitate timely enrollment in clinical studies; • reluctance of physicians to encourage patient participation in clinical studies; • the ability to monitor patients adequately during and after treatment; • our ability to obtain and maintain patient consents; • proximity and availability of clinical study sites for prospective patients; and • impacts and risks associated with global health epidemics or outbreaks.
Patient enrollment is also affected by other factors, including: • severity of the disease under investigation; • our ability to recruit clinical study investigators of appropriate competencies and experience; • invasive procedures required to obtain evidence of the product candidate’s performance during the clinical study; • availability and efficacy of approved medications for the disease under investigation; 43 • eligibility criteria defined in the protocol for the study in question; • the size of the patient population required for analysis of the study’s primary endpoints; • perceived risks and benefits; • efforts to facilitate timely enrollment in clinical studies; • reluctance of physicians to encourage patient participation in clinical studies; • the ability to monitor patients adequately during and after treatment; • our ability to obtain and maintain patient consents; • proximity and availability of clinical study sites for prospective patients; and • impacts and risks associated with global health epidemics or outbreaks.
Also, there has been heightened governmental scrutiny recently over the manner in which pharmaceutical companies set prices for their marketed products, which have resulted in several Congressional inquiries and proposed and enacted federal legislation, as well as state efforts, designed to, among other things, bring more transparency to product pricing, reduce the cost of prescription drugs under Medicare, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for drug products.
Also, there has been heightened governmental scrutiny recently over the manner in which pharmaceutical companies set prices for their marketed products, which have resulted in several Congressional inquiries and proposed and enacted federal legislation, as well as state efforts, designed to, among other things, bring more transparency to product pricing, reduce the cost 72 of prescription drugs under Medicare, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for drug products.
We cannot provide any assurances that third party patents do not exist which might be enforced against our current technology, including our research programs, product candidates, which include EQ101, EQ302, itolizumab (EQ001) and others, their respective methods of use, manufacture and formulations thereof, and could result in either an injunction prohibiting our manufacture or future sales, or, with respect to our future sales, an obligation on our part to pay royalties and/or other forms of compensation to third parties, which could be significant.
We cannot provide any assurances that third party patents do not exist which might be enforced against our current technology, including our research programs, product candidates, which include itolizumab (EQ001), EQ302 and others, their respective methods of use, manufacture and formulations thereof, and could result in either an injunction prohibiting our manufacture or future sales, or, with respect to our future sales, an obligation on our part to pay royalties and/or other forms of compensation to third parties, which could be significant.
Those factors may include the following • the design or results of clinical studies; • the likelihood of approval by the FDA or comparable foreign regulatory authorities; • the potential market for the product candidate; • the costs and complexities of manufacturing and delivering such product candidate to patients; • the potential of competing products; • the existence of uncertainty with respect to our ownership of technology or other rights, which can exist if there is a challenge to such ownership without regard to the merits of the challenge; and • industry and market conditions generally.
Those factors may include the following: • the design or results of clinical studies; 36 • the likelihood of approval by the FDA or comparable foreign regulatory authorities; • the potential market for the product candidate; • the costs and complexities of manufacturing and delivering such product candidate to patients; • the potential of competing products; • the existence of uncertainty with respect to our ownership of technology or other rights, which can exist if there is a challenge to such ownership without regard to the merits of the challenge; and • industry and market conditions generally.
U.S. and foreign anti-corruption, anti-money laundering, export control, sanctions, and other trade laws and regulations, or collectively Trade Laws, prohibit, among other things, companies and their employees, agents, CROs, legal counsel, 82 accountants, consultants, contractors, and other partners from authorizing, promising, offering, providing, soliciting, or receiving, directly or indirectly, corrupt or improper payments or anything else of value to or from recipients in the public or private sector.
U.S. and foreign anti-corruption, anti-money laundering, export control, sanctions, and other trade laws and regulations, or collectively Trade Laws, prohibit, among other things, companies and their employees, agents, CROs, legal counsel, accountants, consultants, contractors, and other partners from authorizing, promising, offering, providing, soliciting, or receiving, directly or indirectly, corrupt or improper payments or anything else of value to or from recipients in the public or private sector.
Even if we determine to perform sales, marketing and distribution functions ourselves, we could face a number of additional related risks, including: • we may not be able to attract and build an effective marketing department or sales force; • the cost of establishing a marketing department or sales force may exceed our available financial resources and the revenue generated by any approved product candidates; and • our direct sales and marketing efforts may not be successful.
Even if we determine to perform sales, marketing and distribution functions ourselves, we could face a number of additional related risks, including: • we may not be able to attract and build an effective marketing department or sales force; 48 • the cost of establishing a marketing department or sales force may exceed our available financial resources and the revenue generated by any approved product candidates; and • our direct sales and marketing efforts may not be successful.
Because patent applications in the United States and most other countries are confidential for a period of time after filing, and some remain so until issued, we cannot be certain that we or our licensors were the first to file any patent application related to our research programs and product candidates such as EQ101, EQ302 and itolizumab (EQ001).
Because patent applications in the United States and most other countries are confidential for a period of time after filing, and some remain so until issued, we cannot be certain that we or our licensors were the first to file any patent application related to our research programs and product candidates such as itolizumab (EQ001) and EQ302.
We face substantial competition, which may result in others discovering, developing or commercializing products more quickly or marketing them more successfully than us. If their product candidates are shown to be safer or more effective than ours, then our commercial opportunity will be reduced or eliminated. 55 The development and commercialization of new products is highly competitive.
We face substantial competition, which may result in others discovering, developing or commercializing products more quickly or marketing them more successfully than us. If their product candidates are shown to be safer or more effective than ours, then our commercial opportunity will be reduced or eliminated. The development and commercialization of new products is highly competitive.
Superior Court of Los Angeles, which introduced a new test for determining worker classification that is widely viewed as expanding the scope of employee relationships and narrowing the scope of independent contractor relationships. While AB 5 exempts certain licensed health care professionals, including physicians and psychologists, not all of our independent contractors work in exempt occupations.
Superior Court of Los Angeles, which introduced a new test for determining worker classification that is widely viewed as expanding the scope of employee 73 relationships and narrowing the scope of independent contractor relationships. While AB 5 exempts certain licensed health care professionals, including physicians and psychologists, not all of our independent contractors work in exempt occupations.
The commencement and completion of clinical studies can be delayed for a number of reasons, including delays related to: • the FDA or other applicable regulatory authorities disagreeing as to the design or implementation of our clinical studies; 48 • obtaining FDA or other applicable regulatory authorizations to commence a study or reaching a consensus with the applicable FDA regulators on study design; • any failure or delay in reaching an agreement with CROs and clinical study sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and study sites; • obtaining approval from one or more Institutional Review Boards, or IRBs; • additional nonclinical pharmacology and toxicology studies to support Phase 2 and 3 clinical studies; • IRBs refusing to approve, suspending or terminating the study at an investigational site, precluding enrollment of additional subjects, or withdrawing their approval of the study; • changes to clinical study protocol; • clinical sites deviating from study protocol or dropping out of a study; • manufacturing sufficient quantities of product candidate or obtaining sufficient quantities of combination therapies for use in clinical studies; • subjects failing to enroll or remain in our study at the rate we expect, or failing to return for post-treatment follow-up; • subjects choosing an alternative treatment, or participating in competing clinical studies; • lack of adequate funding to continue the clinical study; • cost of preclinical research and testing being greater than anticipated or greater than our available financial resources; • subjects experiencing severe or unexpected drug-related adverse effects; • occurrence of serious adverse events in studies of the same class of agents conducted by other companies; • selection of clinical end points that require prolonged periods of clinical observation or analysis of the resulting data; • a facility manufacturing our product candidates or any of their components being ordered by the FDA (or its own regulatory authorities if such facility is located outside the United States) to temporarily or permanently shut down or cease export of such materials due to violations of current good manufacturing practice, or cGMP, regulations or other applicable requirements, changes in export restrictions and controls, or infections or cross-contaminations during the manufacturing process; • any changes to our manufacturing process that may be necessary or desired; • impacts and risks associated with global health epidemics or outbreaks; • third-party clinical investigators losing the licenses or permits necessary to perform our clinical studies, not performing our clinical studies on our anticipated schedule or consistent with the clinical study protocol, Good Clinical Practices, or GCP, or other regulatory requirements; • data collection or analysis in an untimely or inaccurate manner or improper disclosure of data prematurely or otherwise in violation of a clinical study protocol by us or our contractors; or • our contractors becoming debarred or suspended or otherwise penalized by the FDA or other government or regulatory authorities for violations of regulatory requirements, in which case we may need to find a substitute contractor, and we may not be able to use some or all of the data produced by such contractors in support of our marketing applications.
The commencement and completion of clinical studies can be delayed for a number of reasons, including delays related to: • the FDA or other applicable regulatory authorities disagreeing as to the design or implementation of our clinical studies; • obtaining FDA or other applicable regulatory authorizations to commence a study or reaching a consensus with the applicable FDA regulators on study design; • any failure or delay in reaching an agreement with CROs and clinical study sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and study sites; • obtaining approval from one or more Institutional Review Boards, or IRBs; • additional non-clinical pharmacology and toxicology studies to support Phase 2 and 3 clinical studies; • IRBs refusing to approve, suspending or terminating the study at an investigational site, precluding enrollment of additional subjects, or withdrawing their approval of the study; • changes to clinical study protocol; • clinical sites deviating from study protocol or dropping out of a study; • manufacturing sufficient quantities of product candidate or obtaining sufficient quantities of combination therapies for use in clinical studies; • subjects failing to enroll or remain in our study at the rate we expect, or failing to return for post-treatment follow-up; • subjects choosing an alternative treatment, or participating in competing clinical studies; • lack of adequate funding to continue the clinical study; • cost of non-clinical research and testing being greater than anticipated or greater than our available financial resources; • subjects experiencing severe or unexpected drug-related adverse effects; • occurrence of serious adverse events in studies of the same class of agents conducted by other companies; • selection of clinical end points that require prolonged periods of clinical observation or analysis of the resulting data; • a facility manufacturing our product candidates or any of their components being ordered by the FDA (or its own regulatory authorities if such facility is located outside the United States) to temporarily or permanently shut down or cease export of such materials due to violations of current good manufacturing practice, or cGMP, regulations or other applicable requirements, changes in export restrictions and controls, or infections or cross-contaminations during the manufacturing process; • any changes to our manufacturing process that may be necessary or desired; 42 • impacts and risks associated with global health epidemics or outbreaks; • third-party clinical investigators losing the licenses or permits necessary to perform our clinical studies, not performing our clinical studies on our anticipated schedule or consistent with the clinical study protocol, Good Clinical Practices, or GCP, or other regulatory requirements; • data collection or analysis in an untimely or inaccurate manner or improper disclosure of data prematurely or otherwise in violation of a clinical study protocol by us or our contractors; or • our contractors becoming debarred or suspended or otherwise penalized by the FDA or other government or regulatory authorities for violations of regulatory requirements, in which case we may need to find a substitute contractor, and we may not be able to use some or all of the data produced by such contractors in support of our marketing applications.
In addition, if a subsequent drug is approved for marketing for the same or a similar indication as EQ101 or itolizumab (EQ001), we may face increased competition and lose market share regardless of orphan drug exclusivity. Fast-track designation by the FDA may not actually lead to a faster development or regulatory review or approval process.
In 50 addition, if a subsequent drug is approved for marketing for the same or a similar indication as itolizumab (EQ001) or EQ101, we may face increased competition and lose market share regardless of orphan drug exclusivity. Fast-track designation by the FDA may not actually lead to a faster development or regulatory review or approval process.
If we are not successful in developing, commercializing and achieving higher levels of reimbursement than our competitors, we will not be able to compete against them and our business would be materially harmed. Our current product candidates and any future product candidates for which we intend to seek approval as biologic products may face competition sooner than anticipated.
If we are not successful in developing, commercializing and achieving higher levels of reimbursement than our competitors, we will not be able to compete against them and our business would be materially harmed. 49 Our current product candidates and any future product candidates for which we intend to seek approval as biologic products may face competition sooner than anticipated.
If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain 54 regulatory compliance, we may lose any marketing approval that we may have obtained and we may not achieve or sustain profitability, which would adversely affect our business, prospects, financial condition and results of operations.
If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing approval that we may have obtained and we may not achieve or sustain profitability, which would adversely affect our business, prospects, financial condition and results of operations.
Furthermore, we have no assurance that the results of any clinical studies that we conduct for our product 77 candidates in Australia and New Zealand will be accepted by the FDA or other foreign regulatory authorities for development and commercialization approvals. In addition, current Australian tax regulations provide for a refundable research and development tax credit.
Furthermore, we have no assurance that the results of any clinical studies that we conduct for our product candidates in Australia and New Zealand will be accepted by the FDA or other foreign regulatory authorities for development and commercialization approvals. In addition, current Australian tax regulations provide for a refundable research and development tax credit.
We may not be successful in our efforts to establish other 42 strategic partnerships or alternative arrangements for any product candidates because they may be deemed to be at too early of a stage of development for collaborative effort and potential parties may not view such product candidates as having the requisite potential to demonstrate safety and efficacy.
We may not be successful in our efforts to establish other strategic partnerships or alternative arrangements for any product candidates because they may be deemed to be at too early of a stage of development for collaborative effort and potential parties may not view such product candidates as having the requisite potential to demonstrate safety and efficacy.
If we are unable to identify, select and acquire suitable product candidates from third parties or acquire businesses at valuations and on other terms acceptable to us, or if we are unable to raise capital required to acquire businesses or new product candidates, our business and prospects will be limited 45 and may require us to divest one or more of our product candidates to enable us to acquire businesses or new product candidates or progress the development of our other product candidates.
If we are unable to identify, select and acquire suitable product candidates from third parties or acquire businesses at valuations and on other terms acceptable to us, or if we are unable to raise capital required to acquire businesses or new product candidates, our business and prospects will be limited and may require us to divest one or more of our product candidates to enable us to acquire businesses or new product candidates or progress the development of our other product candidates.
If we are unable to obtain patent term extension or restoration, or the term of any such extension is less than we request, the period during which we will have the right to exclusively market our product will be shortened and our competitors may obtain approval of competing products following our patent expiration, and our revenue could be reduced, possibly materially.
If we are unable to obtain patent term extension or restoration, or the term of any such extension is less than we request, the period during which we will have the right to 63 exclusively market our product will be shortened and our competitors may obtain approval of competing products following our patent expiration, and our revenue could be reduced, possibly materially.
If our trademarks and trade names are not adequately protected, then we may not be able to build name recognition in our markets of interest and our business may be adversely affected. 70 We currently have two U.S. trademark registrations for EQUILLIUM respectively covering Classes 5 and 42, and one Canadian trademark registration for EQUILLIUM covering both Classes 5 and 42.
If our trademarks and trade names are not adequately protected, then we may not be able to build name recognition in our markets of interest and our business may be adversely affected. We currently have two U.S. trademark registrations for EQUILLIUM respectively covering Classes 5 and 42, and one Canadian trademark registration for EQUILLIUM covering both Classes 5 and 42.
If we elect or are required to delay, suspend or terminate any clinical study, the commercial prospects of our product candidates will be harmed and our ability to generate product revenues from this product candidate will be delayed or eliminated. Serious adverse events observed in clinical studies could hinder or prevent market acceptance of our product candidates.
If we elect or are required to delay, suspend or terminate any clinical study, the commercial prospects of our product candidates will be harmed and our ability to generate product revenues from this product candidate will be delayed or eliminated. Serious adverse events observed in clinical studies could hinder or prevent 44 market acceptance of our product candidates.
However, the Leahy-Smith Act and its implementation could increase the uncertainties and costs surrounding the prosecution of our patent applications, our ability to obtain future 88 patents, and the enforcement or defense of our issued patents, all of which could have a material adverse effect on our business, financial condition, results of operations and prospects. The U.S.
However, the Leahy-Smith Act and its implementation could increase the uncertainties and costs surrounding the prosecution of our patent applications, our ability to obtain future patents, and the enforcement or defense of our issued patents, all of which could have a material adverse effect on our business, financial condition, results of operations and prospects. The U.S.
We do not maintain insurance for environmental liability or toxic tort claims that may be asserted against us in connection with our storage or disposal of biological, hazardous or radioactive materials. 90 In addition, we may incur substantial costs in order to comply with current or future environmental, health and safety laws and regulations.
We do not maintain insurance for environmental liability or toxic tort claims that may be asserted against us in connection with our storage or disposal of biological, hazardous or radioactive materials. In addition, we may incur substantial costs in order to comply with current or future environmental, health and safety laws and regulations.
Through the date of the filing of this Annual Report on Form 10-K, we are not aware of any meaningful change in the benefit-to-risk profile of itolizumab. Results of our clinical studies could reveal a high and unacceptable severity and prevalence of side effects or unexpected characteristics.
Through the date of the filing of this Annual Report on Form 10-K, we are not aware of any meaningful adverse change in the benefit-to-risk profile of itolizumab. Results of our clinical studies could reveal a high and unacceptable severity and prevalence of side effects or unexpected characteristics.
The federal government has levied large civil and criminal fines against companies for alleged improper promotion and has enjoined several companies from engaging in off-label promotion. The FDA has also requested that companies enter into consent decrees or permanent injunctions under which specified promotional conduct is changed or curtailed.
The federal government has levied large civil and criminal fines against companies for alleged improper promotion and has enjoined several companies from engaging in off-label promotion. The 47 FDA has also requested that companies enter into consent decrees or permanent injunctions under which specified promotional conduct is changed or curtailed.
If one or more of these analysts cease coverage of us or fail to publish reports on us regularly, demand for our common stock could decrease, which might cause our common stock price and trading volume to decline. Our disclosure controls and procedures may not prevent or detect all errors or acts of fraud.
If one or more of these analysts cease coverage of us or fail to publish reports on us regularly, demand for our common stock could decrease, which might cause our common stock price and trading volume to decline. 83 Our disclosure controls and procedures may not prevent or detect all errors or acts of fraud.
As a result, we may forego or delay pursuit of opportunities with other indications or for any future product candidates, or divest product candidates that later prove to have greater commercial potential. Our resource allocation decisions may cause us to fail to capitalize on viable commercial products or profitable market opportunities.
As a result, we may forego or delay pursuit of opportunities with other indications or for any future product candidates, or divest product candidates that later prove to have greater commercial potential. Our resource allocation decisions may cause us to fail to capitalize on viable commercial 46 products or profitable market opportunities.
These provisions would not apply to suits brought to enforce a duty or liability created by the Exchange Act. Furthermore, Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all such Securities Act actions. Accordingly, both state and federal courts have jurisdiction to entertain such claims.
These provisions would not apply to suits brought to enforce a duty or liability created by the Exchange Act. Furthermore, Section 22 of the Securities 79 Act creates concurrent jurisdiction for federal and state courts over all such Securities Act actions. Accordingly, both state and federal courts have jurisdiction to entertain such claims.
Interim data from studies that we may complete are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment continues and more patient data become available. Adverse differences between preliminary or interim data and final data could significantly harm our business prospects.
Interim data from studies that we may complete are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment continues and more patient data become available. Adverse 45 differences between preliminary or interim data and final data could significantly harm our business prospects.
Recent patent reform legislation in the United States and other countries, including the Leahy-Smith America Invents Act, or the Leahy-Smith Act, signed into law on September 16, 2011, could increase those uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents.
Recent patent reform legislation in the United States and other countries, including the Leahy-Smith America Invents Act, or the Leahy-Smith Act, signed into law on September 16, 2011, could increase those uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued 81 patents.
Our failure to become and remain profitable would decrease the value of the company and could impair our ability to raise capital, maintain our research and development efforts, expand our business or continue our operations. A decline in the value of our company could also cause you to lose all or part of your investment.
Our 32 failure to become and remain profitable would decrease the value of the company and could impair our ability to raise capital, maintain our research and development efforts, expand our business or continue our operations. A decline in the value of our company could also cause you to lose all or part of your investment.
We take steps designed to detect, mitigate, and remediate vulnerabilities in our information systems (such as our hardware and/or software). We may not, however, detect and remediate all such vulnerabilities including on a timely basis. Further, we may experience delays in developing and deploying remedial measures and patches designed to address identified vulnerabilities.
We take steps designed to detect, mitigate, and remediate vulnerabilities in our information systems (such as our hardware and/or software). We may not, however, detect and remediate all such vulnerabilities including 67 on a timely basis. Further, we may experience delays in developing and deploying remedial measures and patches designed to address identified vulnerabilities.
In addition, 49 changes in regulatory requirements and policies may occur, and we may need to amend clinical study protocols to comply with these changes. Amendments may require us to resubmit our clinical study protocols to IRBs for reexamination, which may impact the costs, timing or successful completion of a clinical study.
In addition, changes in regulatory requirements and policies may occur, and we may need to amend clinical study protocols to comply with these changes. Amendments may require us to resubmit our clinical study protocols to IRBs for reexamination, which may impact the costs, timing or successful completion of a clinical study.
Unauthorized parties may also attempt to copy or reverse engineer certain aspects of our products that we consider proprietary. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret is difficult, expensive and time-consuming, and the outcome is unpredictable.
Unauthorized parties may also attempt to copy or reverse engineer certain aspects of our products that we consider proprietary. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret is difficult, expensive 62 and time-consuming, and the outcome is unpredictable.
Depending on the facts and circumstances, we could be subject to penalties, including criminal penalties, if we knowingly obtain, use, or disclose individually identifiable health information maintained by a HIPAA-covered entity in a manner that is not authorized or permitted by HIPAA.
Depending on the facts and 68 circumstances, we could be subject to penalties, including criminal penalties, if we knowingly obtain, use, or disclose individually identifiable health information maintained by a HIPAA-covered entity in a manner that is not authorized or permitted by HIPAA.
In the past, securities class action litigation has often been brought against a company following a decline in the market price of its securities. This risk is especially relevant for us because biopharmaceutical companies have experienced significant 91 stock price volatility in recent years.
In the past, securities class action litigation has often been brought against a company following a decline in the market price of its securities. This risk is especially relevant for us because biopharmaceutical companies have experienced significant stock price volatility in recent years.
Delay or failure to obtain, or unexpected costs in obtaining, the regulatory approval necessary to bring itolizumab (EQ001) to market could decrease our ability to generate sufficient revenue to maintain our business. 44 Additionally, companion diagnostic tests may be developed for use with itolizumab (EQ001).
Delay or failure to obtain, or unexpected costs in obtaining, the regulatory approval necessary to bring itolizumab (EQ001) to market could decrease our ability to generate sufficient revenue to maintain our business. Additionally, companion diagnostic tests may be developed for use with itolizumab (EQ001).
Even though we do not and will not control referrals of healthcare services or bill directly to Medicare, Medicaid or 80 other third-party payors, federal and state healthcare laws and regulations pertaining to fraud and abuse and patients’ rights are and will be applicable to our business.
Even though we do not and will not control referrals of healthcare services or bill directly to Medicare, Medicaid or other third-party payors, federal and state healthcare laws and regulations pertaining to fraud and abuse and patients’ rights are and will be applicable to our business.
The FDA and other applicable regulatory authorities could delay, limit or deny approval of a product candidate for many reasons, including because they: • may not deem our product candidate to be adequately safe and effective; 47 • may not agree that the data collected from clinical studies are acceptable or sufficient to support the submission of a BLA, NDA or other submission or to obtain regulatory approval, and may impose requirements for additional preclinical studies or clinical studies; • may determine that adverse events experienced by participants in our clinical studies represents an unacceptable level of risk; • may determine that population studied in the clinical study may not be sufficiently broad or representative to assure safety in the full population for which we seek approval; • may not accept clinical data from studies, which are conducted at clinical facilities or in countries where the standard of care is potentially different from that of the United States; • may disagree regarding the formulation, labeling and/or the specifications; • may not approve the manufacturing processes or facilities associated with our product candidate; • may change approval policies or adopt new regulations; or • may not accept a submission due to, among other reasons, the content or formatting of the submission.
The FDA and other applicable regulatory authorities could delay, limit or deny approval of a product candidate for many reasons, including because they: • may not deem our product candidate to be adequately safe and effective; • may not agree that the data collected from clinical studies are acceptable or sufficient to support the submission of a BLA, NDA or other submission or to obtain regulatory approval, and may impose requirements for additional non-clinical studies or clinical studies; • may determine that adverse events experienced by participants in our clinical studies represents an unacceptable level of risk; • may determine that population studied in the clinical study may not be sufficiently broad or representative to assure safety in the full population for which we seek approval; • may not accept clinical data from studies, which are conducted at clinical facilities or in countries where the standard of care is potentially different from that of the United States; • may disagree regarding the formulation, labeling and/or the specifications; • may not approve the manufacturing processes or facilities associated with our product candidate; • may change approval policies or adopt new regulations; or • may not accept a submission due to, among other reasons, the content or formatting of the submission.
Federal and state enforcement bodies have recently increased their scrutiny of interactions between healthcare companies, healthcare providers and other third parties, including charitable foundations, which has led to a number of investigations, prosecutions, convictions and settlements in the healthcare industry.
Federal and state enforcement bodies have recently increased their scrutiny of interactions between healthcare companies, healthcare providers and other third parties, including charitable foundations, which has led to a number 75 of investigations, prosecutions, convictions and settlements in the healthcare industry.
These losses have had and will continue to have an adverse effect on our financial position and working capital. 39 To become and remain profitable, we must develop or acquire and eventually commercialize a product with significant market potential.
These losses have had and will continue to have an adverse effect on our financial position and working capital. To become and remain profitable, we must develop or acquire and eventually commercialize a product with significant market potential.
If our manufacturers are unable to 59 produce sufficient quantities for clinical studies or for commercialization, commercialization efforts would be impaired, which would have an adverse effect on our business, financial condition, results of operations and growth prospects.
If our manufacturers are unable to produce sufficient quantities for clinical studies or for commercialization, commercialization efforts would be impaired, which would have an adverse effect on our business, financial condition, results of operations and growth prospects.
Though 69 our agreements with third parties typically restrict the ability of our advisors, employees, collaborators, licensors, suppliers, third-party contractors and consultants to publish data potentially relating to our trade secrets, our agreements may contain certain limited publication rights.
Though our agreements with third parties typically restrict the ability of our advisors, employees, collaborators, licensors, suppliers, third-party contractors and consultants to publish data potentially relating to our trade secrets, our agreements may contain certain limited publication rights.
We submitted to OFAC, and subsequently amended and supplemented, a request for interpretive guidance confirming the applicability of the general license to itolizumab (EQ001), or in its absence, a specific license authorization from OFAC authorizing activities relating to the commercialization of itolizumab (EQ001), or the Submission.
We submitted to OFAC, and subsequently amended and supplemented, a request for interpretive guidance confirming the applicability of the general license to itolizumab (EQ001), or in its absence, a specific license authorization from OFAC 71 authorizing activities relating to the commercialization of itolizumab (EQ001), or the Submission.
Moreover, if the FDA determines that our manufacturer is not in compliance with FDA laws and regulations, including those governing cGMPs, the FDA may deny BLA approval until the deficiencies are corrected or we replace the manufacturer in our BLA with a manufacturer that is in compliance.
Moreover, if the FDA determines that our manufacturer is not in compliance with FDA laws and regulations, including those governing cGMPs, the FDA may deny NDA or BLA approval until the deficiencies are corrected or we replace the manufacturer in our NDA or BLA with a manufacturer that is in compliance.
Competitors may infringe our patents, trademarks, copyrights or other intellectual property that relate to our current and future product candidates, including EQ101, EQ302, itolizumab (EQ001) and others, their respective methods of use, manufacture and formulations thereof.
Competitors may infringe our patents, trademarks, copyrights or other intellectual property that relate to our current and future product candidates, including itolizumab (EQ001), EQ302 and others, their respective methods of use, manufacture and formulations thereof.
We also expect our non-U.S. activities to increase over time. We expect to rely on contract service providers for research, preclinical studies, and clinical studies and/or to obtain necessary permits, licenses, patent registrations, and other marketing approvals.
We also expect our non-U.S. activities to increase over time. We expect to rely on contract service providers for research, non-clinical studies, and clinical studies and/or to obtain necessary permits, licenses, patent registrations, and other marketing approvals.
Additionally, any of our 53 product candidates, if approved, could be subject to labeling and other restrictions and market withdrawal and we may be subject to penalties if we fail to comply with regulatory requirements or experience unanticipated problems with our products.
Additionally, any of our product candidates, if approved, could be subject to labeling and other restrictions and market withdrawal and we may be subject to penalties if we fail to comply with regulatory requirements or experience unanticipated problems with our products.
Ensuring that we have adequate internal financial and 87 accounting controls and procedures in place to produce accurate financial statements on a timely basis remains a costly and time-consuming effort that needs to be re-evaluated frequently.
Ensuring that we have adequate internal financial and accounting controls and procedures in place to produce accurate financial statements on a timely basis remains a costly and time-consuming effort that needs to be re-evaluated frequently.
If orphan drug exclusivity is lost and we were unable to successfully 57 enforce any remaining patents covering our eligible product candidates, we could be subject to biosimilar competition earlier than we anticipate.
If orphan drug exclusivity is lost and we were unable to successfully enforce any remaining patents covering our eligible product candidates, we could be subject to biosimilar competition earlier than we anticipate.
We only have the rights to itolizumab (EQ001) for the Equillium Territory, and we are focused on the development of itolizumab (EQ001) for autoimmune and inflammatory diseases, with current plans to develop it for the treatment of patients with aGVHD and LN.
We only have the rights to itolizumab (EQ001) for the Equillium Territory, and we are focused on the development of itolizumab (EQ001) for autoimmune and inflammatory diseases, with current plans to develop it for the treatment of patients with aGVHD.
Further, our contracted manufacturers may experience manufacturing or shipping difficulties due to resource constraints or as a result of natural disasters, labor disputes, unstable political environments, or public health epidemics.
Further, our contracted manufacturers may experience manufacturing or shipping difficulties due to resource constraints or as a result of natural 52 disasters, labor disputes, unstable political environments, or public health epidemics.
Furthermore, pending patent applications that have been published can, subject to certain limitations, be later amended in a manner that could cover our technologies, our products or the use of our products.
Furthermore, pending patent applications that have been published can, subject to certain limitations, be later 58 amended in a manner that could cover our technologies, our products or the use of our products.
Accordingly, we will need to obtain substantial additional funding in connection with our continuing operations. Adequate additional financing may not be available to us on acceptable terms, or at all.
We will need to obtain substantial additional funding in connection with our continuing operations. Adequate additional financing may not be available to us on acceptable terms, or at all.
In addition to litigation, regulators, such as the Federal Trade Commission (FTC), have indicated that use of biometric technologies (including facial recognition technologies) may be subject to additional scrutiny.
In addition to litigation, regulators, such as the Federal Trade Commission, or FTC, have indicated that use of biometric technologies (including facial recognition technologies) may be subject to additional scrutiny.
A Delaware 86 corporation may opt out of this provision by express provision in its original certificate of incorporation or by amendment to its certificate of incorporation or bylaws approved by its stockholders. However, we have not opted out of this provision.
A Delaware corporation may opt out of this provision by express provision in its original certificate of incorporation or by amendment to its certificate of incorporation or bylaws approved by its stockholders. However, we have not opted out of this provision.
Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation or administrative proceedings, there is a risk that some of our confidential information could be compromised by disclosure. 66 If we are found to infringe a third party’s intellectual property rights, we could be forced, including by court order, to cease developing, manufacturing or commercializing the infringing product candidate or product.
Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation or administrative proceedings, there is a risk that some of our confidential information could be compromised by disclosure. 59 If we are found to infringe a third party’s intellectual property rights, we could be forced, including by court order, to cease developing, manufacturing or commercializing the infringing product candidate or product.
We rely on third-party service providers and technologies to operate critical business systems to process sensitive data in a variety of contexts, including, without limitation, cloud-based infrastructure, data center facilities, encryption and authentication technology, employee email, human capital management, document management, preclinical research, clinical studies including data management, biostatistics, and safety reporting, manufacturing of drug product, and other functions.
We rely on third-party service providers and technologies to operate critical business systems to process sensitive data in a variety of contexts, including, without limitation, cloud-based infrastructure, data center facilities, encryption and authentication technology, employee email, human capital management, document management, non-clinical research, clinical studies including data management, biostatistics, and safety reporting, manufacturing of drug product, and other functions.
If we are unable to raise capital when needed or on attractive terms, we would be forced to delay, reduce or eliminate our research and development programs or other operations, or enter into partnerships or otherwise monetize our pipeline through strategic transactions on terms that may not be as favorable to us as if we developed or commercialized the product candidates ourselves.
If we are unable to raise capital when needed or on attractive terms, we would be forced to delay, reduce or eliminate our research and development programs or other operations, potentially entirely, or enter into partnerships or otherwise monetize our pipeline through strategic transactions on terms that may not be as favorable to us as if we developed or commercialized the product candidates ourselves.
We currently generate no revenues from sales of any biopharmaceutical products, and we may never be able to develop or commercialize a marketable biopharmaceutical product.
We currently generate no 35 revenues from sales of any biopharmaceutical products, and we may never be able to develop or commercialize a marketable biopharmaceutical product.
Similar laws are being considered in 75 several other states, as well as at the federal and local levels, and we expect more states to pass similar laws in the future.
Similar laws are being considered in several other states, as well as at the federal and local levels, and we expect more states to pass similar laws in the future.
Before we can initiate clinical studies of our product candidates in any distinct indication in the United States, we must submit the results of preclinical studies to the FDA along with other information, including information about their chemistry, manufacturing and controls and our proposed clinical study protocol, as part of an IND or similar regulatory filing.
Before we can initiate clinical studies of our product candidates in any distinct indication in the United States, we must submit the results of non-clinical studies to the FDA along with other information, including information about their chemistry, manufacturing and controls and our proposed clinical study protocol, as part of an IND or similar regulatory filing.
Even if we ultimately prevail in such claims, the monetary cost of such litigation and the diversion of the attention of our management and scientific personnel could outweigh any benefit we receive as a result of the proceedings. 67 Because of the expense and uncertainty of litigation, we may not be in a position to enforce our intellectual property rights against third parties.
Even if we ultimately prevail in such claims, the monetary cost of such litigation and the diversion of the attention of our management and scientific personnel could outweigh any benefit we receive as a result of the proceedings. 60 Because of the expense and uncertainty of litigation, we may not be in a position to enforce our intellectual property rights against third parties.
During this 12-year period of exclusivity, another company may still market a competing version of the reference product if the FDA approves a full BLA for the competing product containing the sponsor’s own preclinical data and data from adequate and well-controlled clinical studies to demonstrate the safety, purity and potency of their product.
During this 12-year period of exclusivity, another company may still market a competing version of the reference product if the FDA approves a full BLA for the competing product containing the sponsor’s own non-clinical data and data from adequate and well-controlled clinical studies to demonstrate the safety, purity and potency of their product.
If any of these third parties fail to meet expected deadlines, adhere to our clinical protocols or meet regulatory requirements, otherwise performs in a substandard manner, or terminates its engagement with us, the timelines for our development programs may be extended or 60 delayed or our development activities may be suspended or terminated.
If any of these third parties fail to meet expected deadlines, adhere to our clinical protocols or meet regulatory requirements, otherwise performs in a 53 substandard manner, or terminates its engagement with us, the timelines for our development programs may be extended or delayed or our development activities may be suspended or terminated.
Our business would suffer if any current or future licenses terminate, if the licensors fail to abide by the terms of the license, if the licensors fail to enforce licensed patents against infringing third 63 parties, if the licensed patents or other rights are found to be invalid or unenforceable, or if we are unable to enter into necessary licenses on acceptable terms.
Our business would suffer if any current or future licenses terminate, if the licensors fail to 56 abide by the terms of the license, if the licensors fail to enforce licensed patents against infringing third parties, if the licensed patents or other rights are found to be invalid or unenforceable, or if we are unable to enter into necessary licenses on acceptable terms.
Proceedings to enforce our patent rights in foreign jurisdictions could result in substantial costs and divert our efforts and attention from other aspects of our business, could put our patents at risk of being invalidated or interpreted narrowly and our patent applications at risk of not 68 issuing and could provoke third parties to assert claims against us.
Proceedings to enforce our patent rights in foreign jurisdictions could result in substantial costs and divert our efforts and attention from other aspects of our business, could put our patents at risk of being invalidated or interpreted narrowly and our patent applications at risk of not issuing and could 61 provoke third parties to assert claims against us.
Our inability to promptly obtain coverage and adequate reimbursement rates from both government-funded and private payors for any approved products that 58 we develop could have a material adverse effect on our operating results, our ability to raise capital needed to commercialize products and our overall financial condition.
Our inability to promptly obtain coverage and adequate reimbursement rates from both government-funded and private payors for any approved products that 51 we develop could have a material adverse effect on our operating results, our ability to raise capital needed to commercialize products and our overall financial condition.
Therefore, these patents and applications may not be prosecuted and enforced in a manner consistent with the best interests of our business. If our current or future licensors, licensees or partners fail to establish, maintain or protect such patents and other intellectual property rights, such rights may be reduced or 61 eliminated.
Therefore, these patents and applications may not be prosecuted and enforced in 54 a manner consistent with the best interests of our business. If our current or future licensors, licensees or partners fail to establish, maintain or protect such patents and other intellectual property rights, such rights may be reduced or eliminated.
From time to time, we may publicly disclose preliminary or topline data from our preclinical and clinical studies, which is based on a preliminary analysis of then-available data, and the results and related findings and conclusions are subject to change following a more comprehensive review of the data related to the particular study.
From time to time, we may publicly disclose preliminary or topline data from our non-clinical and clinical studies, which is based on a preliminary analysis of then-available data, and the results and related findings and conclusions are subject to change following a more comprehensive review of the data related to the particular study.
Moreover, any product candidate we acquire may require additional, time-consuming development or regulatory efforts prior to commercial sale or prior to expansion into other indications, including preclinical studies if applicable, and extensive clinical testing and approval by the FDA and applicable foreign regulatory authorities.
Moreover, any product candidate we acquire may require additional, time-consuming development or regulatory efforts prior to commercial sale or prior to expansion into other indications, including non-clinical studies if applicable, and extensive clinical testing and approval by the FDA and applicable foreign regulatory authorities.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe audit committee receives periodic reports from the Head of IT and Chief Operating Officer concerning the company’s significant cybersecurity threats and risk and the processes the company has implemented to address them. The audit committee also receives summaries or presentations related to the company’s information systems and data and cybersecurity threats, risk and mitigation.
Biggest changeIn addition, the company’s incident response processes include reporting to the audit committee of the board of directors for certain cybersecurity incidents. 85 The audit committee receives periodic reports from the Head of IT and Chief Operating Officer concerning the company’s significant cybersecurity threats and risk and the processes the company has implemented to address them.
Management is also responsible for hiring appropriate personnel, helping to integrate cybersecurity risk considerations into the company’s overall risk management strategy, and communicating key priorities to relevant personnel. The Head of IT and Chief Operating Officer are responsible for helping prepare the company for cybersecurity incidents, approving cybersecurity processes, and reviewing security assessments and other security-related reports.
Management is also responsible for hiring appropriate personnel, helping to integrate cybersecurity risk considerations into the company’s overall risk management strategy, and communicating key priorities to relevant personnel. The Head of IT and Chief Operating Officer are responsible for helping prepare the company for cybersecurity incidents, training personnel, approving cybersecurity processes, and reviewing security assessments and other security-related reports.
To operate our business, we utilize certain third-party service providers to perform a variety of functions, such as outsourced business critical functions, clinical research, professional services, Software-as-a-Service (SaaS) platforms, managed services, cloud-based infrastructure, encryption and authentication technology, corporate productivity services, and other functions.
To operate our business, we utilize certain third-party service providers to perform a variety of functions, such as outsourced business critical functions, clinical research, professional services, Software-as-a-Service, or SaaS, platforms, managed services, cloud-based infrastructure, encryption and authentication technology, corporate productivity services, and other functions.
We engage an external Head of Information Technology consultant to work with the company, including the Chief Operating Officer, Chief Financial Officer, and Executive Leadership Team, to help identify, assess and manage the company’s cybersecurity threats and risks.
We engage an external Head of Information Technology, or IT, consultant to work with the company, including the Chief Operating Officer, Chief Financial Officer, and Executive Leadership Team, to help identify, assess and manage the company’s cybersecurity threats and risks.
Our assessment and management of material risks from cybersecurity threats are integrated into the company’s overall risk management processes. For example, the Head of Information Technology works with management to prioritize our risk management processes and mitigate cybersecurity threats that are more likely to lead to a material impact to our business.
Our assessment and management of material risks from cybersecurity threats are integrated into the company’s overall risk management processes. For example, the Head of IT works with management to prioritize our risk management processes and mitigate cybersecurity threats that are more likely to lead to a material impact to our business.
Cyb ersecurity Risk management and strategy We have implemented and maintain various information security processes designed to identify, assess and manage material risks from cybersecurity threats to our critical computer networks, third party hosted services, communications systems, lab equipment, hardware and software, and our critical data, including intellectual property, confidential information that is proprietary, strategic or competitive in nature, and data related to our clinical studies and employees, or Information Systems and Data.
C ybersecurity Risk management and strategy We have implemented and maintain various information security processes designed to identify, assess and manage material risks from cybersecurity threats to our critical computer networks, third party hosted services, communications systems, lab equipment, hardware and software, and our critical data, including intellectual property, confidential information that is 84 proprietary, strategic or competitive in nature, and data related to our clinical studies and employees, or Information Systems and Data.
The Head of IT and Chief Operating Officer work with the company’s incident response team to help the company mitigate and remediate cybersecurity incidents of which they are notified. In addition, the company’s incident response processes include reporting to the audit committee of the board of directors for certain cybersecurity incidents.
The Head of IT and Chief Operating Officer work with the company’s incident response team to help the company mitigate and remediate cybersecurity incidents of which they are notified.
The audit committee of the board of directors is responsible for reviewing the company’s guidelines and policies with respect to risk assessment and risk management, including those related to assessment and mitigation of risks from cybersecurity threats. 92 Our cybersecurity risk assessment and management processes are implemented and maintained by certain company management, including our Head of IT, who holds a Microsoft Certification, and our Chief Operating Officer, who earned a Cybersecurity for Directors certificate from the Corporate Governance Institute.
Our cybersecurity risk assessment and management processes are implemented and maintained by certain company management, including our Head of IT, who holds a Microsoft Certification, and our Chief Operating Officer, who earned a Cybersecurity for Directors certificate from the Corporate Governance Institute .
Added
The audit committee of the board of directors is responsible for reviewing the company’s guidelines and policies with respect to risk assessment and risk management, including those related to assessment and mitigation of risks from cybersecurity threats.
Added
The audit committee also receives summaries or presentations related to the company’s information systems and data and cybersecurity threats, risk and mitigation.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe had been leasing office space in South San Francisco, California which expired at the end of February 2023 and was not renewed. We believe that our existing facilities are adequate to meet our current needs, and that suitable additional alternative spaces will be available in the future on commercially reasonable terms. Item 3. Legal Proceedings. None. Item 4.
Biggest changeWe believe that our existing facilities are adequate to meet our current needs, and that suitable additional alternative spaces will be available in the future on commercially reasonable terms. Item 3. Legal Proceedings. None. Item 4. Mine Saf ety Disclosures. Not applicable. 86 PART II
Item 2. Properties. We lease approximately 1,750 square feet of space for our current headquarters in La Jolla, California under a lease that expires in February 2027. We also lease additional office and laboratory spaces in La Jolla, California, under leases with various expiration dates, with the first expiring in February 2025 and the latest extending through February 2027.
Item 2. Properties. We lease a total of approximately 5,545 square feet of office space for our current headquarters in La Jolla, California under leases that expire in February 2027. We also lease laboratory and additional office space in La Jolla, California, under a lease that expires in August 2025 with an option to extend through February 2026.
Removed
Mine Saf ety Disclosures. Not applicable. 93 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

3 edited+1 added−1 removed4 unchanged
Biggest changePurchases of Equity Securities by the Issuer and Affiliated Purchasers In July 2023, our board of directors authorized a stock repurchase program, or Stock Repurchase Program, pursuant to which we may repurchase up to $7.5 million of shares of our common stock through December 31, 2024.
Biggest changePurchases of Equity Securities by the Issuer and Affiliated Purchasers In July 2023, our board of directors authorized a stock repurchase program, or Stock Repurchase Program, pursuant to which we may repurchase up to $7.5 million of shares of our common stock through December 31, 2024. As of December 31, 2024, such authorization expired and was not renewed.
Securities Authorized for Issuance Under Our Equity Compensation Plans Information about our equity compensation plans will be included in our definitive proxy statement to be filed with the SEC with respect to our 2024 Annual Meeting of Stockholders and is incorporated herein by reference. Recent Sales of Unregistered Securities None.
Securities Authorized for Issuance Under Our Equity Compensation Plans Information about our equity compensation plans will be included in our definitive proxy statement to be filed with the SEC with respect to our 2025 Annual Meeting of Stockholders and is incorporated herein by reference. Recent Sales of Unregistered Securities None.
Prior to October 12, 2018, there was no public trading market for our common stock. Holders of Record As of March 20, 2024, there were approximately 50 stockholders of record of our common stock.
Prior to October 12, 2018, there was no public trading market for our common stock. Holders of Record As of March 20, 2025, there were approximately 44 stockholders of record of our common stock.
Removed
As of December 31, 2023, approximately $7.2 million remained available under our Stock Repurchase Program for future repurchases. Item 6. [ R eserved] 94
Added
Approximately $0.3 million of shares had been purchased through December 31, 2024, and there are currently no plans to seek board reauthorization to purchase additional shares. Item 6. [ R eserved] 87

Item 7. Management's Discussion & Analysis

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

78 edited+37 added−40 removed49 unchanged
Biggest changeOur future capital requirements will depend on many factors, including: • whether Ono exercises its option and the extent to which milestones payments, if any, are received: • the initiation, progress, timing, costs and results of our ongoing and future clinical studies of EQ101 and itolizumab (EQ001) and other product candidates, including as such activities may be adversely impacted by public health 102 epidemics or outbreaks, the evolving conflict between Russia and Ukraine, the conflict in the Middle East and bank failures; • the potential advancement and cost of preclinical research of EQ302 and other novel preclinical drug candidates identified by our multi-cytokine targeting drug discovery platform; • the number and scope of indications we decide to pursue for the development of our product candidates; • the cost, timing and outcome of regulatory review of any Biologics License Application, or BLA, or New Drug Application, or NDA, we may submit for our product candidates; • the costs and timing of manufacturing EQ101 and itolizumab (EQ001) and other product candidates; • the costs of drug formulation research and device development; • the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims; • our efforts to enhance operational systems and our ability to attract, hire and retain qualified personnel, including personnel to support the development of our product candidates; • the costs associated with being a public company; • our ability to enter into partnerships or otherwise monetize our pipeline through strategic transactions on a timely basis, on terms that are favorable to us, or at all; • the terms and timing of establishing and maintaining collaborations, licenses and other similar arrangements; • the extent to which we acquire or in-license other product candidates and technologies or engage in in-house discovery and preclinical research of new product candidates, for example EQ302; • the legal and other transactional costs associated with our business development activities; and • the cost associated with commercializing EQ101 and itolizumab (EQ001) or any of our other product candidates, if approved for commercial sale.
Biggest changeOur future capital requirements will depend on many factors, including: • the initiation, progress, timing, costs and results of our ongoing and future non-clinical and clinical studies of itolizumab (EQ001), EQ302 if we resume development activities, and other product candidates, including as such activities may be adversely impacted by public health epidemics or outbreaks, the evolving conflict between Russia and Ukraine, the conflict in the Middle East, bank failures, potential tariffs and inflationary pressures on the economy; • whether the expected FDA feedback related to our EQUATOR study data is positive; • our ability to timely implement and realize the benefit of significant expense reductions; • the potential that, the EQUATOR study data would be insufficient to support a BLA and require further clinical studies; • the advancement and cost of preclinical research of EQ302, if we resume development activities, and other novel preclinical drug candidates; • the number and scope of indications we decide to pursue for the development of our product candidates; 95 • the cost, timing and outcome of regulatory review of any BLA, or New Drug Application, or NDA, we may submit for our product candidates; • the costs and timing of manufacturing itolizumab (EQ001) and other product candidates; • the costs of drug formulation research and device development; • the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims; • our efforts to enhance operational systems and our ability to attract, hire and retain qualified personnel, including personnel to support the development of our product candidates; • the costs associated with being a public company; • our ability to enter into partnerships or otherwise monetize our pipeline through strategic transactions on a timely basis, on terms that are favorable to us, or at all; • the terms and timing of establishing and maintaining collaborations, licenses and other similar arrangements; • the extent to which we acquire or in-license other product candidates and technologies or engage in in-house discovery and non-clinical research of new product candidates; • the legal and other transactional costs associated with our business development activities; and • the cost associated with commercializing itolizumab (EQ001) or any of our other product candidates, if approved for commercial sale.
Financing Activities Net cash used in financing activities totaled $9.2 million during the year ended December 31, 2023, driven by payments totaling $9.1 million related to our former loan and security agreement with Oxford Finance LLC and SVB, or Loan Agreement, and $0.3 million in stock repurchases, offset by $0.2 million of cash received from employee stock purchases related to our Employee Stock Purchase Plan.
Net cash used in financing activities totaled $9.2 million during the year ended December 31, 2023, driven by payments totaling $9.1 million related to our former loan and security agreement with Oxford Finance LLC and SVB, or Loan Agreement, and $0.3 million in stock repurchases, offset by $0.2 million of cash received from employee stock purchases related to our Employee Stock Purchase Plan.
The cost of clinical studies may vary significantly over the life of a project as a result of differences arising during clinical development, including, among others: • per patient clinical study costs; • the number of clinical studies required for approval; • the number of sites and the number of countries included in our clinical studies; • the length of time required to enroll suitable patients; • the inefficiencies and additional costs related to any delays and potential restarts of clinical studies; • the number of doses that patients receive; • the number of patients that participate in our clinical studies; • the drop-out or discontinuation rates of patients in our clinical studies; • the duration of patient follow-up; • potential additional safety monitoring or other studies requested by regulatory agencies; • the number and complexity of procedures, analyses and tests performed during our clinical studies; • the costs of procuring drug product for our clinical studies; • the phase of development of the product candidate; and • the efficacy and safety profile of the product candidate.
The cost of clinical studies may vary significantly over the life of a project as a result of differences arising during clinical development, including, among others: • per patient clinical study costs; • the number of clinical studies required for approval; 91 • the number of sites and the number of countries included in our clinical studies; • the length of time required to enroll suitable patients; • the inefficiencies and additional costs related to any delays and potential restarts of clinical studies; • the number of doses that patients receive; • the number of patients that participate in our clinical studies; • the drop-out or discontinuation rates of patients in our clinical studies; • the duration of patient follow-up; • potential additional safety monitoring or other studies requested by regulatory agencies; • the number and complexity of procedures, analyses and tests performed during our clinical studies; • the costs of procuring drug product for our clinical studies; • the phase of development of the product candidate; and • the efficacy and safety profile of the product candidate.
As of the filing of this Annual Report on Form 10-K, we have not sold any shares under the 2023 ATM Facility. 101 Asset Purchase Agreement with Ono On December 5, 2022, we entered into the Asset Purchase Agreement with Ono, pursuant to which we granted Ono the exclusive right, but not the obligation, to acquire our rights to itolizumab.
As of the filing of this Annual Report on Form 10-K, we have not sold any shares under the 2023 ATM Facility. Asset Purchase Agreement with Ono On December 5, 2022, we entered into the Asset Purchase Agreement with Ono, pursuant to which we granted Ono the exclusive right, but not the obligation, to acquire our rights to itolizumab.
Financial Overview Revenue To date, we have not generated any revenues from therapeutic product sales, developmental milestones or royalties. In 2022 and 2023, our revenues were derived from an upfront payment under the Asset Purchase Agreement as well as from development funding from Ono.
Financial Overview Revenue To date, we have not generated any revenues from therapeutic product sales, developmental milestones or royalties. In 2022, 2023 and 2024, our revenues were derived from an upfront payment under the Asset Purchase Agreement as well as from development funding from Ono.
If a significant financing component exists, the transaction price is adjusted for the time value of money. If an element of variability exists, we must estimate the consideration we expect to receive and use that amount as the basis for recognizing 105 revenue as the product or the service is transferred to the customer.
If a significant financing component exists, the transaction price is adjusted for the time value of money. If an element of variability exists, we must estimate the consideration we expect to receive and use that amount as the basis for recognizing revenue as the product or the service is transferred to the customer.
Investing Activities Net cash used in investing activities was $4.8 million during the year ended December 31, 2023. Purchases of our short-term investments totaled $54.7 million, which was offset by maturities of short-term investments totaling $50.0 million during the period. Purchases of property and equipment for the year ended December 31, 2023 totaled $0.1 million.
Net cash used in investing activities was $4.8 million during the year ended December 31, 2023. Purchases of our short-term investments totaled $54.7 million, which was offset by maturities of short-term investments totaling $50.0 million. Purchases of property and equipment for the year ended December 31, 2023 totaled $0.1 million.
Clinical development timelines, the probability of success, and development costs can differ materially from expectations. 98 Completion of clinical studies may take several years or more, and the length of time generally varies according to the type, complexity, novelty, and intended use of a product candidate.
Clinical development timelines, the probability of success, and development costs can differ materially from expectations. Completion of clinical studies may take several years or more, and the length of time generally varies according to the type, complexity, novelty, and intended use of a product candidate.
If a contract has multiple performance obligations, we allocate the transaction price to each distinct performance obligation in an amount that reflects the consideration we are entitled to receive in exchange for satisfying each distinct performance obligation.
If a contract has multiple performance obligations, we allocate the transaction price to each distinct performance obligation in an amount that reflects the consideration we are entitled to receive in exchange for satisfying each distinct performance 98 obligation.
As a result of the conflict between Russia and Ukraine, the conflict in the Middle East, bank failures, inflationary pressures on the economy and monetary policy responses by government agencies and other macroeconomic factors, the global credit and financial markets have experienced extreme volatility, including from bank failures, diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth and uncertainty about economic stability.
As a result of the conflict between Russia and Ukraine, the conflict in the Middle East, bank failures, potential tariffs, inflationary pressures on the economy and monetary policy responses by government agencies and other macroeconomic factors, the global credit and financial markets have experienced extreme volatility, including from diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth and uncertainty about economic stability.
As a result of the conflict between Russia and Ukraine, the conflict in the Middle East, bank failures, inflationary pressures on the economy and monetary policy responses taken by government agencies and other macroeconomic factors, the global credit and financial markets have experienced extreme volatility, including diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth and uncertainty about economic stability.
As a result of the conflict between Russia and Ukraine, the conflict in the Middle East, bank failures, potential tariffs, inflationary pressures on the economy and monetary policy responses taken by government agencies and other macroeconomic factors, the global credit and financial markets have experienced extreme volatility, including diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth and uncertainty about economic stability.
At this time, due to the inherently unpredictable nature of pre-clinical and clinical development, we cannot reasonably estimate the nature, timing or costs of the efforts that will be necessary to complete the remainder of the development of our product candidates or the period, if any, in which material net cash inflows from the sales from our product candidates may commence.
At this time, due to the inherently unpredictable nature of preclinical and clinical development, we cannot reasonably estimate the nature, timing or costs of the efforts that will be necessary to complete the remainder of the development of our product candidates or the period, if any, in which material net cash inflows from the sales from our product candidates may commence.
These rights include all therapeutic indications and the rights to commercialize itolizumab in the United States, Canada, Australia, and New Zealand. In exchange for the Option, Ono paid us a one-time upfront payment of an amount equal to JPY 3.5 billion, or $26.4 million.
These rights included all therapeutic indications and the rights to commercialize itolizumab in the United States, Canada, Australia, and New Zealand. In exchange for the Option, Ono paid us a one-time upfront payment of an amount equal to JPY 3.5 billion, or $26.4 million.
We reflect research and development expenses in our consolidated financial statements by matching those expenses with the period in which services and efforts are expended. We account for these expenses according to the progress of the preclinical study or clinical study as measured by the timing of various aspects of the study or related activities.
We reflect research and development expenses in our consolidated financial statements by matching those expenses with the period in which services and efforts are expended. We account for these expenses according to the progress of the non-clinical study or clinical study as measured by the timing of various aspects of the study or related activities.
Our expected material cash requirements do not include potential contingent payments upon the achievement by us of regulatory and commercial milestones that we may be required to make under the terms of the merger agreement pursuant to which we acquired Bioniz, nor do they include potential contingent payments upon the achievement by us of regulatory and commercial milestones or royalty payments that we may be required to make under license agreements we have entered into or may enter into with various entities pursuant to which we have in-licensed certain intellectual property, including the Biocon License.
Our expected material cash requirements do not include potential contingent payments upon the achievement by us of regulatory and commercial milestones that we may be required to make under the terms of the merger agreement pursuant to which we acquired Bioniz or potential contingent payments upon the achievement by us of regulatory milestones that we may be 96 required to make under the terms of our stock purchase agreement with Ariagen, nor do they include potential contingent payments upon the achievement by us of regulatory and commercial milestones or royalty payments that we may be required to make under license agreements we have entered into or may enter into with various entities pursuant to which we have in-licensed certain intellectual property, including the Biocon License.
In July 2023, our board of directors authorized a stock repurchase program pursuant to which we may repurchase up to $7.5 million of shares of our common stock through December 31, 2024.
In July 2023, our board of directors authorized a stock repurchase program pursuant to which we could repurchase up to $7.5 million of shares of our common stock through December 31, 2024.
Because the outcome of these efforts is uncertain, we cannot estimate the actual amounts necessary to successfully complete the development and commercialization of EQ101, EQ302 and itolizumab (EQ001) or any of our other product candidates or whether, or when, we may achieve profitability.
Because the outcome of these efforts is uncertain, we cannot estimate the actual amounts necessary to successfully complete the development and commercialization of itolizumab (EQ001) and EQ302 if we resume development activities, or any of our other product candidates or whether, or when, we may achieve profitability.
Material Cash Requirements 103 Our expected material cash requirements are comprised of contractually obligated expenditures, including amounts due under our operating leases. For additional information relating to our leases, see Notes 7 and 12 of the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K.
Material Cash Requirements Our expected material cash requirements are comprised of contractually obligated expenditures, including amounts due under our operating leases. For additional information relating to our leases, see Notes 6 and 11 of the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K.
We do have certain contingent consideration liabilities in the form of potential milestone payments that are included in our Biocon License and in our merger agreement with Bioniz which are not reflected in our balance sheet.
We do have certain 97 contingent consideration liabilities in the form of potential milestone payments that are included in our Biocon License, in our merger agreement with Bioniz and our stock purchase agreement with Ariagen which are not reflected in our balance sheet.
We do not expect to generate any revenues from product sales unless and until we successfully complete development and obtain regulatory approval for EQ101, EQ302, or any future product candidate, which is unlikely to happen within the next 12 months, if ever.
We do not expect to generate any revenues from product sales unless and until we successfully complete development and obtain regulatory approval for itolizumab (EQ001), EQ302 if we resume development activities, or any future product candidate, which is unlikely to happen within the next 12 months, if ever.
Until such time as we can generate substantial product revenues, if ever, we expect to finance our cash needs through a combination of equity offerings, debt financings, and collaboration and license agreements, such as our Asset Purchase Agreement with Ono.
Until such time as we can generate substantial product revenues, if ever, we expect to finance our cash needs through a combination of equity offerings, debt financings, and collaboration and license agreements.
Accordingly, until such time as we can generate significant revenue from sales of our product candidates, if ever, we expect to finance our cash needs through a combination of equity offerings, debt financings, and collaboration and license agreements, such as our Asset Purchase Agreement with Ono.
Until such time as we can generate significant revenue from sales of our product candidates, if ever, we expect to finance our cash needs through a combination of equity offerings, debt financings, and collaboration and license agreements.
We have experienced net losses and negative cash flows from operating activities since our inception and expect to continue to incur net losses into the foreseeable future. We had an accumulated deficit of $185.7 million as of December 31, 2023.
We have experienced net losses and negative cash flows from operating activities since our inception and expect to continue to incur net losses into the foreseeable future. We had an accumulated deficit of $193.8 million as of December 31, 2024.
Furthermore, in connection with the acquisition of Bioniz, we expanded our pipeline from one product candidate to multiple product candidates, all at various stages of development. This expansion may accelerate the rate at which our operating losses increase as we incur costs to further the development and seek regulatory approval for these product candidates.
Furthermore, in connection our acquisitions, we expanded our pipeline to multiple product candidates, all at various stages of development. This expansion may accelerate the rate at which our operating losses increase as we incur costs to further the development and seek regulatory approval for these product candidates.
Our strategy is focused on advancing the clinical development of our product candidates, including potentially pursuing additional indications and acquiring new product candidates and platforms to expand our pipeline. We intend to commercialize our product candidates either independently or through partnerships or otherwise monetize our pipeline through strategic transactions. Our current clinical-stage product candidates consist of EQ101 and itolizumab (EQ001).
Our strategy is focused on advancing the preclinical and clinical development of our product candidates, including potentially pursuing additional indications and acquiring new product candidates and platforms to expand our pipeline. We intend to commercialize our product candidates either independently or through partnerships or otherwise monetize our pipeline through strategic transactions.
For the year ended December 31, 2023, development funding represented $27.0 million and amortization of the upfront payment represented $9.1 million. During the year ended December 31, 2022, we recognized revenue of $15.8 million under our Asset Purchase Agreement with Ono.
For the year ended December 31, 2024, development funding represented $28.3 million and amortization of the upfront payment represented $12.8 million. During the year ended December 31, 2023, we recognized revenue of $36.1 million under our Asset Purchase Agreement with Ono. Development funding represented $27.0 million and amortization of the upfront payment represented $9.1 million.
Our failure to raise capital or enter into such other arrangements when needed would have a negative impact on our financial condition and could force us to delay, reduce or terminate our research and development programs or other operations, or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.
Our failure to raise capital, which ability would be adversely impacted if our expected FDA feedback is negative, or enter into such other arrangements when needed would have a negative impact on our financial condition and could force us to delay, reduce or terminate our research and development programs or other operations, or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.
Since our inception, substantially all of our efforts have been focused on organizing and staffing our company, business planning, raising capital, in-licensing rights to itolizumab (EQ001), conducting non-clinical research, filing three Investigational New Drug applications, or INDs, conducting clinical development of our product candidates, conducting business development activities such as the acquisition of Bioniz, the Asset Purchase Agreement with Ono and other transactions not completed, initiating a stock repurchase program, and the general and administrative activities associated with operating a public company.
Since our inception, substantially all of our efforts have been focused on organizing and staffing our company, business planning, raising capital, in-licensing rights to itolizumab (EQ001), conducting preclinical development, filing three Investigational New Drug applications, or INDs, conducting clinical development of itolizumab (EQ001), EQ101 and EQ102, conducting CMC and formulation development activities, conducting business development activities such as the acquisitions of Bioniz and Ariagen, the Asset Purchase Agreement with Ono and other transactions not completed, implementing a prior stock repurchase program, and the general and administrative activities associated with operating a public company.
We expect operating losses and negative cash flows to continue for at least the next several years as we incur costs related to the development of EQ101, EQ302 and itolizumab (EQ001) if Ono does not exercise its option, and any of our other product candidates.
We expect operating losses and negative cash flows to continue for at least the next several years as we incur costs related to the development of itolizumab (EQ001), EQ302 if we resume development activities, and any of our other product candidates.
If we fail to complete the development of EQ101, EQ302, itolizumab (EQ001) or any future product candidates in a timely manner, or to obtain regulatory approval for our product candidates, our ability to generate future revenue and our results of operations and financial position would be materially adversely affected. Asset Purchase Agreement with Ono Pharmaceutical Co., Ltd.
If we fail to complete the development of itolizumab (EQ001), EQ302 if we resume development activities, or any future product candidates in a timely manner, or to obtain regulatory approval for our product candidates, our ability to generate future revenue and our results of operations and financial position would be materially adversely affected.
Off-Balance Sheet Arrangements We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined under SEC rules, and similarly did not and do not have any holdings in variable interest entities.
Following the termination of the Loan Agreement, we have no further obligations under the Loan Agreement. Off-Balance Sheet Arrangements We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined under SEC rules, and similarly did not and do not have any holdings in variable interest entities.
Cash Flows The following table sets forth the primary sources and uses of cash for each of the periods set forth below (in thousands): Year Ended December 31, 2023 2022 Net cash (used in) provided by: Operating activities $ (21,783 ) $ (8,733 ) Investing activities (4,762 ) 18,684 Financing activities (9,228 ) (1,215 ) Effect of exchange rate changes on cash (118 ) 5 Net (decrease) increase in cash and cash equivalents $ (35,891 ) $ 8,741 Operating Activities During the year ended December 31, 2023, net cash used in operating activities was $21.8 million compared to $8.7 million during the year ended December 31, 2022.
Cash Flows The following table sets forth the primary sources and uses of cash for each of the periods set forth below (in thousands): Year Ended December 31, 2024 2023 Net cash (used in) provided by: Operating activities $ (19,026 ) $ (21,783 ) Investing activities 13,814 (4,762 ) Financing activities 164 (9,228 ) Effect of exchange rate changes on cash (83 ) (118 ) Net decrease in cash and cash equivalents $ (5,131 ) $ (35,891 ) Operating Activities During the year ended December 31, 2024, cash used in operating activities was $19.0 million compared to $21.8 million during the year ended December 31, 2023.
We expect that our primary uses of capital will be for clinical development services, non-clinical research, manufacturing and product supply, potential acquisition of new products, potential repurchases of shares of our common stock under our stock repurchase program, legal and other regulatory compliance expenses, employee compensation and related expenses, insurance premiums, working capital and other general overhead costs.
We expect that our primary uses of capital will be for non-clinical research, clinical development, CMC activities, formulation development, product supply, potential acquisition of new products, legal and other regulatory compliance expenses, employee compensation and related expenses, insurance premiums, working capital and other general overhead costs.
EQ101 is a first-in-class, selective, tri-specific synthetic peptide engineered to specifically inhibit IL-2, IL-9 and IL-15, key disease-driving, clinically validated cytokine targets aimed at addressing unmet needs across a range of immuno-inflammatory indications.
EQ101 is a clinical-stage, first-in-class, selective, tri-specific inhibitor of IL-2, IL-9 and IL-15, which are key disease-driving, clinically validated cytokine targets aimed at addressing unmet needs across a range of immuno-inflammatory indications.
The decrease in general and administrative expense primarily includes the following changes: • $2.1 million decrease in legal fees; • $0.8 million decrease in employee compensation and benefits primarily driven by lower non-cash stock-based compensation expenses; • $0.7 million decrease in consulting expenses; • $0.6 million decrease in overhead related costs primarily driven by lower directors and officers insurance expenses; offset by • $0.6 million increase in audit and tax professional fees.
The decrease of $1.6 million in general and administrative expense primarily includes the following changes: • $1.0 million decrease in employee compensation and benefits primarily driven by lower bonus expense; • $0.3 million decrease in audit and tax professional fees; • $0.2 million decrease in consulting expenses; and • $0.1 million decrease in overhead related costs primarily driven by lower directors and officers insurance expenses.
On May 25, 2023, we terminated our Loan Agreement and prepaid in full all outstanding amounts.
On May 25, 2023, we prepaid in full all amounts owed under, and terminated, the Loan Agreement.
Since inception, we have primarily financed our operations through debt and equity financings and revenue generated from the Asset Purchase Agreement. We have incurred losses since our inception. For the years ended December 31, 2023 and 2022, our net losses were $13.3 million and $62.4 million, respectively.
Since inception, we have primarily financed our operations through debt and equity financings and revenue generated from the Asset Purchase Agreement. We have incurred losses since our inception. For the years ended December 31, 2024 and 2023, our net losses were $8.1 million and $13.3 million, respectively. As of December 31, 2024, we had an accumulated deficit of $193.8 million.
In the future, we may generate revenue from collaboration or license agreements we may enter into with respect to our product candidates, including further revenue such as development funding and potential option exercise and milestone payments from the Asset Purchase Agreement, as well as product sales from any approved product, which approval is unlikely to happen within the next 12 months, if ever.
In the future, we may generate revenue from collaboration or license agreements we may enter into with respect to our product candidates, as well as product sales from any approved product, which approval is unlikely to happen within the next 12 months, if ever.
For the year ended December 31, 2023, other expense, net consisted primarily of net realized foreign currency transaction losses related to our Australian subsidiary.
Other Expense, Net Other expense, net was $0.8 million for the year ended December 31, 2024, compared to $0.1 million for the year ended December 31, 2023. For the years ended December 31, 2024 and 2023, other expense, net consisted primarily of net realized foreign currency transaction losses related to our Australian subsidiary.
We will recognize interest and penalties in income tax expense if and when incurred. 106 Recent Accounting Pronouncements See Note 1 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for information concerning recent accounting pronouncements. Item 7A. Quantitative and Qualitat ive Disclosures About Market Risk. Not required for smaller reporting companies.
We will recognize interest and penalties in income tax expense if and when incurred. Recent Accounting Pronouncements See Note 1 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for information concerning recent accounting pronouncements.
Our ability to generate product revenues will depend on the successful development and eventual commercialization of EQ101, EQ302, itolizumab (EQ001) if Ono does not exercise its option, and any future product candidates.
Our ability to generate product revenues will depend on the successful development and eventual commercialization of itolizumab (EQ001), EQ302 if we resume development activities, and any future product candidates.
Our direct research and development expenses consist principally of external costs, such as fees paid to CROs and consultants in connection with our non-clinical research and clinical development. We recognize the Australian Research and Development Tax Incentive, or the Tax Incentive, as a reduction of research and development expense.
Our direct research and development expenses consist principally of external costs, such as fees paid to CROs and consultants in connection with our non-clinical research and clinical development.
The successful development of EQ101, EQ302 and itolizumab (EQ001) is highly uncertain.
The successful development of itolizumab (EQ001) and EQ302 if we resume development activities is highly uncertain.
We anticipate our expenses will increase substantially as we advance our research and development activities, including the ongoing and future clinical development of EQ101, EQ302 and itolizumab (EQ001), potentially expand the indications in which we conduct clinical development of our product candidates, potentially acquire or develop new product candidates, including preclinical drug candidates identified through our multi-cytokine targeting drug discovery platform, seek regulatory approval for and potentially commercialize any approved product candidates, hire additional personnel, protect our intellectual property, and incur general corporate costs.
Substantially all of our operating losses resulted from expenses incurred in connection with our research and development activities, preclinical and clinical activities, acquired in-process research and development, and general and administrative costs associated with our operations. 89 We expect to continue to incur significant expenses and operating losses into the foreseeable future as we advance our research and development activities, including the ongoing and future development of itolizumab (EQ001), potentially resume development activities related to EQ302, potentially expand the indications for which we conduct clinical development of our product candidates, potentially acquire or develop new product candidates, including preclinical drug candidates identified through our multi-cytokine targeting drug discovery platform, seek regulatory approval for and potentially commercialize any approved product candidates, hire additional personnel, protect our intellectual property, and incur general corporate costs.
The Tax Incentive is recognized when there is reasonable assurance that the Tax Incentive will be received, the relevant expenditure has been incurred, and the amount can be reliably measured or reliably estimated.
The estimated Tax Incentive refund amounts are recognized as a reduction to research and development expense when there is reasonable assurance that the Tax Incentive refund amounts will be received, the relevant expenditure has been incurred, and the amount can be reliably measured.
We plan to substantially increase our research and development expenses for the foreseeable future as we advance the development of EQ101, EQ302, and itolizumab (EQ001) if Ono does not exercise its option, potentially expand the number of indications for which we are developing those product candidates, and potentially acquire or develop new product candidates.
We plan to continue to incur substantial research and development expenses for the foreseeable future as we advance the development of itolizumab (EQ001), and EQ302 if resume development activities, potentially expand the number of indications for which we are developing those product candidates, and potentially acquire or develop new product candidates.
Interest Expense Interest expense consists of interest and amortization of discounts on our prior term loans payable. Interest Income Interest income consists primarily of interest income earned on cash, cash equivalents and short-term investments, and is recognized when earned.
Interest Expense Interest expense consists of interest and amortization of discounts on our prior term loans payable. Interest Income Interest income consists primarily of interest income earned on cash, cash equivalents and short-term investments, and is recognized when earned. Other Expense, Net Other expense, net consists primarily of foreign currency transaction gains and losses related to our Australian subsidiary.
On December 5, 2022, we entered into the Asset Purchase Agreement pursuant to which we granted Ono the Option in exchange for a one-time, upfront payment of an amount equal to JPY 3.5 billion, or $26.4 million. These rights include all therapeutic indications and the rights to commercialize itolizumab in the United States, Canada, Australia, and New Zealand.
Asset Purchase Agreement with Ono Pharmaceutical Co., Ltd. On December 5, 2022, we entered into the Asset Purchase Agreement pursuant to which we granted Ono the Option in exchange for a one-time, upfront payment of an amount equal to JPY 3.5 billion, or $26.4 million.
Net cash provided by investing activities was $18.7 million during the year ended December 31, 2022. Maturities of our short-term investments totaled $33.2 million, which was offset by purchases of short-term investments totaling $14.9 million. Purchases of property and equipment for the year ended December 31, 2022 totaled $0.3 million.
Investing Activities Net cash provided by investing activities was $13.8 million during the year ended December 31, 2024. Maturities of our short-term investments totaled $31.5 million, which was offset by purchases of short-term investments totaling $17.6 million during the period. Purchases of property and equipment for the year ended December 31, 2024 totaled $0.1 million.
Income Tax Expense Income tax expense was $0.6 million for the year ended December 31, 2023. Our 2023 income tax expense was primarily attributable to domestic cash tax expense resulting from differences between book and tax treatment of certain items. We do not record a deferred tax provision as there is a full valuation allowance offsetting our deferred tax assets.
Income Tax Expense Income tax expense was $0.4 million for the year ended December 31, 2024, compared to $0.6 million for the year ended December 31, 2023. Our 2024 and 2023 income tax expense was primarily attributable to domestic cash tax expense resulting from differences between book and tax treatment of certain items.
We acquired our rights to itolizumab (EQ001) pursuant to a collaboration and license agreement with Biocon SA (subsequently assigned to Biocon Limited, or together, Biocon) in May 2017, which has been subsequently amended, or Biocon License.
This pathway plays a central role in modulating the activity and trafficking of T cells that drive a number of immuno-inflammatory diseases. We acquired our rights to itolizumab (EQ001) pursuant to a collaboration and license agreement with Biocon SA (subsequently assigned to Biocon Limited, or together, Biocon) in May 2017, which has been subsequently amended, or Biocon License.
Interest Expense Interest expense was $0.5 million for the year ended December 31, 2023, compared to $1.1 million for the year ended 2022. Interest expense consists of interest on our prior term notes payable. Interest Income Interest income was $2.3 million for the year ended December 31, 2023, compared to $0.4 million for the year ended December 31, 2022.
Interest expense consists of interest on our prior term notes payable. 93 Interest Income Interest income was $1.4 million for the year ended December 31, 2024, compared to $2.3 million for the year ended December 31, 2023. The decrease in interest income was primarily due to lower average cash, cash equivalents and short-term investment balances in 2024 compared to 2023.
Results of Operations Comparison of the Years Ended December 31, 2023 and 2022 The following table sets forth our results of operations for the years ended December 31, 2023 and 2022 (in thousands): Year Ended December 31, 2023 2022 Change Revenue $ 36,084 $ 15,759 $ 20,325 Research and development 37,039 37,547 (508 ) Acquired in-process research and development - 23,049 (23,049 ) General and administrative 13,567 17,239 (3,672 ) Interest expense (491 ) (1,053 ) 562 Interest income 2,334 420 1,914 Other (expense) income, net (76 ) 281 (357 ) Income tax expense 580 - 580 Revenue During the year ended December 31, 2023, we recognized revenue of $36.1 million under our Asset Purchase Agreement with Ono.
Income Tax Expense Income tax expense consists of federal and state income tax expense. 92 Results of Operations Comparison of the Years Ended December 31, 2024 and 2023 The following table sets forth our results of operations for the years ended December 31, 2024 and 2023 (in thousands): Year Ended December 31, 2024 2023 Change Revenue $ 41,095 $ 36,084 $ 5,011 Research and development 37,428 37,039 389 General and administrative 11,936 13,567 (1,631 ) Interest expense - (491 ) 491 Interest income 1,381 2,334 (953 ) Other expense, net (818 ) (76 ) (742 ) Income tax expense 361 580 (219 ) Revenue During the year ended December 31, 2024, we recognized revenue of $41.1 million under our Asset Purchase Agreement with Ono.
Additionally, the process of testing product candidates in clinical studies is costly, and the timing of progress in these studies is uncertain.
Furthermore, our operating plans may change, and we may need additional funds sooner than planned. Additionally, the process of testing product candidates in clinical studies is costly, and the timing of progress in these studies is uncertain.
We are responsible for conducting all research and development of itolizumab, which is being funded by Ono on a quarterly basis from July 1, 2022, through the option period.
We were responsible for conducting all research and development of itolizumab, which has been funded by Ono from July 1, 2022 through October 30, 2024, the end of the option period. The option period expired and the Asset Purchase Agreement automatically terminated on October 30, 2024.
We recently completed EQUALISE, a Phase 1b proof-of-concept clinical study of itolizumab (EQ001) in patients with systemic lupus erythematosus, or SLE, and lupus nephritis, or LN. In November 2023, we announced data from the Type B LN portion of the study presented at the annual meetings of the American College of Rheumatology and the American Society of Nephrology.
We also completed EQUALISE, a Phase 1b proof-of-concept clinical study of itolizumab (EQ001) in patients with systemic lupus erythematosus, or SLE, and lupus nephritis, or LN.
Amortization of the upfront payment represented $4.0 million, and development funding from July 1, 2022 through December 31, 2022, represented $11.8 million. Research and Development Expenses Research and development expenses were $37.0 million for the year ended December 31, 2023, compared to $37.5 million for the year ended December 31, 2022.
Research and Development Expenses Research and development expenses were $37.4 million for the year ended December 31, 2024, compared to $37.0 million for the year ended December 31, 2023.
If we are unable to raise capital when needed or on attractive terms, we would be forced to delay, reduce or eliminate our research and development programs or other operations. Any of these actions could have a material effect on our business, financial condition and results of operations.
If we are unable to raise capital when needed or on attractive terms, which ability would be adversely impacted if our expected FDA feedback is negative, we would be forced to delay, reduce or eliminate our research and development programs or other operations.
Our novel and differentiated pipeline of first-in-class immunology assets has the potential to address unmet medical needs in numerous areas, including dermatology, gastroenterology, rheumatology, hematology, transplant science, oncology and pulmonology. We are focused on developing EQ101, EQ302 and itolizumab (EQ001) as potential best-in-class, disease modifying treatments for multiple severe immuno-inflammatory disorders.
Our novel and differentiated pipeline of therapeutic candidates has the potential to address unmet medical needs in numerous areas, including gastroenterology, dermatology, hematology, transplant science, rheumatology, pulmonology and oncology.
During the year ended December 31, 2023, we recognized $36.1 million of revenue under our Asset Purchase Agreement with Ono consisting of $27.0 million of development funding and $9.1 million related to the amortization of the upfront payment. As of December 31, 2023, aggregate deferred revenue related to the Asset Purchase Agreement was $15.7 million.
On October 30, 2024, the option period expired and the Asset Purchase Agreement automatically terminated pursuant to its terms. During the year ended December 31, 2024, we recognized $41.1 million of revenue under our Asset Purchase Agreement with Ono consisting of $28.3 million of development funding and $12.8 million related to the amortization of the upfront payment.
The consideration in excess of the tangible net liabilities acquired was expensed. 100 General and Administrative Expenses General and administrative expenses were $13.6 million for the year ended December 31, 2023, compared to $17.2 million for the year ended December 31, 2022.
General and Administrative Expenses General and administrative expenses were $11.9 million for the year ended December 31, 2024, compared to $13.6 million for the year ended December 31, 2023.
We are also collaborating with Biocon and co-funding a Phase 2 clinical study of itolizumab in subjects with ulcerative colitis.
Biocon also recently completed a Phase 2 clinical study of itolizumab in subjects with UC in India, which Equillium co-funded.
As of December 31, 2023, we repurchased 298,385 shares of our common stock under the stock repurchase program for a total of $0.3 million. There have been no repurchases of our common stock under the stock repurchase program since December 31, 2023 and through the date of the filing of this Annual Report on Form 10-K.
As of December 31, 2024, we had repurchased 298,385 shares of our common stock under the stock repurchase program for a total of $0.3 million, all of which occurred prior to 2024. This program expired as of December 31, 2024.
On December 5, 2022, we entered into the Asset Purchase Agreement with Ono pursuant to which we granted Ono an exclusive option to acquire our rights to itolizumab (EQ001) or the Option. These rights include all therapeutic indications and the rights to commercialize itolizumab (EQ001) in the United States, Canada, Australia, and New Zealand.
Itolizumab was generally well-tolerated consistent with prior clinical experience, and no safety signal was observed. In December 2022, we entered into an asset purchase agreement, or Asset Purchase Agreement, with Ono Pharmaceutical Co., Ltd., or Ono, pursuant to which we granted Ono an exclusive option to acquire our rights to itolizumab (EQ001), or the Option.
Research and Development Expenses Research and development expenses primarily consist of costs associated with our non-clinical research and clinical development of our product candidates.
As of December 31, 2024, there was no further deferred revenue related to the Asset Purchase Agreement. 90 Research and Development Expenses Research and development expenses primarily consist of costs associated with our non-clinical research and clinical development of our product candidates.
There was no income tax expense for the year ended December 31, 2022. Liquidity and Capital Resources From inception through December 31, 2023, we have financed our operations primarily through the sale of equity and debt securities.
Liquidity and Capital Resources From inception through December 31, 2024, we have financed our operations primarily through the sale of equity and debt securities and income generated from our Asset Purchase Agreement with Ono as described in more detail in the Sources of Liquidity section below.
We have a proprietary product discovery platform that we can leverage to design novel peptides to target and inhibit multiple cytokines that are involved in validated biological and disease pathways. For example, we recently highlighted preclinical data from EQ302, a second generation orally deliverable multi-cytokine inhibitor in development to target IL-15 and IL-21.
That product discovery platform can be leveraged to design novel peptides to target and inhibit multiple cytokines that are involved in validated biological and disease pathways.
The increase in interest income was primarily due to higher average interest rates in 2023 compared to 2022. Other (Expense) Income, Net Other expense, net was $0.1 million for the year ended December 31, 2023, compared to other income, net of $0.3 million for the year ended December 31, 2022.
Interest Expense There was no interest expense for the year ended December 31, 2024, compared to $0.5 million for the year ended December 31, 2023.
The study, which is being conducted by Biocon in India and commenced in November 2022, is a randomized, double-blinded, placebo-controlled clinical study in up to 90 subjects, to evaluate the safety and efficacy of itolizumab in patients with moderate to severe ulcerative colitis.
The study commenced in November 2022 and was a randomized, double-blinded, placebo- and active-controlled Phase 2 clinical study of 90 subjects to evaluate the safety and efficacy of itolizumab compared to placebo and adalimumab (a global standard of care biologic treatment used as an active control).
We have based this estimate on assumptions that may prove to be wrong, and we could use our capital resources sooner than we expect. Furthermore, our operating plans may change, and we may need additional funds sooner than planned.
As a result, there can be no assurance that we will be successful in implementing our plans to alleviate this substantial doubt about our ability to continue as a going concern. We have based these estimates on assumptions that may prove to be wrong, and we could use our capital resources sooner than we expect.
In addition, we have generated proceeds from our Asset Purchase Agreement with Ono as described in more detail in the Sources of Liquidity section below. As of December 31, 2023, we had an accumulated deficit of $185.7 million and anticipate that we will continue to incur net losses for the foreseeable future.
As of December 31, 2024, we had an accumulated deficit of $193.8 million and anticipate that we will continue to incur net losses for the foreseeable future. As of December 31, 2024, we had $18.1 million in cash and cash equivalents and $4.5 million in short-term investments.
As of December 31, 2023, we have not received the option exercise payment or any milestone payments. We are responsible for conducting all research and development of itolizumab, which is being funded by Ono on a quarterly basis from July 1, 2022 through the option period.
These rights included all therapeutic indications and the rights to commercialize itolizumab in the United States, Canada, Australia, and New Zealand. We were responsible for conducting all research and development of itolizumab, which was funded by Ono on a quarterly basis from July 1, 2022, through October 30, 2024, the end of the option period.
We expect that our existing cash, cash equivalents and short-term investments as of December 31, 2023, will enable us to fund our operations into the second half of 2025, assuming no further repurchases under our stock repurchase program.
Although we have recently implemented operating changes and plan to take further actions as necessary to decrease our expenditures and conserve our cash, we expect that our existing cash, cash equivalents and short-term investments as of December 31, 2024, will enable us to fund our operations into the third quarter of 2025, based on certain assumptions and estimates that may prove to be inaccurate.
These payments were offset by $0.2 million of cash received from employee stock purchases related to our Employee Stock Purchase Plan.
Financing Activities Net cash provided by financing activities totaled $0.2 million during the year ended December 31, 2024 and was primarily attributed to cash received from employee stock purchases related to our Employee Stock Purchase Plan.
The total payments made in the year ended December 31, 2023 were $9.1 million, comprised of (i) principal amounts outstanding as of December 31, 2022, totaling $8.6 million, (ii) a prepayment fee of approximately $62,000, and (iii) a final payment fee of approximately $0.5 million.
In connection with the prepayment and termination of the Loan Agreement, we paid a total of approximately $6.8 million, which consisted of (i) the remaining principal amount and interest outstanding of approximately $6.2 million as of the date of the repayment, (ii) a prepayment fee of approximately $62,000, (iii) a final payment of approximately $0.5 million, and (iv) the remainder for transaction expenses.
The decrease in research and development expense primarily includes the following changes: • $1.7 million decrease in non-clinical research expenses; • $1.4 million decrease in employee compensation and benefits; • $1.1 million increase in the estimated Tax Incentive benefit from the Australian Taxation Office, or ATO, offsetting our research and development expenses associated with our EQ101 and EQ102 clinical studies in Australia; • $0.4 million decrease in transaction costs associated with the Bioniz asset acquisition, primarily legal expenses; offset by • $3.7 million increase in clinical development expenses, primarily driven by EQUATOR, EQ101 and EQ102 clinical studies, partially offset by lower costs for our other itolizumab (EQ001) clinical studies; and • $0.4 million increase in consulting expenses.
The increase of $0.4 million in research and development expense primarily includes the following changes: • $0.6 million increase in preclinical expenses, primarily related to the preclinical asset acquired from Ariagen; • $0.3 million increase in clinical development expenses, primarily driven by our EQUATOR clinical study as well as CMC activities; and • $0.3 million increase in consulting expenses; offset by • $0.8 million decrease in employee compensation and benefits primarily driven by lower bonus expense.
That data represented all but the last patient in the follow-up period and demonstrated that itolizumab (EQ001) was well-tolerated and produced a clinically meaningful response in highly proteinuric subjects. We expect to provide the topline data from the Type B LN portion of EQUALISE to Ono Pharmaceutical Co., Ltd., or Ono, in the coming weeks.
In April 2024, we announced positive topline data from the Type B LN portion of that study in which itolizumab (EQ001) was generally well-tolerated and demonstrated clinically meaningful responses in highly proteinuric patients where more than 80% of subjects achieved a greater than 50% reduction in urine protein creatinine ratio, or UPCR.
In exchange for the Option, Ono paid us a one-time, upfront payment of an amount equal to JPY 3.5 billion, or $26.4 million.
In exchange for the Option, Ono paid us a one-time, upfront payment of $26.4 million and funded all of our itolizumab (EQ001) research and development expenses from July 1, 2022 through October 30, 2024, the end of the option period.
Removed
Itolizumab (EQ001) is a first-in-class monoclonal antibody that selectively targets the immune checkpoint receptor CD6, which plays a central role in the modulation of effector T cell, or T eff cell, activity and trafficking that drives a number of immuno-inflammatory diseases across multiple therapeutic areas.
Added
Itolizumab (EQ001), our most advanced clinical-stage product candidate, is a first-in-class anti-CD6 immune-modifying monoclonal antibody, or mAb, that selectively targets the CD6-ALCAM signaling pathway to downregulate pathogenic T effector cells while preserving T regulatory cells critical for maintaining a balanced immune response.

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Other EQ 10-K year-over-year comparisons