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

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Paragraph-level year-over-year comparison of Gossamer Bio, 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.

+431 added−394 removedSource: 10-K (2025-03-13) vs 10-K (2024-03-05)

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

431 paragraphs added · 394 removed · 330 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

119 edited+48 added−20 removed248 unchanged
Biggest changeFailure to comply with applicable foreign regulatory requirements, may be subject to, among other things, fines, suspension or withdrawal of regulatory approvals, product recalls, seizure of products, operating restrictions and criminal prosecution. Non-clinical studies and clinical trials Similar to the U.S., the various phases of non-clinical and clinical research in the EU are subject to significant regulatory controls.
Biggest changeRegulatory approval in one country or jurisdiction does not ensure regulatory approval in another, but a failure or delay in obtaining regulatory approval in one country or jurisdiction may negatively impact the regulatory process in others. 22 Table of Contents Failure to comply with applicable foreign regulatory requirements, may be subject to, among other things, fines, suspension or withdrawal of regulatory approvals, product recalls, seizure of products, operating restrictions and criminal prosecution.
Summary of Preclinical Program in PAH Seralutinib inhibits both PGDFR α and β, and it inhibited and reversed cell overgrowth in lung blood vessels in a PAH rat model, which replicates many features of human PAH, including the abnormal cell proliferation that can block the small vessels of the lung.
Summary of Preclinical Program Seralutinib inhibits both PGDFR α and β, and it inhibited and reversed cell overgrowth in lung blood vessels in a PAH rat model, which replicates many features of human PAH, including the abnormal cell proliferation that can block the small vessels of the lung.
In a separate rat model of PAH, the SU5416 hypoxia model, seralutinib demonstrated a statistically significant reduction in circulating plasma NT-proBNP as compared to placebo, while the difference between imatinib and placebo was not significant for this PAH biomarker.
In a separate rat model of PAH, the SU5416 hypoxia model, seralutinib demonstrated a statistically significant reduction in circulating plasma NT-proBNP as compared to placebo, while the difference between imatinib and placebo was not significant for this PAH biomarker.
Seralutinib also restored rat lung BMPR2 expression to healthy levels, which was a statistically significant improvement as compared to placebo and imatinib. Irregularities in BMPR2 expression have been linked to PAH.
Seralutinib also restored rat lung BMPR2 expression to healthy levels, which was a statistically significant improvement as compared to placebo and imatinib. Irregularities in BMPR2 expression have been linked to PAH.
Patent application, which, if issued, is not due to expire before 2037, excluding any additional term for patent term extension; and a number of patents and pending applications in other jurisdictions, including issued patents in Mexico and Russia, and pending applications in Australia, Brazil, Canada, China, the European Patent Convention, India, Japan, South Korea, and New Zealand, which, if issued, are not due to expire before 2037, excluding any additional term for patent term extension.
Patent application, which, if issued, is not due to expire before 2037, excluding any additional term for patent term extension; and a number of patents and pending applications in other jurisdictions, including issued patents in Mexico, Russia, Australia, India, Japan, South Korea, and New Zealand, and pending applications in, Brazil, Canada, China, the European Patent Convention, and New Zealand, which, if issued, are not due to expire before 2037, excluding any additional term for patent term extension.
In order to obtain a UK MA to commercialize products in the UK, an applicant must be established in the UK and must follow one of the UK national authorization procedures or one of the remaining post-Brexit international cooperation procedures to obtain an MA to commercialize products in the UK.
In order to obtain a UK MA to commercialize products in the UK, an applicant must be established in the UK and must follow one of the UK national authorization procedures or one of the remaining post-Brexit international cooperation procedures.
We intend to maintain a scientifically rigorous and inclusive corporate culture where employees strive to bring improved therapeutic options to patients. Our Team Our founders and management team have held senior positions at leading biopharmaceutical companies and possess substantial experience and expertise across the spectrum of drug discovery, development and commercialization.
We intend to maintain a scientifically rigorous and inclusive corporate culture where employees strive to bring improved therapeutic options to patients. Our Team Our founders and management team have held senior positions at leading biopharmaceutical companies and possess substantial experience and expertise across the spectrum of drug development and commercialization.
We are enrolling approximately 350 Functional Class II and III PAH patients on stable background therapy. Patients will be randomized in a 1:1 fashion to 90 mg twice daily seralutinib and placebo, and patients will receive blinded therapy for up to 48 weeks. Patients will remain on their background PAH therapies throughout the trial.
We are enrolling approximately 350 Functional Class II and III PAH patients on stable background therapy. Patients will be randomized in a 1:1 fashion to 90 mg twice daily seralutinib or placebo, and patients will receive blinded therapy for up to 48 weeks. Patients will remain on their background PAH therapies throughout the trial.
The process required by the FDA before a drug may be marketed in the United States generally involves the following: • completion of certain preclinical laboratory tests, animal studies and formulation studies in accordance with Good Laboratory Practice, or GLP, regulations and other applicable regulations; • submission to the FDA of an IND, which must become effective before human clinical trials may begin; 12 Table of Contents • approval by an independent institutional review board, or IRB, or ethics committee at each clinical site before each trial may be initiated; • performance of adequate and well-controlled human clinical trials in accordance with Good Clinical Practice, or GCP, regulations to establish the safety and efficacy of the proposed drug for its intended use; • submission to the FDA of an NDA; • satisfactory completion of an FDA advisory committee review, if applicable; • satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the drug is produced to assess compliance with current GMP, or cGMP, requirements to assure that the facilities, methods and controls are adequate to preserve the drug’s identity, strength, quality and purity, and potential inspection of selected clinical investigation sites to assess compliance with GCPs; and • FDA review and approval of the NDA to permit commercial marketing of the product for particular indications for use in the United States.
The process required by the FDA before a drug may be marketed in the United States generally involves the following: • completion of certain preclinical laboratory tests, animal studies and formulation studies in accordance with Good Laboratory Practice, or GLP, regulations and other applicable regulations; • submission to the FDA of an IND, which must become effective before human clinical trials may begin; • approval by an independent institutional review board, or IRB, or ethics committee at each clinical site before each trial may be initiated; • performance of adequate and well-controlled human clinical trials in accordance with Good Clinical Practice, or GCP, regulations to establish the safety and efficacy of the proposed drug for its intended use; • submission to the FDA of an NDA; • satisfactory completion of an FDA advisory committee review, if applicable; • satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the drug is produced to assess compliance with current GMP, or cGMP, requirements to assure that the facilities, methods and controls are adequate to preserve the drug’s identity, strength, quality and purity, and potential inspection of selected clinical investigation sites to assess compliance with GCPs; and • FDA review and approval of the NDA to permit commercial marketing of the product for particular indications for use in the United States.
The true incidence and prevalence of PAH are unknown. The estimated PAH patient population in the US is over 50,000 patients, and the estimated patient population in the EU is over 70,000 patients. The number of diagnosed PAH patients continues to increase, and we believe this increase is likely due to enhanced awareness and diagnosis of the disease.
The true incidence and prevalence of PAH are unknown. The estimated PAH patient population in the US is about 50,000 patients, and the estimated patient population in the EU is over 70,000 patients. The number of diagnosed PAH patients continues to increase, and we believe this increase is likely due to enhanced awareness and diagnosis of the disease.
Seralutinib Product Differentiation in PAH Seralutinib is an inhaled kinase inhibitor designed to build on the evidence of efficacy seen in trials of imatinib while overcoming imatinib’s observed systemic safety and tolerability issues and improving on imatinib's kinase inhibitory profile.
Seralutinib Product Differentiation Seralutinib is an inhaled kinase inhibitor designed to build on the evidence of efficacy seen in trials of imatinib while overcoming imatinib’s observed systemic safety and tolerability issues and improving on imatinib's kinase inhibitory profile.
Specifically, under regulations issued by the FDA, a combination product may be: • a product comprised of two or more regulated components that are physically, chemically, or otherwise combined or mixed and produced as a single entity; • two or more separate products packaged together in a single package or as a unit and comprised of drug and device products, device and biological products, or biological and drug products; • a drug, or device, or biological product packaged separately that according to its investigational plan or proposed labeling is intended for use only with an approved individually specified drug, or device, or biological product where both are required to achieve the intended use, indication, or effect and where upon approval of the proposed product the labeling of the approved product would need to be changed, e.g., to reflect a change in intended use, dosage form, strength, route of administration, or significant change in dose; or 14 Table of Contents • any investigational drug, or device, or biological product packaged separately that according to its proposed labeling is for use only with another individually specified investigational drug, device, or biological product where both are required to achieve the intended use, indication, or effect.
Specifically, under regulations issued by the FDA, a combination product may be: • a product comprised of two or more regulated components that are physically, chemically, or otherwise combined or mixed and produced as a single entity; • two or more separate products packaged together in a single package or as a unit and comprised of drug and device products, device and biological products, or biological and drug products; • a drug, or device, or biological product packaged separately that according to its investigational plan or proposed labeling is intended for use only with an approved individually specified drug, or device, or biological product where both are required to achieve the intended use, indication, or effect and where upon approval of the proposed product the labeling of the approved product would need to be changed, e.g., to reflect a change in intended use, dosage form, strength, route of administration, or significant change in dose; or • any investigational drug, or device, or biological product packaged separately that according to its proposed labeling is for use only with another individually specified investigational drug, device, or biological product where both are required to achieve the intended use, indication, or effect.
We have also exclusively licensed four issued U.S. patents co-owned by Pulmokine and Gilead Sciences, Inc., which are not due to expire before 2034, excluding any additional term for patent term extension; two pending U.S. patent applications, which, if issued, are not due to expire before 2034, excluding any additional term for patent term extension; and a number of patents and pending patent applications in other jurisdictions, including issued patents in Australia, Canada, China, the European Patent Convention and Japan, and pending applications in Australia, China, the European Patent Convention and Japan.
We have also exclusively licensed four issued U.S. patents co-owned by Pulmokine and Gilead Sciences, Inc., which are not due to expire before 2034, excluding any additional term for patent term extension; two pending U.S. patent applications which, if issued, are not due to expire before 2034, excluding any additional term for patent term extension; and a number of patents and pending patent applications in other jurisdictions, including issued patents in Australia, Canada, China, the European Patent Convention, Japan, and Hong Kong.
The federal Physician Payments Sunshine Act requires certain manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program, with specific exceptions, to report annually to CMS information related to payments or other transfers of value made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain non-physician providers including physician assistants and nurse practitioners, and teaching hospitals, and applicable manufacturers and applicable group purchasing organizations to report annually to CMS ownership and investment interests held by physicians (as defined by statute) and their immediate family members.
The federal Physician Payments Sunshine Act requires certain manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program, with specific exceptions, to report annually to CMS information related to payments or other transfers of value made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain non-physician providers including physician assistants and nurse practitioners, and teaching hospitals, and applicable manufacturers and applicable group 21 Table of Contents purchasing organizations to report annually to CMS ownership and investment interests held by physicians (as defined by statute) and their immediate family members.
Intellectual property rights may not address all potential threats to our competitive advantage. Seralutinib As of December 31, 2023, with respect to seralutinib, we have exclusively licensed two issued U.S. patents owned by Pulmokine, which are not due to expire before 2037, excluding any additional term for patent term extension; one pending U.S.
Intellectual property rights may not address all potential threats to our competitive advantage. Seralutinib As of December 31, 2024, with respect to seralutinib, we have exclusively licensed two issued U.S. patents owned by Pulmokine, which are not due to expire before 2037, excluding any additional term for patent term extension; one pending U.S.
Caryn Peterson, our Executive Vice President, Regulatory Affairs, has considerable experience and regulatory expertise as a Managing Director of Development & Strategic Consulting Associates, as well as management positions leading regulatory affairs at Syndax Pharmaceuticals and FeRx Incorporated. Our Strategy We are a clinical-stage biopharmaceutical company focused on the development and commercialization of seralutinib for the treatment of PAH.
Caryn Peterson, our Executive Vice President, Regulatory Affairs, has considerable experience and regulatory expertise as a Managing Director of Development & Strategic Consulting Associates, as well as management positions leading regulatory affairs at Syndax Pharmaceuticals and FeRx Incorporated. Our Strategy We are a clinical-stage biopharmaceutical company focused on the development and commercialization of seralutinib for the treatment of PH.
At the state level, legislatures have increasingly passed legislation and implemented regulations designed to control pharmaceutical product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.
At the state level, legislatures have increasingly passed legislation and implemented regulations designed to control pharmaceutical product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure, drug price reporting and other transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.
We expect that healthcare reform measures that may be adopted in the future may result in more rigorous coverage criteria, new payment methodologies and additional downward pressure on the price that we receive for any approved product. Any reduction in reimbursement from Medicare or other government programs may result in a similar reduction in payments from private payors. U.S.
We expect that healthcare reform measures that may be adopted in the future may result in more rigorous coverage criteria, new payment methodologies and additional downward pressure on the price that we receive for any approved product. Any reduction in reimbursement from Medicare or other government programs may result in a similar reduction in payments from private payors.
Foreign Regulation In order to market any product outside of the United States, we need to comply with numerous and varying regulatory requirements of other countries and jurisdictions regarding quality, safety and efficacy and governing, among other things, clinical trials, marketing authorization, commercial sales and distribution of our products.
Foreign Regulation In order to market any product outside of the United States, we need to comply with numerous and varying regulatory requirements of other countries and jurisdictions regarding quality, safety and efficacy and governing, among other things, clinical trials, marketing authorization, or MA, commercial sales and distribution of our products.
Drug Development Process In the United States, the FDA regulates drugs under the federal Food, Drug, and Cosmetic Act, or the FDCA, and its implementing regulations. The process of obtaining regulatory approvals and the subsequent compliance with appropriate federal, state, local and foreign statutes and regulations require the expenditure of substantial time and financial resources.
U.S. Drug Development Process In the United States, the FDA regulates drugs under the federal Food, Drug, and Cosmetic Act, or the FDCA, and its implementing regulations. The process of obtaining regulatory approvals and the subsequent compliance with appropriate federal, state, local and foreign statutes and regulations require the expenditure of substantial time and financial resources.
On August 2, 2011, the Budget Control Act of 2011 was signed into law, which, among other things, resulted in aggregate reductions of Medicare payments to providers, which went into effect on April 1, 2013 and, due to subsequent legislative amendments to the statute, will remain in effect through 2032, with the exception of a temporary suspension from May 1, 2020 through March 31, 2022, unless additional Congressional action is taken.
On August 2, 2011, the Budget Control Act of 2011 was signed into law, which, among other things, resulted in aggregate reductions of Medicare payments to providers, which went into effect on April 1, 2013 and, due to subsequent legislative amendments to the statute, 20 Table of Contents will remain in effect through 2032, with the exception of a temporary suspension from May 1, 2020 through March 31, 2022, unless additional Congressional action is taken.
Orphan drug designation The criteria for designating an “orphan medicinal product” in the EU are similar in principle to those in the United States.
Orphan designation The criteria for designating an “orphan medicinal product” in the EU are similar in principle to those in the United States.
The FDA strictly regulates labeling, advertising, promotion and other types of information on products that are placed on the market and imposes requirements and restrictions on drug manufacturers, such as those related to direct-to-consumer advertising, the prohibition on promoting products for uses or in patient populations that are not described 17 Table of Contents in the product’s approved labeling (known as “off-label use”), industry-sponsored scientific and educational activities, and promotional activities involving the internet.
The FDA strictly regulates labeling, advertising, promotion and other types of information on products that are placed on the market and imposes requirements and restrictions on drug manufacturers, such as those related to direct-to-consumer advertising, the prohibition on promoting products for uses or in patient populations that are not described in the product’s approved labeling (known as “off-label use”), industry-sponsored scientific and educational activities, and promotional activities involving the internet.
If coverage and adequate reimbursement are not available, or are available only at limited levels, successful commercialization of, and obtaining a satisfactory financial return on, any product we develop may not be possible. 18 Table of Contents Third-party payors are increasingly challenging the price and examining the medical necessity and cost-effectiveness of medical products and services, in addition to their safety and efficacy.
If coverage and adequate reimbursement are not available, or are available only at limited levels, successful commercialization of, and obtaining a satisfactory financial return on, any product we develop may not be possible. Third-party payors are increasingly challenging the price and examining the medical necessity and cost-effectiveness of medical products and services, in addition to their safety and efficacy.
Among other things, the IRA requires manufacturers of certain drugs to engage in price negotiations with Medicare (beginning in 2026), with prices that can be negotiated subject to a cap; imposes rebates under Medicare Part B and Medicare Part D to penalize price increases that outpace inflation (first due in 2023); and replaces the Part D coverage gap discount program with a new discounting program (beginning in 2025).
Among other things, the IRA requires manufacturers of certain drugs to engage in price negotiations with Medicare (beginning in 2026), with prices that can be negotiated subject to a cap; imposes rebates under Medicare Part B and Medicare Part D to penalize price increases that outpace inflation (first due in 2023); and replaces the Part D coverage gap discount program with a new manufacturer discounting program (which began in 2025).
Failure to comply with EU and member state laws that apply to the conduct of clinical trials, manufacturing approval, MA of medicinal products and marketing of such products, both before and after grant of the MA, manufacturing of pharmaceutical products, statutory health insurance, bribery and anti-corruption or with other applicable regulatory 24 Table of Contents requirements may result in administrative, civil or criminal penalties.
Failure to comply with EU and member state laws that apply to the conduct of clinical trials, manufacturing approval, MA of medicinal products and marketing of such products, both before and after grant of the MA, manufacturing of pharmaceutical products, statutory health insurance, bribery and anti-corruption or with other applicable regulatory requirements may result in administrative, civil or criminal penalties.
Our commercial success will depend in part on our ability to obtain and maintain patent and other proprietary protection for our technology, inventions and improvements; to preserve the confidentiality of our trade secrets; to defend and enforce our proprietary rights, including any patents that we may 11 Table of Contents own in the future; and to operate without infringing on the valid and enforceable patents and other proprietary rights of third parties.
Our commercial success will depend in part on our ability to obtain and maintain patent and other proprietary protection for our technology, inventions and improvements; to preserve the confidentiality of our trade secrets; to defend and enforce our proprietary rights, including any patents that we may own in the future; and to operate without infringing on the valid and enforceable patents and other proprietary rights of third parties.
The centralized procedure is mandatory for certain types of products, such as: (i) medicinal products derived from biotechnology medicinal products, (ii) designated orphan medicinal products, (iii) advanced therapy medicinal products, or ATMPs, and (iv) medicinal products containing a new active substance indicated for the treatment certain diseases, such as HIV/AIDS, cancer, neurodegenerative diseases, diabetes, auto-immune and other dysfunctions and viral diseases.
The centralized procedure is mandatory for certain types of products, such as: (i) medicinal products derived from biotechnology medicinal 23 Table of Contents products, (ii) designated orphan medicinal products, (iii) advanced therapy medicinal products, or ATMPs, and (iv) medicinal products containing a new active substance indicated for the treatment certain diseases, such as HIV/AIDS, cancer, neurodegenerative diseases, diabetes, auto-immune and other dysfunctions and viral diseases.
This progressive obstruction of blood flow from the right side of the heart to the lungs can cause the right ventricle to fail, thus leading to severe breathlessness, reduced exercise tolerance and death. Seralutinib was designed to inhibit multiple kinases that play a role in the pathology of PAH, including PDGFRα/β, CSF1R and c-KIT.
This progressive obstruction of blood flow from the right side of the heart to the lungs can cause the right ventricle to fail, thus leading to severe breathlessness, reduced exercise tolerance and death. 5 Table of Contents Seralutinib was designed to inhibit multiple kinases that play a role in the pathology of PAH, including PDGFRα/β, CSF1R and c-KIT.
With regard to a fast track product, the FDA may also consider for review sections of the NDA on a rolling basis before the complete application is submitted, if the sponsor provides a schedule for the submission of the sections of the NDA, 16 Table of Contents the FDA agrees to accept sections of the NDA and determines that the schedule is acceptable, and the sponsor pays any required user fees upon submission of the first section of the NDA.
With regard to a fast track product, the FDA may also consider for review sections of the NDA on a rolling basis before the complete application is submitted, if the sponsor provides a schedule for the submission of the sections of the NDA, the FDA agrees to accept sections of the NDA and determines that the schedule is acceptable, and the sponsor pays any required user fees upon submission of the first section of the NDA.
The requirements regarding quality documentation for medicinal products when used with a medical device, including single integral products, co-packaged and referenced products, are outlined in the EMA guideline of July 22, 2021, which became applicable as of January 1, 2022. The aforementioned EU rules are generally applicable in the EEA.
The requirements regarding quality documentation for medicinal products when used with a medical device, including single integral products, co-packaged and referenced products, are outlined in the EMA guideline of July 22, 2021, which became applicable as of January 1, 2022. 26 Table of Contents The aforementioned EU rules are generally applicable in the EEA.
Under the above described procedures, before granting the MA, the regulatory authorities make an assessment of the risk-benefit balance of the product on the basis of scientific criteria concerning its quality, safety and efficacy. 22 Table of Contents Under the centralized procedure the maximum timeframe for the evaluation of a MAA by the EMA is 210 days.
Under the above described procedures, before granting the MA, the regulatory authorities make an assessment of the risk-benefit balance of the product on the basis of scientific criteria concerning its quality, safety and efficacy. Under the centralized procedure the maximum timeframe for the evaluation of a MAA by the EMA is 210 days.
Upregulated PDGFR signaling results in endothelial cell and fibroblast dysfunction and the proliferation and migration of smooth muscle cells. This effect results in the overgrowth and occlusion of 5 Table of Contents blood vessels in the lung. Kinase inhibitors with activity against the PDGFR pathway have shown the ability to reverse PAH in animal models.
Upregulated PDGFR signaling results in endothelial cell and fibroblast dysfunction and the proliferation and migration of smooth muscle cells. This effect results in the overgrowth and occlusion of blood vessels in the lung. Kinase inhibitors with activity against the PDGFR pathway have shown the ability to reverse PAH in animal models.
If granted, the data exclusivity period prevents generic or biosimilar applicants from relying on the preclinical and clinical trial data contained in the dossier of the reference product when applying for a generic or biosimilar MA in the EU during a period of eight years from the date on which the reference product was first authorized in the EU.
If granted, the data exclusivity period prevents generic or biosimilar applicants from relying on the preclinical and clinical trial data contained in the dossier of the reference product when applying for a generic or biosimilar MA in the EU during a period of eight years from the date on which the reference 24 Table of Contents product was first authorized in the EU.
Clinical Trials must be conducted under protocols detailing, among other things, the objectives of the trial, dosing procedures, subject selection and exclusion criteria and the safety and effectiveness criteria to be evaluated. Each protocol must be submitted to the FDA as part of the IND as well as any subsequent protocol amendments.
Clinical Trials must be conducted under protocols 14 Table of Contents detailing, among other things, the objectives of the trial, dosing procedures, subject selection and exclusion criteria and the safety and effectiveness criteria to be evaluated. Each protocol must be submitted to the FDA as part of the IND as well as any subsequent protocol amendments.
Smith was the National Sales Lead in charge of preparing for the potential launch of sotatercept for the treatment of PAH in the US at Merck & Co., or Merck. Previously until 2018, Mr.
Smith was the National Sales Lead in charge of preparing for the commercial launch of sotatercept for the treatment of PAH in the US at Merck & Co., or Merck. Previously until 2018, Mr.
Information related to the product, patient population, phase of investigation, trial sites and investigators and other aspects of the clinical trial is then made public as part of the registration. Sponsors are also obligated to 13 Table of Contents disclose the results of their clinical trials after completion.
Information related to the product, patient population, phase of investigation, trial sites and investigators and other aspects of the clinical trial is then made public as part of the registration. Sponsors are also obligated to disclose the results of their clinical trials after completion.
The issuance of a written request does not require the sponsor to undertake the described clinical trials. In addition, orphan drug exclusivity, as described above, may offer a seven-year period of marketing exclusivity, except in certain circumstances. U.S.
The 19 Table of Contents issuance of a written request does not require the sponsor to undertake the described clinical trials. In addition, orphan drug exclusivity, as described above, may offer a seven-year period of marketing exclusivity, except in certain circumstances. U.S.
The holder of a MA must establish and maintain a pharmacovigilance system and appoint an individual qualified person for pharmacovigilance, or QPPV, who is responsible for establishment and maintenance of that system, and oversees the safety profiles of medicinal products and any emerging safety concerns.
The holder of a MA must establish and maintain a pharmacovigilance system and appoint an individual qualified person for pharmacovigilance, or QPPV, who is responsible for establishment and maintenance of that system, and oversees the safety 25 Table of Contents profiles of medicinal products and any emerging safety concerns.
This allows new rules to be introduced in the future by way of secondary legislation, 25 Table of Contents which aims to allow flexibility in addressing regulatory gaps and future changes in the fields of human medicines, clinical trials and medical devices.
This allows new rules to be introduced in the future by way of secondary legislation, which aims to allow flexibility in addressing regulatory gaps and future changes in the fields of human medicines, clinical trials and medical devices.
In addition, the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the civil False Claims Act and the civil monetary penalties statute.
In addition, the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the civil False Claims Act.
Certain 20 Table of Contents countries also mandate implementation of commercial compliance programs, or require disclosure of marketing expenditures and pricing information. Efforts to ensure compliance with applicable healthcare laws and regulations can involve substantial costs.
Certain countries also mandate implementation of commercial compliance programs, or require disclosure of marketing expenditures and pricing information. Efforts to ensure compliance with applicable healthcare laws and regulations can involve substantial costs.
There were no SAEs, and the most frequently reported AEs were mild-to-moderate cough and mild headache. Systemic PK was characterized by low systemic exposure and rapid drug clearance in PAH patients, which was consistent with PK data from the Phase 1a studies in healthy volunteers.
There were no SAEs, and the most frequently reported AEs were mild-to-moderate cough and mild headache. Systemic PK was characterized by low systemic exposure and rapid drug clearance in PAH patients, which was consistent with PK data from the Phase 1a studies in healthy 8 Table of Contents volunteers.
The designation of such drug also entitles a party to financial incentives such as opportunities for grant funding toward clinical trial costs, tax advantages and user-fee waivers.
The designation of such drug also entitles a party to financial incentives such 17 Table of Contents as opportunities for grant funding toward clinical trial costs, tax advantages and user-fee waivers.
Once the MA is obtained in all EU member states and study results are included in the product 23 Table of Contents information, even when negative, the product is eligible for six months’ supplementary protection certificate extension (if any is in effect at the time of approval) or, in the case of orphan pharmaceutical products, a two year extension of the orphan market exclusivity is granted.
Once the MA is obtained in all EU member states and study results are included in the product information, even when negative, the product is eligible for six months’ supplementary protection certificate extension (if any is in effect at the time of approval) or, in the case of orphan medicinal products, a two year extension of the orphan market exclusivity is granted.
Once filed, the FDA reviews an NDA to determine, among other things, whether a product is safe and effective for its intended use and whether its manufacturing is cGMP-compliant to assure and preserve the product’s identity, strength, quality and purity.
Once filed, the FDA reviews an NDA to determine, among other things, whether a product is safe and effective for its intended use and whether its manufacturing is cGMP-compliant to assure and preserve the product’s identity, 16 Table of Contents strength, quality and purity.
Therefore after Brexit, companies established in the UK can no longer cannot use the EU centralized procedure and instead an EEA entity must hold any centralized MAs.
Therefore, since Brexit, companies established in the UK can no longer use the EU centralized procedure and instead an EEA entity must hold any centralized MAs.
Seralutinib is a PDGFR, CSF1R and c-KIT inhibitor initially targeted for PAH and PH-ILD patients. We expect competition within the PAH indication will include prostanoids / prostacyclin receptor agonists, including Orenitram (United Therapeutics), Uptravi (Janssen), Tyvaso (United Therapeutics), and Remodulin (United Therapeutics).
Seralutinib is a PDGFR, CSF1R and c-KIT inhibitor initially targeted for PAH and PH-ILD patients. We expect competition within the PAH indication will include prostanoids / prostacyclin receptor agonists, including Orenitram (United Therapeutics), Uptravi (Janssen), Tyvaso (United Therapeutics), and Remodulin (United Therapeutics), and activin ligand traps, including Winrevair (Merck).
Patients remained on their background PAH therapies throughout the trial. 8 Table of Contents Seralutinib demonstrated a statistically significant improvement on the primary endpoint, change from baseline in PVR over a 24-week treatment period.
Patients remained on their background PAH therapies throughout the trial. Seralutinib demonstrated a statistically significant improvement on the primary endpoint, change from baseline in PVR over a 24-week treatment period.
In addition, appropriate packaging must be selected and tested and stability studies must be conducted to demonstrate that the product candidate does not undergo unacceptable deterioration over its shelf life.
In addition, appropriate packaging must be 15 Table of Contents selected and tested and stability studies must be conducted to demonstrate that the product candidate does not undergo unacceptable deterioration over its shelf life.
We also may face some competition from products used in class I and II patients, such as the oral PDE5 inhibitors, including Revatio (Pfizer Inc.) and Adcirca (United Therapeutics); the sGC stimulator Adempas (Bayer AG); and oral ERAs, including Tracleer (Janssen), Letairis (Gilead Sciences, Inc.) and Opsumit (Janssen).
We also may face some competition from products used in Functional Class I and II patients, such as the oral PDE5 inhibitors, including Revatio (Pfizer Inc.) and Adcirca (United Therapeutics); the sGC stimulator Adempas (Bayer AG); and oral ERAs, including Tracleer (Janssen), Letairis (Gilead Sciences, Inc.) and Opsumit (Janssen); and combination PDE5 inhibitor / ERA therapies, such as Opsynvi (Janssen).
We believe seralutinib has the potential to be a therapeutic option for PAH that may provide a: 7 Table of Contents • differentiated, anti-proliferative mechanism that addresses the underlying mechanisms of PAH; • more tolerable safety profile than systemic imatinib; and • convenient, simple and portable inhalation delivery system.
We believe seralutinib has the potential to be a therapeutic option for PH that may provide a: • differentiated, anti-proliferative mechanism that addresses the underlying mechanisms of both PAH and PH-ILD; • more tolerable safety profile than systemic imatinib; and • convenient, simple and portable inhalation delivery system.
It is currently unclear to what extent the Government of the United Kingdom, or UK, will seek to align its regulations with the EU. The EU laws that have been transposed into UK law through secondary legislation remain applicable in Great Britain, however, new legislation such as the (EU) CTR is not applicable in Great Britain.
It is currently unclear to what extent the government of the UK will seek to align its regulations with the EU. The EU laws that have been transposed into UK law through secondary legislation remain applicable in Great Britain (England, Scotland and Wales), or GB, however, new legislation such as the (EU) CTR is not applicable in GB.
Additionally, although not approved for the treatment of PAH, we may face competition from formulations of imatinib in development for the treatment of PAH, including those from Aerami Therapeutics, Aerovate Therapeutics and Tenax Therapeutics. We expect to face competition from Tyvaso (United Therapeutics) within the PH-ILD indication, as it is the only approved therapy for PH-ILD in the US.
Additionally, although not approved for the treatment of PAH, we may face competition from formulations of imatinib, including the one in development from Tenax Therapeutics and Inhibikase Therapeutics. We expect to face competition from Tyvaso (United Therapeutics) within the PH-ILD indication, as it is the only approved therapy for PH-ILD in the United States.
In patients who fail to respond to combination therapy of an ERA and a PDE5 inhibitor, it is common practice to add a prostanoid. Prostanoids are also commonly used to treat patients with evidence of right heart failure.
PDE5 inhibitors are often used in combination with ERAs as an early treatment strategy. In patients who fail to respond to combination therapy of an ERA and a PDE5 inhibitor, it is common practice to add a prostanoid. Prostanoids are also commonly used to treat patients with evidence of right heart failure.
The UK government has passed a new Medicines and Medical Devices Act 2021, which introduces delegated powers in favor of the Secretary of State or an ‘appropriate authority’ to amend or supplement existing regulations in the area of medicinal products and medical devices.
The UK Medicines and Medical Devices Act 2021 has introduced delegated powers in favor of the Secretary of State or an ‘appropriate authority’ to amend or supplement existing regulations in the area of medicinal products and medical devices.
The ACA, among other things: (1) increased the minimum Medicaid rebates owed by manufacturers under the Medicaid Drug Rebate Program and extended the rebate program to individuals enrolled in Medicaid managed care organizations; (2) created a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for certain drugs and biologics that are inhaled, infused, instilled, implanted or injected; (3) established an annual, nondeductible fee on any entity that manufactures or imports certain specified branded prescription drugs and biologic agents apportioned among these entities according to their market share in certain government healthcare programs; (4) expanded the availability of lower pricing under the 340B drug pricing program by adding new entities to the program; (5) expanded the eligibility criteria for Medicaid programs; (6) created a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research; (7) created a new Medicare Part D coverage gap discount program, in which manufacturers must agree to offer 50% (which was increased to 70% commencing January 1, 2019) point-of-sale discounts off negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period, as a condition for the manufacturer’s outpatient drugs to be covered under Medicare Part D; (8) established a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research; and (9) established a Center for Medicare and Medicaid Innovation at the Centers for Medicare & Medicaid Services, or CMS, to test innovative payment and service delivery models to lower Medicare and Medicaid spending, potentially including prescription drugs.
The ACA, among other things: (1) increased the minimum Medicaid rebates owed by manufacturers under the Medicaid Drug Rebate Program and extended the rebate program to individuals enrolled in Medicaid managed care organizations; (2) created a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for certain drugs and biologics that are inhaled, infused, instilled, implanted or injected; (3) established an annual, nondeductible fee on any entity that manufactures or imports certain specified branded prescription drugs and biologic agents apportioned among these entities according to their market share in certain government healthcare programs; (4) expanded the availability of lower pricing under the 340B drug pricing program by adding new entities to the program; (5) expanded the eligibility criteria for Medicaid programs; (6) created a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research; (7) established a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research; and (8) established a Center for Medicare and Medicaid Innovation at the Centers for Medicare & Medicaid Services, or CMS, to test innovative payment and service delivery models to lower Medicare and Medicaid spending, potentially including prescription drugs.
The PIP sets out the timing and measures proposed to generate data to support a pediatric indication of the drug for which marketing authorization is being sought.
The PIP sets out the timing and measures proposed to generate data to support a pediatric indication of the product candidate for which MA is being sought.
The principal purposes of our equity and cash incentive plans are to attract, retain and motivate personnel through the granting of stock-based and cash-based compensation awards, in order to align our interests and the interests of our stockholders with those of our employees and consultants. As of February 27, 2024, we had 135 full-time employees and no part-time employees.
The principal purposes of our equity and cash incentive plans are to attract, retain and motivate personnel through the granting of stock-based and cash-based compensation awards, in order to align our interests and the interests of our stockholders with those of our employees and consultants. As of March 6, 2025, we had 144 full-time employees and 1 part-time employee.
Ordinary physical activity does not cause undue dyspnea or fatigue, chest pain or near syncope. Class II Patients with PAH resulting in slight limitation of physical activity. They are comfortable at rest. Ordinary physical activity causes undue dyspnea or fatigue, chest pain or near syncope. Class III Patients with PAH resulting in marked limitation of physical activity.
PAH Functional Classes Functional Class Description Class I Patients with PAH, but without resulting limitation of physical activity. Ordinary physical activity does not cause undue dyspnea or fatigue, chest pain or near syncope. Class II Patients with PAH resulting in slight limitation of physical activity. They are comfortable at rest.
Both PAH and PH-ILD patients are often treated by cardiologists and pulmonologists at national or regional centers of excellence. These 4 Table of Contents concentrations of patients could allow us to commercialize seralutinib with a relatively small commercial footprint, if approved. • Engage in partnerships, collaborations, licensing deals or other transactions.
Both PAH and PH-ILD patients are often treated by cardiologists and pulmonologists at national or regional centers of excellence. These concentrations of patients could allow us to commercialize seralutinib with a relatively small commercial footprint, if approved.
Non-clinical studies are performed to demonstrate the health or environmental safety of new chemical or biological substances. Non-clinical (pharmaco-toxicological) studies must be conducted in compliance with the principles of good laboratory practice, or GLP, as set forth in EU Directive 2004/10/EC (unless otherwise justified for certain particular medicinal products – e.g., radio-pharmaceutical precursors for radio-labelling purposes).
Non-clinical (pharmaco-toxicological) studies must be conducted in compliance with the principles of good laboratory practice, or GLP, as set forth in EU Directive 2004/10/EC (unless otherwise justified for certain particular medicinal products, e.g., radio-pharmaceutical precursors for radio-labeling purposes).
In the case of seralutinib, the primary mode of action is attributable to the drug component of the product, which means that the FDA’s Center for Drug Evaluation and Research has primary jurisdiction over the premarket development, review and approval. Accordingly, we plan to investigate seralutinib through the IND framework and seek approval through the NDA pathway.
In the case of seralutinib, the primary mode of action is attributable to the drug component of the product, which means that the FDA’s Center for Drug Evaluation and Research has primary jurisdiction over the premarket development, review and approval.
There are no approved therapies for PH-ILD in the EU. PH-ILD is also an active indication for investigational drugs, and we may face competition in the future from L606 (Pharmosa Biopharm Inc.), MD-711 (Mochida Pharmaceutical Co., Ltd.), sirolimus (OrphAI Therapeutics) and treprostinil palmitil (Insmed, Inc.).
There are no approved therapies for PH-ILD in the EU. PH-ILD is also an active indication for investigational drugs, and we may face competition in the future from L606 (Liquidia / Pharmosa Biopharm Inc.), sirolimus (OrphAI Therapeutics), treprostinil palmitil (Insmed, Inc.), MK-5475 (Merck), and mosliciguat (Pulmovant, Inc.).
Summary of Ongoing TORREY Open-Label Extension Clinical Trial in PAH Upon completion of the 24-week blinded portion of the Phase 2 TORREY Study, 73 of the 80 (91%) completing patients elected to rollover into an ongoing open-label extension trial. In December 2023, we reported out interim results, including PVR results at Week 72.
Summary of Ongoing TORREY Open-Label Extension Clinical Trial in PAH Upon completion of the 24-week blinded portion of the Phase 2 TORREY Study, 73 of the 80 (91%) completing patients elected to rollover into an ongoing open-label extension trial.
The United States Food and Drug Administration, or FDA, and the European Medicines Agency, or EMA, have granted seralutinib orphan drug designation for the treatment of patients with PAH.
The United States Food and Drug Administration, or FDA, the European Commission, or EC, and the Pharmaceuticals and Medical Devices Agency, or PMDA, of Japan have granted seralutinib orphan drug designation for the treatment of patients with PAH.
We believe that, if approved, seralutinib could be used alongside all three classes of approved therapies. PAH is also an active indication for investigational drugs, and we may face competition in the future from CS1 (Cereno Scientific), KER-012 (Keros Therapeutics, Inc.), L606 (Pharmosa Biopharm Inc.), MK-5475 (Merck & Co., Inc.), ralinepag (Pfizer and United Therapeutics) and sotatercept (Merck).
We believe that, if approved, seralutinib could be used alongside all classes of approved therapies. PAH is also an active indication for investigational drugs, and we may face competition in the future from CS1 (Cereno Scientific), L606 (Liquidia / Pharmosa Biopharm Inc.), treprostinil palmitil (Insmed), ralinepag (United Therapeutics), and REGN13335 (Regeneron Pharmaceuticals, Inc.).
A new international recognition framework has been in place from January 1, 2024, whereby the MHRA will have regard to decisions on the approval of MAs made by the EMA and certain other regulators when determining an application for a new GB MA. There is no pre-MA orphan designation.
In addition, an international recognition procedure, or IRP, has been in place since January 1, 2024, whereby the MHRA will have regard to decisions on the approval of MAs made by the EMA and certain other regulators when determining an application for a new UK MA.
To accomplish this goal, we have assembled a deeply 3 Table of Contents experienced and highly skilled group of industry veterans, scientists, clinicians and key opinion leaders from leading biotechnology and pharmaceutical companies, as well as leading academic centers from around the world.
Our goal is to be an industry leader in, and to enhance the lives of patients living with, PH. To accomplish this goal, we have assembled a deeply experienced and highly skilled group of industry veterans, scientists, clinicians and key opinion leaders from leading biotechnology and pharmaceutical companies, as well as leading academic centers from around the world.
Should an orphan designation be granted, the period or market exclusivity will be set from the date of first approval of the product in GB. The UK regulatory framework in relation to clinical trials is derived from existing EU legislation (as implemented into UK law, through secondary legislation).
Should an orphan designation be granted, the period or market exclusivity will be set from the date of first approval of the product in the UK. 27 Table of Contents The UK regulatory framework in relation to clinical trials is derived from the now-repealed EU Clinical Trials Directive (as implemented into UK law, through the Medicines for Human Use (Clinical Trials) Regulations 2004, as amended).
Instead, the MHRA will review applications for orphan designation in parallel to the corresponding MA application. The criteria are essentially the same, but have been tailored for the market, i.e., the prevalence of the condition in GB, rather than the EU, must not be more than five in 10,000.
The criteria are essentially the same, but have been tailored for the market, i.e., the prevalence of the condition in the UK, rather than the EU, must not be more than five in 10,000.
License Agreements Pulmokine In October 2017, we entered into a license agreement, or the Pulmokine Agreement, with Pulmokine, Inc., under which we were granted an exclusive worldwide license and sublicense to certain intellectual property rights owned or controlled by Pulmokine, including intellectual property rights co-owned by Pulmokine and Gilead Sciences, to develop and commercialize seralutinib and certain backup compounds for the treatment, prevention and diagnosis of any and all disease or conditions.
Our success will be based in part on our ability to build and actively manage a portfolio of drugs that addresses unmet medical needs and creates value in patient therapy. 10 Table of Contents License and Collaboration Agreements Pulmokine In October 2017, we entered into a license agreement, or the Pulmokine Agreement, with Pulmokine, Inc., under which we were granted an exclusive worldwide license and sublicense to certain intellectual property rights owned or controlled by Pulmokine, including intellectual property rights co-owned by Pulmokine and Gilead Sciences, to develop and commercialize seralutinib and certain backup compounds for the treatment, prevention and diagnosis of any and all disease or conditions.
Additional mergers and acquisitions in the pharmaceutical industry may result in even more resources being concentrated in our competitors. Competition may increase further as a result of advances made in the commercial applicability of technologies and greater availability of capital for investment in these fields.
Competition may increase further as a result of advances made in the commercial applicability of technologies and greater availability of capital for investment in these fields.
Foreign Data Privacy and Security Laws We are also subject to laws and regulations in non-U.S. countries governing data privacy and the protection of personal data, including health-related data. Laws and regulations in the EU and other jurisdictions apply broadly to the collection, use, storage, disclosure, processing and security of personal data, and have generally become more stringent over time.
Laws and regulations in the EU and other jurisdictions apply broadly to the collection, use, storage, disclosure, processing and security of personal data, and have generally become more stringent over time.
Overview of Pulmonary Arterial Hypertension PAH is a rare disease that is characterized by abnormally high blood pressure in the blood vessels carrying deoxygenated blood from the right side of the heart to the lungs and is progressive and often fatal. Symptoms include shortness of breath at rest or with minimal exertion.
Overview of PAH (WHO Group 1 Pulmonary Hypertension) PAH, classified as World Health Organization, or WHO, Group 1 Pulmonary Hypertension, is a rare disease that is characterized by abnormally high blood pressure in the blood vessels carrying deoxygenated blood from the right side of the heart to the lungs and is progressive and often fatal.
In this well-treated patient population, the seralutinib arm demonstrated a statistically significant, placebo-adjusted improvement of 14.3% in its primary efficacy endpoint, pulmonary vascular resistance, or PVR. Seralutinib has been generally well tolerated in all completed clinical trials. We dosed the first patient in our registrational Phase 3 PROSERA Study in PAH in the fourth quarter of 2023.
In December 2022, we announced positive topline results from the 24-week Phase 2 TORREY trial in 86 PAH patients. In this well-treated patient population, the seralutinib arm demonstrated a statistically significant, placebo-adjusted improvement of 14.3% in its primary efficacy endpoint, pulmonary vascular resistance, or PVR. Seralutinib has been generally well tolerated in all completed clinical trials.
Marketing Authorization To market a medicinal product in the EU, we must obtain a marketing authorization, or MA. To obtain regulatory approval of an investigational medicinal product under EU regulatory systems, we must submit a MA application, or MAA. The process for doing this depends, among other things, on the nature of the medicinal product.
Other national and EU-wide regulatory requirements may also apply. Marketing Authorization To market a medicinal product in the EU, we must obtain a MA. To obtain regulatory approval of an investigational medicinal product under EU regulatory systems, we must submit a MA application, or MAA.
They are comfortable at rest. Less than ordinary activity causes undue dyspnea or fatigue, chest pain or near syncope. Class IV Patients with PAH with inability to carry out any physical activity without symptoms. These patients manifest signs of right heart failure. Dyspnea and/or fatigue may even be present at rest. Discomfort is increased by any physical activity.
Ordinary physical activity causes undue dyspnea or fatigue, chest pain or near syncope. Class III Patients with PAH resulting in marked limitation of physical activity. They are comfortable at rest. Less than ordinary activity causes undue dyspnea or fatigue, chest pain or near syncope. Class IV Patients with PAH with inability to carry out any physical activity without symptoms.
Even if a product candidate qualifies for one or more of these programs, the FDA may later decide that the product candidate no longer meets the conditions for qualification or decide that the time period for FDA review or approval will not be shortened.
Even if a product candidate qualifies for one or more of these programs, the FDA may later decide that the product candidate no longer meets the conditions for qualification or decide that the time period for FDA review or approval will not be shortened. 18 Table of Contents Post-Approval Requirements Once an approval is granted, the FDA may withdraw the approval if compliance with regulatory standards is not maintained or if problems occur after the product reaches the market.
Even if such data and information are submitted, the FDA may decide that the NDA does not satisfy the criteria for approval. 15 Table of Contents If a product receives regulatory approval, the approval may be significantly limited to specific diseases and dosages or the indications for use may otherwise be limited, which could restrict the commercial value of the product.
If a product receives regulatory approval, the approval may be significantly limited to specific diseases and dosages or the indications for use may otherwise be limited, which could restrict the commercial value of the product.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAlthough we own issued patents in the United States and foreign countries, we cannot be certain that the claims in our U.S. pending patent applications and patent applications in foreign countries and jurisdictions will be considered patentable by the United States Patent and Trademark Office, or USPTO, courts in the United States or by the patent offices and courts in foreign countries and jurisdictions, nor can we be certain that the claims in our issued patents will not be found invalid or unenforceable if challenged. 56 Table of Contents The patent application process is subject to numerous risks and uncertainties, and there can be no assurance that we or any of our potential future collaborators will be successful in protecting seralutinib by obtaining and defending patents.
Biggest changeThese uncertainties and/or limitations in our ability to properly protect the intellectual property rights relating to seralutinib could have a material adverse effect on our financial condition and results of operations. 57 Table of Contents Although we own issued patents in the United States and foreign countries, we cannot be certain that the claims in our U.S. pending patent applications and patent applications in foreign countries and jurisdictions will be considered patentable by the United States Patent and Trademark Office, or USPTO, courts in the United States or by the patent offices and courts in foreign countries and jurisdictions, nor can we be certain that the claims in our issued patents will not be found invalid or unenforceable if challenged.
Seralutinib is subject to regulation as combination product, which means that it is composed of both a drug product and device product. If marketed individually, each component would be subject to different regulatory pathways and reviewed by different centers within the FDA.
Seralutinib is subject to regulation as a combination product, which means that it is composed of both a drug product and device product. If marketed individually, each component would be subject to different regulatory pathways and reviewed by different centers within the FDA.
Risks Related to Our Reliance on Third Parties We rely on third parties to conduct many of our preclinical studies and clinical trials.
Risks Related to Our Reliance on Third Parties We rely on third parties to conduct many of our clinical trials and preclinical studies.
The provisions in our charter documents include the following: • a classified board of directors with three-year staggered terms, which may delay the ability of stockholders to change the membership of a majority of our board of directors; • no cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates; 67 Table of Contents • the exclusive right of our board of directors, unless the board of directors grants such right to the stockholders, to elect a director to fill a vacancy created by the expansion of the board of directors or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our board of directors; • the required approval of at least 66-2/3% of the shares entitled to vote to remove a director for cause, and the prohibition on removal of directors without cause; • the ability of our board of directors to authorize the issuance of shares of preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquiror; • the ability of our board of directors to alter our amended and restated bylaws without obtaining stockholder approval; • the required approval of at least 66-2/3% of the shares entitled to vote to adopt, amend or repeal our amended and restated bylaws or repeal the provisions of our amended and restated certificate of incorporation regarding the election and removal of directors; • a prohibition on stockholder action by written consent, which forces stockholder action to be taken at an annual or special meeting of our stockholders; • an exclusive forum provision providing that the Court of Chancery of the State of Delaware will be the exclusive forum for certain actions and proceedings; • the requirement that a special meeting of stockholders may be called only by the board of directors, which may delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors; and • advance notice procedures that stockholders must comply with in order to nominate candidates to our board of directors or to propose matters to be acted upon at a stockholders’ meeting, which may discourage or deter a potential acquiror from conducting a solicitation of proxies to elect the acquiror’s own slate of directors or otherwise attempting to obtain control of us.
The provisions in our charter documents include the following: 68 Table of Contents • a classified board of directors with three-year staggered terms, which may delay the ability of stockholders to change the membership of a majority of our board of directors; • no cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates; • the exclusive right of our board of directors, unless the board of directors grants such right to the stockholders, to elect a director to fill a vacancy created by the expansion of the board of directors or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our board of directors; • the required approval of at least 66-2/3% of the shares entitled to vote to remove a director for cause, and the prohibition on removal of directors without cause; • the ability of our board of directors to authorize the issuance of shares of preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquiror; • the ability of our board of directors to alter our amended and restated bylaws without obtaining stockholder approval; • the required approval of at least 66-2/3% of the shares entitled to vote to adopt, amend or repeal our amended and restated bylaws or repeal the provisions of our amended and restated certificate of incorporation regarding the election and removal of directors; • a prohibition on stockholder action by written consent, which forces stockholder action to be taken at an annual or special meeting of our stockholders; • an exclusive forum provision providing that the Court of Chancery of the State of Delaware will be the exclusive forum for certain actions and proceedings; • the requirement that a special meeting of stockholders may be called only by the board of directors, which may delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors; and • advance notice procedures that stockholders must comply with in order to nominate candidates to our board of directors or to propose matters to be acted upon at a stockholders’ meeting, which may discourage or deter a potential acquiror from conducting a solicitation of proxies to elect the acquiror’s own slate of directors or otherwise attempting to obtain control of us.
The FDA or comparable foreign regulatory authorities could delay, limit or deny approval of seralutinib for many reasons, including: • such authorities may disagree with the design or implementation of our clinical trials; 37 Table of Contents • negative or ambiguous results from our clinical trials or results may not meet the level of statistical significance required by the FDA or comparable foreign regulatory agencies for approval; • serious and unexpected drug-related side effects may be experienced by participants in our clinical trials or by individuals using drugs similar to seralutinib; • the population studied in the clinical trial may not be sufficiently broad or representative to assure safety in the full population for which we seek approval; • such authorities may not accept clinical data from trials which are conducted at clinical facilities or in countries where the standard of care is potentially different from that of the United States; • we may be unable to demonstrate that seralutinib’s clinical and other benefits outweigh its safety risks; • such authorities may disagree with our interpretation of data from preclinical studies or clinical trials; • such authorities may not agree that the data collected from clinical trials of seralutinib are acceptable or sufficient to support the submission of an NDA or other submission or to obtain regulatory approval in the United States or elsewhere, and such authorities may impose requirements for additional preclinical studies or clinical trials • such authorities may disagree regarding the formulation, labeling and/or the specifications of seralutinib; • approval may be granted only for indications that are significantly more limited than what we apply for and/or with other significant restrictions on distribution and use; • such authorities may find deficiencies in the manufacturing processes or facilities of our third-party manufacturers with which we contract for clinical and commercial supplies; or the approval policies; • regulations of such authorities may significantly change in a manner rendering our or any of our potential future collaborators’ clinical data insufficient for approval; or • such authorities may not accept a submission due to, among other reasons, the content or formatting of the submission.
The FDA or comparable foreign regulatory authorities could delay, limit or deny approval of seralutinib for many reasons, including: • such authorities may disagree with the design or implementation of our clinical trials; 38 Table of Contents • negative or ambiguous results from our clinical trials or results may not meet the level of statistical significance required by the FDA or comparable foreign regulatory agencies for approval; • serious and unexpected drug-related side effects may be experienced by participants in our clinical trials or by individuals using drugs similar to seralutinib; • the population studied in the clinical trial may not be sufficiently broad or representative to assure safety in the full population for which we seek approval; • such authorities may not accept clinical data from trials which are conducted at clinical facilities or in countries where the standard of care is potentially different from that of the United States; • we may be unable to demonstrate that seralutinib’s clinical and other benefits outweigh its safety risks; • such authorities may disagree with our interpretation of data from preclinical studies or clinical trials; • such authorities may not agree that the data collected from clinical trials of seralutinib are acceptable or sufficient to support the submission of an NDA or other submission or to obtain regulatory approval in the United States or elsewhere, and such authorities may impose requirements for additional preclinical studies or clinical trials • such authorities may disagree regarding the formulation, labeling and/or the specifications of seralutinib; • approval may be granted only for indications that are significantly more limited than what we apply for and/or with other significant restrictions on distribution and use; • such authorities may find deficiencies in the manufacturing processes or facilities of our third-party manufacturers with which we contract for clinical and commercial supplies; or the approval policies; • regulations of such authorities may significantly change in a manner rendering our or any of our potential future collaborators’ clinical data insufficient for approval; or • such authorities may not accept a submission due to, among other reasons, the content or formatting of the submission.
In addition, if seralutinib receives marketing approval, and we or others later identify undesirable side effects caused by seralutinib, a number of potentially significant negative consequences could result, including: • regulatory authorities may withdraw, suspend or limit approvals of seralutinib; • we may be required to recall a product or change the way seralutinib is administered to patients; • regulatory authorities may require additional warnings on the label, such as a “black box” warning or a contraindication; • we may be required to implement a Risk Evaluation and Mitigation Strategy, or REMS, or create a medication guide outlining the risks of such side effects for distribution to patients, or similar risk management measures; 36 Table of Contents • we may be required to change the way seralutinib is distributed or administered, conduct additional clinical trials or change the labeling of seralutinib or be required to conduct additional post-marketing studies or surveillance; • we could be sued and held liable for harm caused to patients; • sales of seralutinib may decrease significantly or seralutinib could become less competitive; and • our reputation may suffer.
In addition, if seralutinib receives marketing approval, and we or others later identify undesirable side effects caused by seralutinib, a number of potentially significant negative consequences could result, including: • regulatory authorities may withdraw, suspend or limit approvals of seralutinib; • we may be required to recall a product or change the way seralutinib is administered to patients; • regulatory authorities may require additional warnings on the label, such as a “black box” warning or a contraindication; • we may be required to implement a Risk Evaluation and Mitigation Strategy, or REMS, or create a medication guide outlining the risks of such side effects for distribution to patients, or similar risk management measures; 37 Table of Contents • we may be required to change the way seralutinib is distributed or administered, conduct additional clinical trials or change the labeling of seralutinib or be required to conduct additional post-marketing studies or surveillance; • we could be sued and held liable for harm caused to patients; • sales of seralutinib may decrease significantly or seralutinib could become less competitive; and • our reputation may suffer.
Risks Related to Our Limited Operating History, Financial Position and Capital Requirements We have a limited operating history, have incurred significant operating losses since our inception and expect to incur significant losses for the foreseeable future. We may never generate any revenue or become profitable or, if we achieve profitability, we may not be able to sustain it.
Risks Related to Our Limited Operating History, Financial Position and Capital Requirements We have a relatively limited operating history, have incurred significant operating losses since our inception and expect to incur significant losses for the foreseeable future. We may never generate any revenue or become profitable or, if we achieve profitability, we may not be able to sustain it.
This could reduce the ultimate demand for seralutinib, if approved, or put pressure on our product pricing, which could negatively affect our business, results of operations, financial condition and prospects. In the EU, similar political, economic and regulatory developments may affect our ability to profitably commercialize, or co-commercialize, seralutinib, if approved.
This could reduce the ultimate demand for seralutinib, if approved, or put pressure on our product pricing, which could negatively affect our business, results of operations, financial condition and prospects. In the EU, similar political, economic and regulatory developments may affect our or Chiesi's ability to profitably commercialize, or co-commercialize, seralutinib, if approved.
If we or any of our potential future collaborators or CROs fail to comply with such reporting obligations, the FDA or a foreign regulatory authority could take action, including criminal prosecution, the imposition of civil monetary penalties, seizure of seralutinib or delay in approval or clearance of future products.
If we, Chiesi or any of our potential future collaborators or CROs fail to comply with such reporting obligations, the FDA or a foreign regulatory authority could take action, including criminal prosecution, the imposition of civil monetary penalties, seizure of seralutinib or delay in approval or clearance of future products.
New income, sales, use or other tax laws, statutes, rules, regulations or ordinances, including in the United States, Ireland or Luxembourg, could be enacted at any time, or interpreted, changed, modified or applied adversely to us, any of which could adversely affect our business operations and financial performance.
New income, sales, use or other tax laws, statutes, rules, regulations or ordinances, including in the United States or Ireland, could be enacted at any time, or interpreted, changed, modified or applied adversely to us, any of which could adversely affect our business operations and financial performance.
Our future capital requirements will depend on many factors, including: • the type, number, scope, progress, expansions, results, costs and timing of, our clinical trials and preclinical studies of seralutinib or product candidates we may choose to pursue in the future; • the costs and timing of manufacturing for seralutinib, including commercial manufacturing if seralutinib is approved; • the costs, timing and outcome of regulatory review of seralutinib; • the costs of obtaining, maintaining and enforcing our patents and other intellectual property rights; • our efforts to enhance operational systems and hire additional personnel to satisfy our obligations as a public company, including enhanced internal controls over financial reporting; • the costs associated with hiring additional personnel and consultants as our clinical activities increase; • the timing and amount of the milestone or other payments we must make to Pulmokine from whom we have in-licensed seralutinib; • the costs and timing of establishing or securing sales and marketing capabilities if seralutinib is approved; 29 Table of Contents • our ability to achieve sufficient market acceptance, coverage and adequate reimbursement from third-party payors and adequate market share and revenue for seralutinib, if approved; • the terms and timing of establishing and maintaining collaborations, licenses and other similar arrangements; and • costs associated with any products or technologies that we may in-license or acquire.
Our future capital requirements will depend on many factors, including: • the type, number, scope, progress, expansions, results, costs and timing of, our clinical trials and preclinical studies of seralutinib or product candidates we may choose to pursue in the future; • the costs and timing of manufacturing for seralutinib, including commercial manufacturing if seralutinib is approved; • the costs, timing and outcome of regulatory review of seralutinib; • the costs of obtaining, maintaining and enforcing our patents and other intellectual property rights; • our efforts to enhance operational systems and hire additional personnel to satisfy our obligations as a public company, including enhanced internal controls over financial reporting; • the costs associated with hiring additional personnel and consultants as our clinical activities increase; • the timing and amount of the milestone or other payments we must make to Pulmokine from whom we have in-licensed seralutinib; • the costs and timing of establishing or securing sales and marketing capabilities if seralutinib is approved; • our ability to achieve sufficient market acceptance, coverage and adequate reimbursement from third-party payors and adequate market share and revenue for seralutinib, if approved; • the terms and timing of establishing and maintaining collaborations, licenses and other similar arrangements; and • costs associated with any products or technologies that we may in-license or acquire.
If we and any of our potential future collaborators are successful in commercializing seralutinib, the FDA and foreign regulatory authorities would require that we and any of our potential future collaborators report certain information about adverse medical events if those products may have caused or contributed to those adverse events.
If we, Chiesi and any of our potential future collaborators are successful in commercializing seralutinib, the FDA and foreign regulatory authorities would require that we, Chiesi and any of our potential future collaborators report certain information about adverse medical events if those products may have caused or contributed to those adverse events.
We and any of our potential future collaborators will be required to report to regulatory authorities if any of our approved products cause or contribute to adverse medical events, and any failure to do so would result in sanctions that would materially harm our business.
We, Chiesi and any of our potential future collaborators will be required to report to regulatory authorities if any of our approved products cause or contribute to adverse medical events, and any failure to do so would result in sanctions that would materially harm our business.
The timing of our obligation to report would be triggered by the date we become aware of the adverse event as well as the nature of the event. We and any of our potential future collaborators or CROs may fail to report adverse events within the prescribed timeframe.
The timing of our obligation to report would be triggered by the date we become aware of the adverse event as well as the nature of the event. We, Chiesi and any of our potential future collaborators or CROs may fail to report adverse events within the prescribed timeframe.
You should carefully consider these risk factors, together with the risk factors set forth in this Item 1A. • We have a limited operating history, a history of losses and expect to incur additional losses in the future. • We will require substantial additional financing to achieve our goals. • We depend heavily on the ability to successfully advance seralutinib through clinical development. • Clinical drug development involves a lengthy and expensive process with an uncertain outcome, and the results of preclinical studies and early clinical trials are not necessarily predictive of future results. • Our business may be adversely affected by difficulties or delays in enrolling patients in our current or planned clinical trials or the commencement or completion, or termination or suspension, of our current or planned clinical trials. • We operate in a highly regulated industry and such regulation may cause unanticipated delays or prevent the receipt of the required approvals to commercialize seralutinib. • We are dependent on third parties to conduct our pre-clinical and clinical trials. • Our business activities could be adversely affected by a global pandemic and other epidemic diseases. • We are dependent on third parties to manufacture seralutinib. 27 Table of Contents • We may not be successful in entering into or maintaining collaborations, licenses and other similar arrangements. • I f approved, the success of seralutinib will depend on meeting ongoing regulatory obligations, market acceptance and adequate coverage by governmental authorities and insurers. • We face significant competition from other biotechnology and pharmaceutical companies, and our operating results will suffer if we fail to compete effectively. • Our results of operations may fluctuate significantly. • Our business relies on our ability to attract, retain and motivate highly qualified management, clinical and scientific personnel. • If product liability lawsuits are brought against us, we may incur substantial liabilities and may be required to limit commercialization of seralutinib. • Our business relies on our ability to protect our intellectual property and our proprietary technologies. • We must comply with our license agreements or we could lose our license rights to seralutinib. • Our stock price is volatile, and investors may incur substantial losses. • We have been involved in securities class action litigation and could be subject in the future to securities class action litigation.
You should carefully consider these risk factors, together with the risk factors set forth in this Item 1A. • We have a limited operating history, a history of losses and expect to incur additional losses in the future. • We will require substantial additional financing to achieve our goals. • We depend heavily on the ability to successfully advance seralutinib through clinical development. • Clinical drug development involves a lengthy and expensive process with an uncertain outcome, and the results of preclinical studies and early clinical trials are not necessarily predictive of future results. • Our business may be adversely affected by difficulties or delays in enrolling patients in our current or planned clinical trials or the commencement or completion, or termination or suspension, of our current or planned clinical trials. • We operate in a highly regulated industry and such regulation may cause unanticipated delays or prevent the receipt of the required approvals to commercialize seralutinib. • We are dependent on third parties to conduct our pre-clinical and clinical trials. • Our business activities could be adversely affected by a global pandemic and other epidemic diseases. • We are dependent on third parties to manufacture seralutinib. • We may not be successful in entering into or maintaining collaborations, licenses and other similar arrangements, including the maintenance of our collaboration with Chiesi. • I f approved, the success of seralutinib will depend on meeting ongoing regulatory obligations, market acceptance and adequate coverage by governmental authorities and insurers. • We face significant competition from other biotechnology and pharmaceutical companies, and our operating results will suffer if we fail to compete effectively. • Our results of operations may fluctuate significantly. • Our business relies on our ability to attract, retain and motivate highly qualified management, clinical and scientific personnel. • If product liability lawsuits are brought against us, we may incur substantial liabilities and may be required to limit commercialization of seralutinib. • Our business relies on our ability to protect our intellectual property and our proprietary technologies. • We must comply with our license agreements or we could lose our license rights to seralutinib. • Our stock price is volatile, and investors may incur substantial losses. 29 Table of Contents • We have been involved in securities class action litigation and could be subject in the future to securities class action litigation.
Biopharmaceutical product development is a highly speculative undertaking and involves a substantial degree of risk. We are a clinical-stage biopharmaceutical company with a limited operating history upon which you can evaluate our business and prospects.
Biopharmaceutical product development is a highly speculative undertaking and involves a substantial degree of risk. We are a clinical-stage biopharmaceutical company with a relatively limited operating history upon which you can evaluate our business and prospects.
The commencement and completion of clinical trials can be delayed for a number of reasons including delays related to: • the FDA or comparable foreign regulatory authorities disagreeing as to the design or implementation of our clinical studies, including the doses and endpoints of our Phase 3 clinical trial of seralutinib; • obtaining regulatory authorizations to commence a trial or reaching a consensus with regulatory authorities on trial design; • any failure or delay in reaching an agreement with contract research organizations, or CROs, and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites; • obtaining approval or positive opinion from one or more institutional review boards, or IRBs or ethics committees; • IRBs refusing to approve, suspending or terminating a trial at an investigational site, precluding enrollment of additional subjects, or withdrawing their approval of a trial; • changes to clinical trial protocol; • clinical sites deviating from trial protocol or dropping out of a trial; • manufacturing sufficient quantities of seralutinib or obtaining sufficient quantities of combination therapies for use in clinical trials; • subjects failing to enroll or remain in our trials at the rate we expect, or failing to return for post-treatment follow-up, including subjects failing to remain in our trials; • subjects choosing an alternative treatment for PAH or other indications for which we are developing seralutinib, or participating in competing clinical trials; • lack of adequate funding to continue a clinical trial; • subjects experiencing severe or unexpected drug-related adverse effects; 33 Table of Contents • occurrence of serious adverse events in trials of the same class of agents conducted by other companies; • selection of clinical endpoints that require prolonged periods of clinical observation or analysis of the resulting data; • a facility manufacturing seralutinib or any of its components, including the device component of orally inhaled seralutinib , being ordered by the FDA or comparable foreign regulatory authorities to temporarily or permanently shut down due to violations of cGMP or similar foreign regulations or other applicable requirements, or infections or cross-contaminations of seralutinib in the manufacturing process; • any changes to our manufacturing process that may be necessary or desired; • third-party clinical investigators losing the licenses or permits necessary to perform our clinical trials, not performing our clinical trials on our anticipated schedule or consistent with the clinical trial protocol, good clinical practices, or GCP, or other regulatory requirements; third-party contractors not performing data collection or analysis in a timely or accurate manner; or • third-party 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, data readouts and completion of clinical trials can be delayed for a number of reasons including delays related to: • the FDA or comparable foreign regulatory authorities disagreeing as to the design or implementation of our clinical studies, including the doses and endpoints of our ongoing and planned Phase 3 clinical trial of seralutinib; • obtaining regulatory authorizations to commence a trial or reaching a consensus with regulatory authorities on trial design; • any failure or delay in reaching an agreement with contract research organizations, or CROs, and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites; • obtaining approval or positive opinion from one or more institutional review boards, or IRBs or ethics committees; • IRBs refusing to approve, suspending or terminating a trial at an investigational site, precluding enrollment of additional subjects, or withdrawing their approval of a trial; • changes to clinical trial protocol; • clinical sites deviating from trial protocol or dropping out of a trial; • manufacturing sufficient quantities of seralutinib or obtaining sufficient quantities of combination therapies for use in clinical trials; • subjects failing to enroll or remain in our trials at the rate we expect, or failing to return for post-treatment follow-up, including subjects failing to remain in our trials; • subjects choosing an alternative treatment for PAH or other indications including PH-ILD for which we are developing seralutinib, or participating in competing clinical trials; • lack of adequate funding to continue a clinical trial; 34 Table of Contents • subjects experiencing severe or unexpected drug-related adverse effects; • occurrence of serious adverse events in trials of the same class of agents conducted by other companies; • selection of clinical endpoints that require prolonged periods of clinical observation or analysis of the resulting data; • a facility manufacturing seralutinib or any of its components, including the device component of orally inhaled seralutinib , being ordered by the FDA or comparable foreign regulatory authorities to temporarily or permanently shut down due to violations of cGMP or similar foreign regulations or other applicable requirements, or infections or cross-contaminations of seralutinib in the manufacturing process; • any changes to our manufacturing process that may be necessary or desired; • third-party clinical investigators losing the licenses or permits necessary to perform our clinical trials, not performing our clinical trials on our anticipated schedule or consistent with the clinical trial protocol, good clinical practices, or GCP, or other regulatory requirements; third-party contractors not performing data collection or analysis in a timely or accurate manner; or • third-party 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.
If patients are unwilling to participate in our trials for any reason, including the existence of concurrent clinical trials for similar patient populations in PAH, if they are unwilling to enroll in a clinical trial 35 Table of Contents with a placebo-controlled design or the availability of approved therapies, or we otherwise have difficulty enrolling a sufficient number of patients, the timeline for recruiting subjects, conducting studies and obtaining regulatory approval of seralutinib may be delayed.
If patients are unwilling to participate in our trials for any reason, including the existence of concurrent clinical trials for similar patient populations in PAH, if they are unwilling to enroll in a clinical trial with a placebo-controlled design or the availability of approved therapies, or we otherwise have difficulty enrolling a sufficient 36 Table of Contents number of patients, the timeline for recruiting subjects, conducting studies and obtaining regulatory approval of seralutinib may be delayed.
In addition, we may seek additional capital due to favorable market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans.
In addition, we may seek additional capital due to favorable market conditions or liquidity or strategic considerations, even if we believe we have sufficient funds for our current or future operating plans.
Under the Orphan Drug Act of 1983, the FDA may designate a product as 39 Table of Contents an orphan product if it is intended to treat a rare disease or condition, which is generally defined as a patient population of fewer than 200,000 individuals in the United States, or a patient population of greater than 200,000 individuals in the United States, but for which there is no reasonable expectation that the cost of developing the drug will be recovered from sales in the United States.
Under the Orphan Drug Act of 1983, the FDA may designate a product as an orphan product if it is intended to treat a rare disease or condition, which is generally defined as a patient population of fewer than 200,000 individuals in the United States, or a patient population of greater than 200,000 individuals in the United States, 40 Table of Contents but for which there is no reasonable expectation that the cost of developing the drug will be recovered from sales in the United States.
Conducting clinical trials outside the United States also exposes us to additional risks, including risks associated with: • additional foreign regulatory requirements; • foreign exchange fluctuations; 40 Table of Contents • compliance with foreign manufacturing, customs, shipment and storage requirements; • cultural differences in medical practice and clinical research; • diminished protection of intellectual property in some countries; and • interruptions or delays in our trials resulting from geopolitical events, such as war or terrorism.
Conducting clinical trials outside the United States also exposes us to additional risks, including risks associated with: • additional foreign regulatory requirements; • foreign exchange fluctuations; • compliance with foreign manufacturing, customs, shipment and storage requirements; 41 Table of Contents • cultural differences in medical practice and clinical research; • diminished protection of intellectual property in some countries; and • interruptions or delays in our trials resulting from geopolitical events, such as war or terrorism.
Disruptions at the FDA and other government agencies caused by funding shortages or global health concerns could hinder their ability to hire, retain or deploy key leadership and other personnel, or otherwise prevent new or modified products from being developed, cleared or approved or commercialized in a timely manner or at all, which could negatively impact our business.
Disruptions at the FDA and other government agencies caused by funding shortages, staffing limitations or global health concerns could hinder their ability to hire, retain or deploy key leadership and other personnel, or otherwise prevent new or modified products from being developed, cleared or approved or commercialized in a timely manner or at all, which could negatively impact our business.
Our ability to achieve coverage and acceptable levels of reimbursement for seralutinib by third-party payors will have an effect on our ability to successfully commercialize seralutinib. Even if we obtain coverage for seralutinib by a third-party payor, the resulting reimbursement payment rates may not be 46 Table of Contents adequate or may require co-payments that patients find unacceptably high.
Our ability to achieve coverage and acceptable levels of reimbursement for seralutinib by third-party payors will have an effect on our ability to successfully commercialize seralutinib. Even if we obtain coverage for seralutinib by a third-party payor, the resulting reimbursement payment rates may not be 47 Table of Contents adequate or may require co-payments that patients find unacceptably high.
The success of seralutinib will depend on several factors, including the following: • successful enrollment in clinical trials and completion of clinical trials and preclinical studies with favorable results; 31 Table of Contents • regulatory authority acceptance of our proposed design of future clinical trials and allowance to proceed with such clinical trials under INDs by the FDA or under similar applications by comparable regulatory authorities; • demonstrating safety and efficacy to the satisfaction of applicable regulatory authorities; • receipt of marketing approvals from applicable regulatory authorities, including new drug applications, or NDAs, from the FDA and maintaining such approvals; • making arrangements with our third-party manufacturers for, or establishing, commercial manufacturing capabilities; • establishing sales, marketing and distribution capabilities and launching commercial sales of seralutinib, if and when approved, whether alone or in collaboration with others; • establishment and maintenance of patent and trade secret protection or regulatory exclusivity for seralutinib; • maintaining an acceptable safety profile of seralutinib following any approval; and • maintaining and growing an organization of people who can develop seralutinib and our technology.
The success of seralutinib will depend on several factors, including the following: • successful enrollment in clinical trials and completion of clinical trials and preclinical studies with favorable results; 32 Table of Contents • regulatory authority acceptance of our proposed design of future clinical trials and allowance to proceed with such clinical trials under INDs by the FDA or under similar applications by comparable regulatory authorities; • demonstrating safety and efficacy to the satisfaction of applicable regulatory authorities; • receipt of marketing approvals from applicable regulatory authorities, including NDAs from the FDA and maintaining such approvals; • making arrangements with our third-party manufacturers for, or establishing, commercial manufacturing capabilities; • establishing sales, marketing and distribution capabilities and launching commercial sales of seralutinib, if and when approved, whether alone or in collaboration with others; • establishment and maintenance of patent and trade secret protection or regulatory exclusivity for seralutinib; • maintaining an acceptable safety profile of seralutinib following any approval; and • maintaining and growing an organization of people who can develop seralutinib and our technology.
Our indebtedness could have significant negative consequences for our stockholders and our business, results of operations and financial condition by, among other things: • increasing our vulnerability to adverse economic and industry conditions; • limiting our ability to obtain additional financing; • requiring the dedication of a substantial portion of our cash flow from operations to service our indebtedness, which will reduce the amount of cash available for other purposes; • limiting our flexibility to plan for, or react to, changes in our business; • making it more difficult or expensive for a third party to acquire us; • diluting the interests of our existing stockholders as a result of issuing shares of our common stock upon conversion of the notes; and • placing us at a possible competitive disadvantage with competitors that are less leveraged than us or have better access to capital.
Our indebtedness and liabilities could have significant 31 Table of Contents negative consequences for our stockholders and our business, results of operations and financial condition by, among other things: • increasing our vulnerability to adverse economic and industry conditions; • limiting our ability to obtain additional financing; • requiring the dedication of a substantial portion of our cash flow from operations to service our indebtedness, which will reduce the amount of cash available for other purposes; • limiting our flexibility to plan for, or react to, changes in our business; • making it more difficult or expensive for a third party to acquire us; • diluting the interests of our existing stockholders as a result of issuing shares of our common stock upon conversion of the notes; and • placing us at a possible competitive disadvantage with competitors that are less leveraged than us or have better access to capital.
At the state level, legislatures have increasingly passed legislation and implemented regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.
At the state level, legislatures have increasingly passed legislation and implemented regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure, drug price reporting and other transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.
We will need to reassess, as of June 30, 2024, whether we will continue to qualify as a smaller reporting company and a non-accelerated filer for filings beyond the fiscal year ending December 31, 2024. We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions.
We will need to reassess, as of June 30, 2025, whether we will continue to qualify as a smaller reporting company and a non-accelerated filer for filings beyond the fiscal year ending December 31, 2025. We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions.
Among other things, the IRA requires manufacturers of certain drugs to engage in price negotiations with Medicare (beginning in 2026), imposes rebates under Medicare Part B and Medicare Part D to penalize price increases that outpace inflation (first due in 2023), and replaces the Part D coverage gap discount program with a new discounting program (beginning in 2025).
Among other things, the IRA requires manufacturers of certain drugs to engage in price negotiations with Medicare (beginning in 2026), imposes rebates under Medicare Part B and Medicare Part D to penalize price increases that outpace inflation (first due in 2023), and replaces the Part D coverage gap discount program with a new discounting program (which began in 2025).
There can be no assurance that future credit and financial market instability and a deterioration in confidence in economic conditions will not occur. Our general business strategy may be adversely affected by any such economic downturn, liquidity shortages, volatile business environment or continued unpredictable and unstable market 71 Table of Contents conditions.
There can be no assurance that future credit and financial market instability and a deterioration in 72 Table of Contents confidence in economic conditions will not occur. Our general business strategy may be adversely affected by any such economic downturn, liquidity shortages, volatile business environment or continued unpredictable and unstable market conditions.
We are dependent on third parties to conduct our clinical trials and preclinical studies, including our ongoing or potential future clinical trials for seralutinib.
We are dependent on third parties to conduct our clinical trials and preclinical studies, including our ongoing and potential future clinical trials for seralutinib.
Any delay in obtaining, or inability to obtain, applicable regulatory approval would delay or prevent commercialization of seralutinib and would materially adversely impact our business and prospects. 38 Table of Contents We may attempt to secure approval from the FDA or comparable foreign regulatory authorities through the use of accelerated approval pathways.
Any delay in obtaining, or inability to obtain, applicable regulatory approval would delay or prevent commercialization of seralutinib and would materially adversely impact our business and prospects. 39 Table of Contents We may attempt to secure approval from the FDA or comparable foreign regulatory authorities through the use of accelerated approval pathways.
Misconduct by these parties could include intentional, reckless and/or negligent conduct or disclosure of unauthorized activities to us that violate: (1) the laws and regulations of the FDA and other similar regulatory requirements, including those laws that require the reporting of true, complete and accurate information to such authorities, (2) manufacturing standards, including cGMP and similar requirements, 55 Table of Contents (3) federal and state data privacy, security, fraud and abuse and other healthcare laws and regulations in the United States and abroad or (4) laws that require the true, complete and accurate reporting of financial information or data.
Misconduct by these parties could include intentional, reckless and/or negligent conduct or disclosure of unauthorized activities to us that violate: (1) the laws and regulations of the FDA and other similar regulatory requirements, including those laws that require the reporting of true, complete and accurate information to such authorities, (2) manufacturing standards, including cGMP and similar requirements, (3) federal and state data privacy, security, fraud and abuse and other healthcare laws and regulations in the United States and abroad or (4) laws that require the true, complete and accurate reporting of financial information or data.
We do not know whether our planned trials will begin on time or be completed on schedule, if at all.
We do not know whether our ongoing or planned trials will begin on time or be completed on schedule, if at all.
Our competitors include larger and better funded pharmaceutical, biopharmaceutical, biotechnological and therapeutics companies. Moreover, we may also compete with universities and other 47 Table of Contents research institutions who may be active in the indications we are targeting and could be in direct competition with us.
Our competitors include larger and better funded pharmaceutical, biopharmaceutical, biotechnological and therapeutics companies. Moreover, we may also compete with 48 Table of Contents universities and other research institutions who may be active in the indications we are targeting and could be in direct competition with us.
These fluctuations may occur due to a variety of factors, many of which are outside of our control, including, but not limited to: • the timing and cost of, and level of investment in, research, development, regulatory approval and commercialization activities relating to seralutinib, which may change from time to time; 49 Table of Contents • coverage and reimbursement policies with respect to seralutinib, if approved, and potential future drugs that compete with seralutinib; • the cost of manufacturing seralutinib, which may vary depending on the quantity of production and the terms of our agreements with third-party manufacturers; • the timing and amount of the milestone or other payments we must make to Pulmokine and other third parties from whom we have in-licensed seralutinib, including payments due upon a change in control of our subsidiaries; • expenditures that we may incur to acquire, develop or commercialize additional product candidates and technologies; • the level of demand for any approved products, which may vary significantly; • future accounting pronouncements or changes in our accounting policies; and • the timing and success or failure of preclinical studies or clinical trials for seralutinib or competing product candidates, or any other change in the competitive landscape of our industry, including consolidation among our competitors or partners.
These fluctuations may occur due to a variety of factors, many of which are outside of our control, including, but not limited to: 50 Table of Contents • the timing and cost of, and level of investment in, research, development, regulatory approval and commercialization activities relating to seralutinib, which may change from time to time; • coverage and reimbursement policies with respect to seralutinib, if approved, and potential future drugs that compete with seralutinib; • the cost of manufacturing seralutinib, which may vary depending on the quantity of production and the terms of our agreements with third-party manufacturers; • the timing and amount of the milestone or other payments we must make to Pulmokine and other third parties from whom we have in-licensed seralutinib, including payments due upon a change in control of our subsidiaries as well as timing and amount of the milestone or other payments we receive from Chiesi; • expenditures that we may incur to acquire, develop or commercialize additional product candidates and technologies; • the level of demand for any approved products, which may vary significantly; • future accounting pronouncements or changes in our accounting policies; and • the timing and success or failure of preclinical studies or clinical trials for seralutinib or competing product candidates, or any other change in the competitive landscape of our industry, including consolidation among our competitors or partners.
If we are not successful in commercializing seralutinib, either on our own or through arrangements with one or more third parties, we may not be able to generate any future product revenue, and we would incur significant additional losses.
If we are not successful in commercializing seralutinib, either on our own in partnership with Chiesi or through arrangements with one or more third parties, we may not be able to generate any future product revenue, and we would incur significant additional losses.
Our information technology systems, or those of any of our CROs, manufacturers, other contractors or consultants or potential future collaborators, may fail or suffer security breaches, which could result in a material disruption of our seralutinib development program, which could materially affect our results.
Our information technology, or IT, systems, or those of any of our CROs, manufacturers, other contractors or consultants or Chiesi or potential future collaborators, may fail or suffer security breaches, which could result in a material disruption of our seralutinib development program, which could materially affect our results.
The market price for our common stock may be influenced by those factors discussed in this “Risk Factors” section and many others, including: • our ability to enroll subjects in our ongoing and planned clinical trials; • results of our clinical trials and preclinical studies, and the results of trials of our competitors or those of other companies in our market sector; • regulatory approval of seralutinib, or limitations to specific label indications or patient populations for its use, or changes or delays in the regulatory review process; • regulatory developments in the United States and foreign countries; • changes in the structure of healthcare payment systems, especially in light of current reforms to the U.S. healthcare system; • the success or failure of our efforts to acquire, license or develop additional product candidates; • innovations or new products developed by us or our competitors; • announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments; • manufacturing, supply or distribution delays or shortages; • any changes to our relationship with any manufacturers, suppliers, licensors, future collaborators or other strategic partners; • achievement of expected product sales and profitability; • variations in our financial results or those of companies that are perceived to be similar to us; • market conditions in the biopharmaceutical sector and issuance of securities analysts’ reports or recommendations; • trading volume of our common stock; • an inability to obtain additional funding; • sales of our stock by insiders and stockholders; • general economic, industry and market conditions other events or factors, many of which are beyond our control, such as the COVID-19 pandemic, the military conflict between Russia and Ukraine, inflation and interest changes and financial institution instability; • additions or departures of key personnel; and 66 Table of Contents • intellectual property, product liability or other litigation against us.
The market price for our common stock may be influenced by those factors discussed in this “Risk Factors” section and many others, including: • our ability to enroll subjects in our ongoing and planned clinical trials; • results of our clinical trials and preclinical studies, and the results of trials of our competitors or those of other companies in our market sector; • regulatory approval of seralutinib, or limitations to specific label indications or patient populations for its use, or changes or delays in the regulatory review process; • regulatory developments in the United States and foreign countries; • changes in the structure of healthcare payment systems, especially in light of current reforms to the U.S. healthcare system; • the success or failure of our efforts to acquire, license or develop additional product candidates; • innovations or new products developed by us or our competitors; • announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments; • manufacturing, supply or distribution delays or shortages; • any changes to our relationship with Chiesi or any manufacturers, suppliers, licensors, future collaborators or other strategic partners; • achievement of expected product sales and profitability; • variations in our financial results or those of companies that are perceived to be similar to us; • market conditions in the biopharmaceutical sector and issuance of securities analysts’ reports or recommendations; • trading volume of our common stock; • an inability to obtain additional funding; • sales of our stock by insiders and stockholders; 67 Table of Contents • general economic, industry and market conditions other events or factors, many of which are beyond our control, such as health pandemics, the military conflict between Russia and Ukraine and Israel and Hamas, inflation and interest changes and financial institution instability; • additions or departures of key personnel; and • intellectual property, product liability or other litigation against us.
Although we have determined that our internal control over financial reporting was effective as of December 31, 2023, we cannot assure you that there will not be material weaknesses or significant deficiencies in our internal control over financial reporting in the future.
Although we have determined that our internal control over financial reporting was effective as of December 31, 2024, we cannot assure you that there will not be material weaknesses or significant deficiencies in our internal control over financial reporting in the future.
Among the provisions of the ACA of importance to seralutinib, the ACA: established an annual, nondeductible fee on any entity that manufactures or imports specified branded prescription drugs and biologic agents; extended manufacturers’ Medicaid rebate liability to covered drugs dispensed to individuals who are enrolled in Medicaid managed care organizations; expanded eligibility criteria for Medicaid programs; expanded the entities eligible for discounts under the Public Health program; increased the statutory minimum rebates a manufacturer must pay under the Medicaid Drug Rebate Program; created a new Medicare Part D coverage gap discount program; established a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in and conduct comparative clinical effectiveness research, along with funding for such research; and established a Center for Medicare and Medicaid Innovation at CMS to test innovative payment and service delivery models to lower Medicare and Medicaid spending.
Among the provisions of the ACA of importance to seralutinib, the ACA: established an annual, nondeductible fee on any entity that manufactures or imports specified branded prescription drugs and biologic agents; extended manufacturers’ Medicaid rebate liability to covered drugs dispensed to individuals who are enrolled in Medicaid managed care organizations; expanded eligibility criteria for Medicaid programs; expanded the entities eligible for discounts under the Public Health program; increased the statutory minimum rebates a manufacturer must pay under the Medicaid Drug Rebate Program; established a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in and conduct comparative clinical effectiveness research, along with funding for such research; and established a Center for Medicare and Medicaid Innovation at CMS to test innovative payment and service delivery models to lower Medicare and Medicaid spending.
This reliance on third parties increases the risk that we will not have sufficient quantities of seralutinib or such quantities at an acceptable cost, which could delay, prevent or impair our development or commercialization efforts. We do not own or operate manufacturing facilities and have no plans to build our own clinical or commercial scale manufacturing capabilities.
This reliance on third parties increases the risk that we will not have sufficient quantities of seralutinib or such quantities at an acceptable cost, which could delay, prevent or impair our development or commercialization efforts. 43 Table of Contents We do not own or operate manufacturing facilities and have no plans to build our own clinical or commercial scale manufacturing capabilities.
There are a limited number of manufacturers that operate under cGMP or similar foreign regulations and that might be capable of manufacturing for us. Any performance failure on the part of our existing or future manufacturers could delay clinical development or marketing approval, and any related remedial measures may be costly or time consuming to implement.
There are a limited number of manufacturers that operate under cGMP or similar foreign regulations and that might be capable of manufacturing for us. 44 Table of Contents Any performance failure on the part of our existing or future manufacturers could delay clinical development or marketing approval, and any related remedial measures may be costly or time consuming to implement.
For so long as we qualify as a smaller reporting company, we will have the option to take advantage of certain exemptions from various reporting and other requirements that are applicable to other public companies that are not smaller reporting companies, including, but not limited to reduced disclosure obligations 69 Table of Contents regarding executive compensation in our periodic reports and proxy statements.
For so long as we qualify as a smaller reporting company, we will have the option to take advantage of certain exemptions from various reporting and other requirements that are applicable to other public companies that are not smaller reporting companies, including, but not limited to reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements.
Similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation; • the federal Physician Payments Sunshine Act, which requires certain manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) to report annually to the Centers for Medicare and Medicaid Services, or CMS, information related to payments and other “transfers of value” made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain non-physician practitioners (physician assistants, nurse practitioners, clinical nurse specialists, certified nurse anesthetists, anesthesiology assistants and certified nurse-midwives), and teaching hospitals, as well as ownership and investment interests held by the physicians described above and their immediate family members; and • analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, which may apply to our business practices, including but not limited to, research, distribution, sales and marketing arrangements and claims involving healthcare items or services reimbursed by non- governmental third-party payors, including private insurers, or by the patients themselves; state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government, or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; state laws and regulations that require drug manufacturers to file reports relating to pricing and marketing information or which require tracking gifts and other remuneration and items of value provided to physicians, other healthcare providers and entities; and state and local laws that require the registration of pharmaceutical sales representatives. 51 Table of Contents Ensuring that our internal operations and business arrangements with third-parties comply with applicable healthcare laws and regulations could involve substantial costs.
Similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation; • the federal Physician Payments Sunshine Act, which requires certain manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) to report annually to the Centers for Medicare and Medicaid Services, or CMS, information related to payments and other “transfers of value” made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain non-physician practitioners (physician assistants, nurse practitioners, clinical nurse specialists, certified nurse anesthetists, anesthesiology assistants and certified nurse-midwives), and teaching hospitals, as well as ownership and investment interests held by the physicians described above and their immediate family members; and • analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, which may apply to our business practices, including but not limited to, research, distribution, sales and marketing arrangements and claims involving healthcare items or services reimbursed by non- governmental third-party payors, including private insurers, or by the patients themselves; state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government, or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; state laws and regulations that require drug manufacturers to file reports relating to pricing and marketing information or which require tracking gifts and other remuneration 52 Table of Contents and items of value provided to physicians, other healthcare providers and entities; and state and local laws that require the registration of pharmaceutical sales representatives.
To obtain separate regulatory approval in many other countries, we must comply with numerous and varying regulatory requirements regarding safety and efficacy and governing, among other things, clinical trials, commercial sales, pricing and distribution of seralutinib.
To obtain separate regulatory approval in many other countries, Chiesi must comply with numerous and varying regulatory requirements regarding safety and efficacy and governing, among other things, clinical trials, commercial sales, pricing and distribution of seralutinib.
Individual EU member states will continue to be responsible for assessing non-clinical (e.g., economic, social, ethical) aspects of health technology, and making decisions on pricing and reimbursement. If product liability lawsuits are brought against us, we may incur substantial liabilities and may be required to limit commercialization of seralutinib.
Individual EU member states will continue to be responsible for assessing non-clinical (e.g., economic, social, ethical) aspects of health technology, and making decisions on pricing and reimbursement. 55 Table of Contents If product liability lawsuits are brought against us, we may incur substantial liabilities and may be required to limit commercialization of seralutinib.
For example, over the last several years, the U.S. government has shut down several times and certain regulatory agencies, such as the FDA, have had to furlough critical FDA employees and stop critical activities. Separately, in response to the COVID-19 pandemic, the FDA postponed most inspections of domestic and foreign manufacturing facilities at various points.
For example, in recent years, the U.S. government has shut down several times and certain regulatory agencies, such as the FDA, have had to furlough critical FDA employees and stop critical activities. Separately, in response to the COVID-19 pandemic, the FDA postponed most inspections of domestic and foreign manufacturing facilities at various points.
It is not uncommon to observe results in clinical trials that are unexpected based on preclinical studies and early clinical trials, and 32 Table of Contents many product candidates fail in clinical trials despite very promising early results.
It is not uncommon to observe results in clinical trials that are unexpected based on preclinical studies and early clinical trials, and 33 Table of Contents many product candidates fail in clinical trials despite very promising early results.
If a court were to find the choice of forum provisions in our amended and restated certificate of 68 Table of Contents incorporation or amended and restated bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could adversely affect our business and financial condition.
If a court were to find the choice of forum provisions in our amended and restated certificate of incorporation or amended and restated bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could adversely affect our business and financial condition.
Similar rules may apply under state and foreign tax laws. In connection with our IPO in February 2019, we experienced an ownership change for purposes of Section 382 and 383 of the Code. Consequently, our federal NOLs and tax credits generated through February 2019 will be subject to annual limitations.
Similar rules may apply under state and foreign tax laws. In connection with our IPO in February 2019, we experienced an ownership change for purposes of Section 382 and 383 of the Code. We also experienced an ownership change in July 2023. Consequently, our federal NOLs and tax credits generated through July 2023 will be subject to annual limitations.
The financial markets and the global economy may also be adversely affected by the current or anticipated impact of military conflict, including the ongoing conflict between Russia and Ukraine, terrorism or other geopolitical events.
The financial markets and the global economy may also be adversely affected by the current or anticipated impact of military conflict, including the ongoing conflict between Russia and Ukraine and Israel and Hamas, terrorism or other geopolitical events.
Risks Related to the Discovery, Development and Regulatory Approval of Seralutinib We depend heavily on the success of seralutinib , which is currently in Phase 3 clinical development. If we are unable to advance seralutinib in clinical development, obtain regulatory approval and ultimately commercialize seralutinib, or experience significant delays in doing so, our business will be materially harmed.
Risks Related to the Development and Regulatory Approval of Seralutinib We depend entirely on the success of seralutinib , which is currently in Phase 3 clinical development. If we are unable to advance seralutinib in clinical development, obtain regulatory approval and ultimately commercialize seralutinib, or experience significant delays in doing so, our business will be materially harmed.
Further, we may have to relinquish valuable rights to our future revenue streams, or grant licenses on terms on terms that may not be favorable to us, as part of any such arrangement, and such arrangements may restrict us from entering into additional agreements with potential collaborators.
Further, in connection with any such collaborations, we may have to relinquish valuable rights to our future revenue streams, or grant licenses on terms that may not be favorable to us, as part of any such arrangement, and such arrangements may restrict us from entering into additional agreements with potential collaborators.
Even if we are successful in our efforts to establish such collaborations, the terms that we agree upon may not be favorable to us, and we may not be able to maintain such collaborations if, for example, development or approval of seralutinib is delayed, the safety of seralutinib is questioned or sales of seralutinib, if approved, are unsatisfactory.
If we are successful in our efforts to establish any additional collaborations, the terms that we agree upon may not be favorable to us, and we may not be able to maintain such collaborations if, for example, development or approval of seralutinib is delayed, the safety of seralutinib is questioned or sales of seralutinib, if approved, are unsatisfactory.
We cannot predict the breadth of claims that may be allowed or enforced in our patents or in third-party patents. In addition, Congress or other foreign legislative bodies may pass patent reform legislation that is unfavorable to us. For example, the U.S.
We cannot predict the breadth of claims 64 Table of Contents that may be allowed or enforced in our patents or in third-party patents. In addition, Congress or other foreign legislative bodies may pass patent reform legislation that is unfavorable to us. For example, the U.S.
Any safety concerns observed in any one of our clinical trials in our targeted indications could limit the prospects for regulatory approval of seralutinib in PAH and other indications, which could have a material adverse effect on our business, financial condition and results of operations.
Any safety concerns observed in any one of our clinical trials in our targeted indications could limit the prospects for regulatory approval of seralutinib in PAH and other indications including PH-ILD, which could have a material adverse effect on our business, financial condition and results of operations.
These choice of forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees, which may discourage such lawsuits against us and our directors, officers and other employees.
These choice of forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees, 69 Table of Contents which may discourage such lawsuits against us and our directors, officers and other employees.
The commercial success of 45 Table of Contents seralutinib will depend significantly on the broad adoption and use of the resulting product by physicians and patients for approved indications.
The commercial success of 46 Table of Contents seralutinib will depend significantly on the broad adoption and use of the resulting product by physicians and patients for approved indications.
Our business strategy depends on the successful development of seralutinib, which is a 59 Table of Contents licensed technologies, into a commercial product. Therefore, any limitations on our ability to utilize these technologies may impair our ability to develop, out-license or market and sell seralutinib.
Our business strategy depends on the successful development of seralutinib, which is a licensed technologies, into a commercial product. Therefore, any limitations on our ability to utilize these technologies may impair our ability to develop, out-license or market and sell seralutinib.
In addition, some of our assumptions about why seralutinib is worthy of future development and potential approval are based on data collected by other companies. Seralutinib may not have favorable results in its Phase 3 clinical trial in PAH, or receive regulatory approval on a timely basis, if at all.
In addition, some of our assumptions about why seralutinib is worthy of future development and potential approval are based on data collected by other companies. Seralutinib may not have favorable results in its Phase 3 clinical trial in PAH or the anticipated Phase 3 clinical trial in PH-ILD, or receive regulatory approval on a timely basis, if at all.
If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel, which could adversely affect our business. Even if we are successful in defending against these claims, litigation could result in substantial costs and be a distraction to our management team and other employees.
If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or 66 Table of Contents personnel, which could adversely affect our business. Even if we are successful in defending against these claims, litigation could result in substantial costs and be a distraction to our management team and other employees.
We are a smaller reporting company within the meaning of the Securities Act, and if we decide to take advantage of certain exemptions from various reporting requirements applicable to smaller reporting companies, our common stock could be less attractive to investors. We are a smaller reporting company.
We are a smaller reporting company within the meaning of the Securities Act, and if we decide to take advantage of certain exemptions from various reporting requirements applicable to smaller reporting companies, our common stock could be less attractive to investors. 70 Table of Contents We are a smaller reporting company.
We collect and maintain information in digital form that is necessary to conduct our business, and we are increasingly dependent on information technology systems and infrastructure to operate our business.
We collect and maintain information in digital form that is necessary to conduct our business, and we are increasingly dependent on IT systems and infrastructure to operate our business.
Derivation or interference proceedings provoked by third parties or brought by us or declared by the USPTO or similar proceedings in foreign patent offices may be necessary to determine the priority of inventions with respect to our patents or patent applications.
Derivation or interference proceedings provoked by third parties or brought by us or declared by the USPTO or similar proceedings in foreign patent offices may be necessary to determine the priority of inventions with respect to our 63 Table of Contents patents or patent applications.
It is difficult to monitor whether our predecessors or licensors limit their use of the technology to these uses, and we could incur substantial expenses to enforce our rights to our licensed technology in the event of misuse.
It is difficult 60 Table of Contents to monitor whether our predecessors or licensors limit their use of the technology to these uses, and we could incur substantial expenses to enforce our rights to our licensed technology in the event of misuse.
Moreover, even if we or our future strategic partners were able to obtain a license, the rights may be nonexclusive, which could result in our competitors gaining access to the same intellectual property. In addition, we cannot be certain that we could redesign seralutinib or processes to avoid infringement, if necessary.
Moreover, even if we or our future strategic partners were able to obtain a license, the 62 Table of Contents rights may be nonexclusive, which could result in our competitors gaining access to the same intellectual property. In addition, we cannot be certain that we could redesign seralutinib or processes to avoid infringement, if necessary.
We may not prevail in any lawsuits that we initiate, and the damages or other remedies awarded, if any, 64 Table of Contents may not be commercially meaningful. Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license.
We may not prevail in any lawsuits that we initiate, and the damages or other remedies awarded, if any, may not be commercially meaningful. Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license.
We believe that a significant number of products are currently under development, and may become commercially available in the future, for the treatment of conditions for which we may attempt to develop product candidates. In particular, there is intense competition in the fields of PAH and other pulmonary indications.
We believe that a significant number of products are currently under development, and may become commercially available in the future, for the treatment of conditions for which we may attempt to develop product candidates. In particular, there is intense competition in the fields of PAH and other PH indications including PH-ILD.
Even if patent applications we own or license currently or in the future issue as patents, they may not issue in a form that will provide us with any meaningful protection, prevent competitors or other third parties from competing with us, or otherwise provide us with any competitive advantage.
Even if patent applications we own or license currently or in the future issue as patents, they may not issue in a form that will provide us with any meaningful protection, prevent competitors or other 59 Table of Contents third parties from competing with us, or otherwise provide us with any competitive advantage.
Risks Related to Our Common Stock An active, liquid and orderly market for our common stock may not be maintained. 65 Table of Contents Our common stock only began trading on the Nasdaq Global Select Market, or Nasdaq, in February 2019, and we can provide no assurance that we will be able to maintain an active trading market for our common stock.
Risks Related to Our Common Stock An active, liquid and orderly market for our common stock may not be maintained. Our common stock only began trading on the Nasdaq Global Select Market, or Nasdaq, in February 2019, and we can provide no assurance that we will be able to maintain an active trading market for our common stock.
Item 1A. Risk Factors. You should carefully consider the following risk factors, together with the other information contained in this annual report on Form 10-K, including our financial statements and the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” before making a decision to purchase or sell shares of our common stock.
Risk Factors. 28 Table of Contents You should carefully consider the following risk factors, together with the other information contained in this annual report on Form 10-K, including our financial statements and the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” before making a decision to purchase or sell shares of our common stock.
If our operations expand, we expect that we will need to manage additional relationships with various strategic partners, suppliers and other third parties. Our future financial performance and our ability to develop and 50 Table of Contents commercialize seralutinib and to compete effectively will depend, in part, on our ability to manage any future growth effectively.
If our operations expand, we expect that we will need to manage additional relationships with various strategic partners, suppliers and other third parties. Our future financial performance and our ability to develop and commercialize seralutinib and to compete effectively will depend, in part, on our ability to manage any future growth effectively.
If these requirements divert the attention of our management and personnel from other business concerns, they could have a material adverse effect on our business, financial condition and results of operations.
If these requirements divert 73 Table of Contents the attention of our management and personnel from other business concerns, they could have a material adverse effect on our business, financial condition and results of operations.
If we fail to comply with our obligations under these agreements, or we are subject to bankruptcy-related proceedings, the licensor may have the right to terminate the license, in which event we would not be able to market products covered by the license.
If we fail to 58 Table of Contents comply with our obligations under these agreements, or we are subject to bankruptcy-related proceedings, the licensor may have the right to terminate the license, in which event we would not be able to market products covered by the license.
Congress, the U.S. federal courts, the USPTO, or similar authorities in foreign jurisdictions, the laws and regulations governing patents could 63 Table of Contents change in unpredictable ways that would weaken our ability to obtain new patents or to enforce our existing patents and patents we might obtain in the future.
Congress, the U.S. federal courts, the USPTO, or similar authorities in foreign jurisdictions, the laws and regulations governing patents could change in unpredictable ways that would weaken our ability to obtain new patents or to enforce our existing patents and patents we might obtain in the future.
Since the shares were sold in our initial public offering, or IPO, in February 2019 at a price of $16.00 per share, the price per share of our common stock has ranged as low as $0.45 and as high as $27.15 through February 27, 2024.
Since the shares were sold in our initial public offering, or IPO, in February 2019 at a price of $16.00 per share, the price per share of our common stock has ranged as low as $0.45 and as high as $27.15 through March 6, 2025.
If a prolonged government shutdown occurs, or if global health concerns prevent the FDA or other regulatory authorities from conducting their regular inspections, reviews, or other regulatory activities, it could significantly impact the ability of the FDA or other regulatory authorities to timely review and process our regulatory submissions, which could have a material adverse effect on our business. 41 Table of Contents Our business is subject to risks arising from pandemic and epidemic diseases.
If a prolonged government shutdown occurs, or if staffing or funding shortages or renewed global health concerns prevent the FDA or other regulatory authorities from conducting their regular inspections, reviews, or other regulatory activities, it could significantly impact the ability of the FDA or other regulatory authorities to timely review and process our regulatory submissions, which could have a material adverse effect on our business. 42 Table of Contents Our business is subject to risks arising from pandemic and epidemic diseases.
These products may compete with seralutinib, and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing. Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions.
These products may compete with seralutinib, and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing. 65 Table of Contents Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions.
The increased costs will decrease our net income or increase our net loss 72 Table of Contents and may require us to reduce costs in other areas of our business or increase the prices of our products or services.
The increased costs will decrease our net income or increase our net loss and may require us to reduce costs in other areas of our business or increase the prices of our products or services.
Our employees and independent contractors, including principal investigators, CROs, consultants and vendors, may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements. We are exposed to the risk that our employees and independent contractors, including principal investigators, CROs, consultants and vendors may engage in misconduct or other illegal activity.
Our employees and independent contractors, including principal investigators, CROs, consultants and vendors, may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements. 56 Table of Contents We are exposed to the risk that our employees and independent contractors, including principal investigators, CROs, consultants and vendors may engage in misconduct or other illegal activity.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur management team’s experience includes collective decades of experience working in and overseeing information technology and cybersecurity functions, technical cybersecurity certifications, and active membership in cybersecurity professional organizations, as well as local groups, to support knowledge sharing and ongoing education. 74 Table of Contents Our management team supervises efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various means, which may include briefings from internal security personnel; threat intelligence and other information obtained from governmental, public or private sources, including external consultants engaged by us and alerts and reports produced by security tools deployed in the information technology environment.
Biggest changeOur management team takes steps to stay informed about and monitor efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various means, which may include briefings from internal security personnel; threat intelligence and other information obtained from governmental, public or private sources, including external consultants engaged by us and alerts and reports produced by security tools deployed in our IT environment.
Our cybersecurity program is integrated into our overall risk management program and includes reporting channels to the executive management team and an internal Cybersecurity Oversight Committee, as well as governance processes which communicate cybersecurity risks to departments across the organization, including legal, strategic, operational, and financial areas. This encourages consideration of cybersecurity oversight, accountability and diligence across the organization.
Our cybersecurity governance program includes reporting channels to the executive management team and an internal Cybersecurity Oversight Committee, as well as governance processes which communicate cybersecurity risks to departments across the organization, including legal, strategic, operational, and financial areas. This encourages consideration of cybersecurity oversight, accountability and diligence across the organization.
For more information, see the section titled “Risk Factors— Our information technology systems, or those of any of our CROs, manufacturers, other contractors or consultants or potential future collaborators, may fail or suffer security breaches, which could result in a material disruption of our seralutinib development program, which could materially affect our results.” Cybersecurity Governance Our Board considers cybersecurity risk as part of its risk oversight function and has delegated oversight of cybersecurity and other information technology risks to the Audit Committee.
See “Risk Factors - Our information technology systems, or those of any of our CROs, manufacturers, other contractors or consultants or Chiesi or potential future collaborators, may fail or suffer security breaches, which could result in a material disruption of our seralutinib development program, which could materially affect our results.” Cybersecurity Governance Our Board considers cybersecurity risk as part of its risk oversight function and has delegated oversight of cybersecurity risks, including oversight of management’s implementation of the cybersecurity governance program.
We design and assess our program based on the National Institute of Standards and Technology Cybersecurity Framework (NIST CSF). This does not imply that we meet any particular technical standards, specifications, or requirements, only that we use the NIST CSF as a guide to help us identify, assess, and manage cybersecurity risks relevant to our business.
This does not imply we meet any particular technical standards, specifications, or requirements, only that we use the NIST CSF as a guide to help us identify, assess, and manage cybersecurity risks relevant to our business.
We have not identified risks from known cybersecurity threats, including as a result of any prior cybersecurity incidents, which have materially affected or are reasonably likely to materially affect the organization, including operations, business strategy, results of operations, or financial condition.
We have not identified risks from known cybersecurity threats, including as a result of any prior cybersecurity incidents, which have materially affected us, including our operations, business strategy, results of operations, or financial condition.
Our cybersecurity program includes: • Processes to assess cybersecurity risk, designed to help identify material cybersecurity risks to critical systems, information, products, services, and the broader enterprise information technology environment; • a security team principally responsible for coordinating and managing (1) cybersecurity risk evaluation processes, (2) implementation of cybersecurity controls, and (3) response to cybersecurity incidents; • the use of external service providers, where appropriate, to assess, test or otherwise assist with aspects of the organization’s cybersecurity controls; • cybersecurity awareness training of employees, incident response personnel, including third party providers, and senior management; • a cybersecurity incident response plan which includes procedures for responding to cybersecurity incidents; and • a third-party risk management process for service providers, suppliers, and vendors that have access to sensitive data or information.
Key elements of our cybersecurity governance program includes but are not limited to the following: • Processes to assess cybersecurity risk, designed to help identify material risks from cybersecurity threats to critical systems and information; • a security team principally responsible for coordinating and managing (1) cybersecurity risk evaluation processes, (2) implementation of cybersecurity controls, and (3) response to cybersecurity incidents; • the use of external service providers, where appropriate, to assess, test or otherwise assist with aspects of the organization’s cybersecurity processes; • cybersecurity awareness training of employees, including incident response personnel including third party providers, and senior management; • a cybersecurity incident response plan which includes procedures for responding to cybersecurity incidents; and • a third-party risk management process for key service providers based on our assessment of their criticality to our operations and respective risk profile.
Item 1C. Cybersecurity. Cybersecurity Risk Management and Strategy 73 Table of Contents We have developed and implemented a cybersecurity program intended to protect the confidentiality, integrity, and availability of our critical systems and information. Our cybersecurity program includes a cybersecurity incident response plan.
Item 1C. Cybersecurity. Cybersecurity Risk Management and Strategy We have developed and implemented a cybersecurity governance program intended to protect the confidentiality, integrity, and availability of our critical systems and information. We design and assess our program based on the National Institute of Standards and Technology Cybersecurity Framework (NIST CSF).
The Audit Committee reports to the full Board regarding its activities, including those related to cybersecurity. Our management team including the Executive Vice President, Technical Operations and Administration is responsible for assessing and managing material risks from cybersecurity threats.
The Audit Committee reports to the full Board regarding its activities, including those related to cybersecurity. 75 Table of Contents Assessment and management of material risks from cybersecurity threats are performed by the Executive Director, Information Security, Risk & Compliance and the Vice President, IT and Facilities, reporting to the Executive Vice President, Technical Operations and Administration.
The Audit Committee oversees management’s implementation of the cybersecurity program. The Audit Committee receives formal annual reports from management regarding cybersecurity risks. In addition, management updates the Board and Audit Committee, as necessary, regarding any material cybersecurity incidents, as well as any incidents with lesser impact potential.
The Audit Committee receives formal annual reports from IT management regarding cybersecurity risks. In addition, management would update the Audit Committee and Board, where it deems appropriate, regarding cybersecurity incidents it considers to be significant or potentially significant.
Removed
The team has primary responsibility for our overall cybersecurity program and supervises both our internal cybersecurity personnel and our retained external cybersecurity consultants.
Added
We face risks from cybersecurity threats that, if realized, are reasonably likely to materially affect the organization, including operations, business strategy, results of operations, or financial condition.
Added
Our Executive Vice President, Technical Operations and Administration reports to the President and Chief Executive Officer. This group holds primary responsibility for our overall cybersecurity governance program, along with our internal Cybersecurity Oversight Committee, which includes senior personnel from key departments in the organization.
Added
The collective experience of the individuals listed above, along with the Cybersecurity Oversight Committee, includes decades of experience working in and overseeing IT and cybersecurity functions and enterprise, IT and cybersecurity risk management functions, in addition to holding active technical cybersecurity certifications and maintaining active membership in cybersecurity professional organizations, as well as local groups, to support knowledge share and ongoing cybersecurity professional development.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties . Our corporate headquarters are located in San Diego, California, where we currently lease approximately 63,667 square feet of office, laboratory and vivarium space. We use our corporate headquarters primarily for corporate, research, development, clinical, regulatory, manufacturing and quality functions. Our lease for this facility expires in January 2025.
Biggest changeItem 2. Properties . Our corporate headquarters are located in San Diego, California, where we currently lease approximately 18,421 square feet of office space. We use our corporate headquarters primarily for corporate, research, development, clinical, regulatory, manufacturing and quality functions. Our lease for this facility expires in October 2029.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeMarket Information Our common stock is listed on the Nasdaq Global Select Market under the symbol “GOSS.” Holders of Common Stock As of February 27, 2024, there were 225,582,250 shares of our common stock outstanding held by approximately 50 holders of record of our common stock.
Biggest changeMarket Information Our common stock is listed on the Nasdaq Global Select Market under the symbol “GOSS.” Holders of Common Stock As of March 6, 2025, there were 227,221,261 shares of our common stock outstanding held by approximately 34 holders of record of our common stock.
Securities Authorized for Issuance Under Equity Compensation Plans See Item 12 of Part III of this Annual Report on Form 10-K for information about our equity compensation plans which is incorporated by reference herein. 76 Table of Contents Stock Performance Graph The following stock performance graph compares our total stock return with the total return for (i) the Nasdaq Composite Index and the (ii) the Nasdaq Biotechnology Index for the period from February 8, 2019 (the date our common stock commenced trading on the Nasdaq Global Select Market) through December 31, 2023.
Securities Authorized for Issuance Under Equity Compensation Plans See Item 12 of Part III of this Annual Report on Form 10-K for information about our equity compensation plans which is incorporated by reference herein. 77 Table of Contents Stock Performance Graph The following stock performance graph compares our total stock return with the total return for (i) the Nasdaq Composite Index and the (ii) the Nasdaq Biotechnology Index for the period from February 8, 2019 (the date our common stock commenced trading on the Nasdaq Global Select Market) through December 31, 2024.
Removed
In addition, the terms of our Credit Facility restrict our ability to pay dividends, subject to certain exceptions.

Item 7. Management's Discussion & Analysis

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

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Biggest changeResults of Operations for the Years Ended December 31, 2023 and 2022 The following table sets forth our selected statements of operations data for the years ended December 31, 2023 and 2022: Years Ended December 31, 2023 vs 2022 Change 2023 2022 (in thousands) Operating expenses: Research and development $ 135,304 $ 170,919 $ (35,615) In process research and development 10,000 65 9,935 General and administrative 38,455 47,609 (9,154) Total operating expenses 183,759 218,593 (34,834) Loss from operations (183,759) (218,593) 34,834 Other income (expense) Interest income 1,997 1,583 414 Interest expense (13,511) (13,880) 369 Other income, net 15,456 1,512 13,944 Total other income (expense), net 3,942 (10,785) 14,727 Net loss $ (179,817) $ (229,378) $ 49,561 Operating Expenses Research and development Research and development expenses were $135.3 million for the year ended December 31, 2023, compared to $170.9 million for the year ended December 31, 2022, for a decrease of $35.6 million, which was primarily attributable to a decrease of $65.8 million of costs associated with preclinical studies and clinical trials for terminated programs, offset by an increase of $30.2 million of costs associated with preclinical studies and clinical trials for seralutinib.
Biggest changeResults of Operations for the Years Ended December 31, 2024 and 2023 The following table sets forth our selected statements of operations data for the years ended December 31, 2024 and 2023: Years Ended December 31, 2024 vs 2023 Change 2024 2023 (in thousands) Revenue: Revenue from sale of licenses $ 90,682 $ — $ 90,682 Revenue from contracts with collaborators 24,019 — 24,019 Total revenue 114,701 — 114,701 Operating expenses: Research and development 138,487 135,304 3,183 In process research and development — 10,000 (10,000) General and administrative 36,133 38,455 (2,322) Total operating expenses 174,620 183,759 (9,139) Loss from operations (59,919) (183,759) 123,840 Other income (expense) Interest income 1,779 1,997 (218) Interest expense (11,517) (13,511) 1,994 Other income, net 14,022 15,456 (1,434) Total other income (expense), net 4,284 3,942 342 Loss before provision for income taxes (55,635) (179,817) 124,182 Provision for income taxes 893 — 893 Net loss $ (56,528) $ (179,817) $ 123,289 Operating Expenses Revenue For the year ended December 31, 2024, our revenue was $114.7 million.
Investing activities During the year ended December 31, 2023, investing activities used approximately $111.0 million of cash, primarily resulting from the purchases of marketable securities of $441.7 million, offset by the maturities of marketable securities of $330.7 million.
During the year ended December 31, 2023, investing activities used approximately $111.0 million of cash, primarily resulting from the purchases of marketable securities of $441.7 million, offset by the maturities of marketable securities of $330.7 million.
During the year ended December 31, 2022, financing activities provided $117.1 million of cash, resulting from proceeds from the private offering of $119.9 million, proceeds from the exercise of stock options of $1.7 million, and from proceeds from the purchase of shares pursuant to our 2019 Employee Stock Purchase Plan, or ESPP, of $1.2 million, partially offset by the principal repayments of long-term debt of $5.8 million.
During the year ended December 31, 2022, financing activities provided $117.1 million of cash, primarily resulting from proceeds from the purchase of shares pursuant to our 2019 Employee Stock Purchase Plan, or ESPP, of $1.2 million, proceeds from the private offering of $119.9 million, and proceeds from the exercise of stock options of $1.7 million, partially offset by the principal repayments of long-term debt of $5.8 million.
The preparation of these financial statements requires us to make judgments and estimates that affect the reported amounts of assets, liabilities, and expenses and the disclosure of contingent assets and liabilities in our consolidated financial statements. We base our estimates on historical experience, known trends and events, and various other factors that are believed to be reasonable under the circumstances.
The preparation of these financial statements requires us to make judgments and estimates that affect the reported amounts of assets, liabilities, revenue, expenses and the disclosure of contingent assets and liabilities in our consolidated financial statements. We base our estimates on historical experience, known trends and events, and various other factors that are believed to be reasonable under the circumstances.
Our future capital requirements will depend on many factors, including: • the type, number, scope, progress, enrollment pace, expansions, results, costs and timing of, our preclinical studies and clinical trials of seralutinib which we are pursuing or may choose to pursue in the future; • the costs and timing of manufacturing for seralutinib; • the costs, timing and outcome of regulatory review of seralutinib; • the costs of obtaining, maintaining and enforcing our patents and other intellectual property rights; • our efforts to enhance operational systems and hire additional personnel to satisfy our obligations as a public company, including enhanced internal controls over financial reporting; • the costs associated with hiring additional personnel and consultants to continue the development and potential commercialization of seralutinib; • the timing and amount of the milestone or other payments we must make to Pulmokine from whom we have in-licensed seralutinib; • the costs and timing of establishing or securing sales and marketing capabilities if seralutinib is approved; • our ability to achieve sufficient market acceptance, coverage and adequate reimbursement from third-party payors and adequate market share and revenue for any approved products; • the terms and timing of establishing and maintaining collaborations, licenses and other similar arrangements; • costs associated with any products or technologies that we may in-license or acquire; and • any delays and cost increases that result from the COVID-19 pandemic or other epidemic diseases.
Our future capital requirements will depend on many factors, including: • the type, number, scope, progress, enrollment pace, expansions, results, costs and timing of, our preclinical studies and clinical trials of seralutinib which we are pursuing or may choose to pursue in the future; • the costs and timing of manufacturing for seralutinib; 86 Table of Contents • the costs, timing and outcome of regulatory review of seralutinib; • the costs of obtaining, maintaining and enforcing our patents and other intellectual property rights; • our efforts to enhance operational systems and hire additional personnel to satisfy our obligations as a public company, including enhanced internal controls over financial reporting; • the costs associated with hiring additional personnel and consultants to continue the development and potential commercialization of seralutinib; • the timing and amount of the milestone or other payments we must make to Pulmokine from whom we have in-licensed seralutinib; • the costs and timing of establishing or securing sales and marketing capabilities if seralutinib is approved; • our ability to achieve sufficient market acceptance, coverage and adequate reimbursement from third-party payors and adequate market share and revenue for any approved products; • the terms and timing of establishing and maintaining collaborations, licenses and other similar arrangements; • costs associated with any products or technologies that we may in-license or acquire; and • any delays and cost increases that result from epidemic diseases.
Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2022 is incorporated by reference into this MD&A.
Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2023 is incorporated by reference into this MD&A.
We received net proceeds of $117.1 million, after deducting underwriting discounts and commissions and other offering costs. Our concurrent offerings of 2027 Notes and common stock were registered pursuant to the 2020 Shelf Registration Statement. 82 Table of Contents On July 15, 2022, we completed a private placement of 16,649,365 shares of our common stock.
We received net proceeds of $117.1 million, after deducting underwriting discounts and commissions and other offering costs. Our concurrent offerings of 2027 Notes and common stock were registered pursuant to the 2020 Shelf Registration Statement. On July 15, 2022, we completed a private placement of 16,649,365 shares of our common stock.
We anticipate that we will make determinations as to how much funding to direct to seralutinib on an ongoing basis in response to the results of ongoing and future preclinical studies and clinical trials, regulatory developments and our ongoing assessments as to seralutinib's commercial potential. We will need to raise substantial additional capital in the future.
We anticipate that we will make determinations as to how much funding to direct to seralutinib on an ongoing basis in response to the results of ongoing and future preclinical studies and clinical trials, regulatory 80 Table of Contents developments and our ongoing assessments as to seralutinib's commercial potential. We will need to raise substantial additional capital in the future.
Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Risk Factors” or in other parts of this annual report. 77 Table of Contents Overview We are a clinical-stage biopharmaceutical company focused on the development and commercialization of seralutinib for the treatment of PAH.
Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Risk Factors” or in other parts of this annual report. 78 Table of Contents Overview We are a clinical-stage biopharmaceutical company focused on the development and commercialization of seralutinib for the treatment of PH, including PAH and PH-ILD.
Results of Operations for the Years Ended December 31, 2022 and 2021 The discussion of our financial condition and results of operations for the year ended December 31, 2022 and the comparison of 2022 and 2021 results included in Item 7.
Results of Operations for the Years Ended December 31, 2023 and 2022 The discussion of our financial condition and results of operations for the year ended December 31, 2023 and the comparison of 2023 and 2022 results included in Item 7.
Operating expenses Research and development Research and development expenses relate primarily to preclinical and clinical development of seralutinib and discovery efforts, as well as our discontinued clinical product candidates.
Operating expenses Research and development Research and development expenses relate primarily to preclinical and clinical development of seralutinib, as well as our discontinued clinical product candidates.
Our clinical development costs may vary significantly based on factors such as: • per patient trial costs; • the number of trials required for approval; • the number of sites included in the trials; • the countries in which the trials are conducted; • the length of time required to enroll eligible patients; • the number of patients that participate in the trials; • the number of doses that patients receive; • the drop-out or discontinuation rates of patients; • potential additional safety monitoring requested by regulatory agencies; • the duration of patient participation in the trials and follow-up; • the cost and timing of manufacturing seralutinib; • the costs incurred as a result of the COVID-19 pandemic, including clinical trial delays; 79 Table of Contents • the phase 3 stage of development for seralutinib; and • the efficacy and safety profile of seralutinib.
Our clinical development costs may vary significantly based on factors such as: • per patient trial costs; • the number of trials required for approval; • the number of sites included in the trials; • the countries in which the trials are conducted; • the length of time required to enroll eligible patients; • the number of patients that participate in the trials; • the number of doses that patients receive; • the drop-out or discontinuation rates of patients; • potential additional safety monitoring requested by regulatory agencies; • the duration of patient participation in the trials and follow-up; • the cost and timing of manufacturing seralutinib; • the costs incurred as a result of health epidemics and pandemics, including the COVID-19 pandemic, and clinical site staff shortages, including clinical trial delays; • the phase 3 stage of development for seralutinib; and • the efficacy and safety profile of seralutinib.
We categorize Terminated Programs as any research and development expenses attributable to our clinical stage product candidates that were terminated prior to December 31, 2023. We expect our research and development expenses for the foreseeable future to remain relatively flat as we continue the development of seralutinib.
We categorize Terminated Programs as any research and development expenses attributable to our clinical stage product candidates that were terminated prior to December 31, 2023. We expect to incur research and development expenses for the foreseeable future as we continue the development of seralutinib.
Liquidity and Capital Resources We have incurred substantial operating losses since our inception and expect to continue to incur significant operating losses for the foreseeable future and may never become profitable. As of December 31, 2023 and 2022, we had an accumulated deficit of $1,212.0 million and $1,032.2 million, respectively.
Liquidity and Capital Resources We have incurred substantial operating losses since our inception and expect to continue to incur significant operating losses for the foreseeable future and may never become profitable. As of December 31, 2024 and 2023, we had an accumulated deficit of $1,268.6 million and $1,212.0 million, respectively.
We expect our general and administrative expenses for the foreseeable future to remain relatively flat to support our current infrastructure and continued costs of operating as a public company.
We expect to incur general and administrative expenses for the foreseeable future to support our current infrastructure and continued costs of operating as a public company.
Additional information about our long-term borrowings is presented in Note 5 “Indebtedness” to the Notes to Consolidated Financial Statements included in Part II, Item 8, of this Form 10-K, herein by this reference.
Additional information about our long-term borrowings is presented in Note 5 “Indebtedness” and operating leases is presented in Note 11 "Commitments and Contingencies" to the Notes to Consolidated Financial Statements included in Part II, Item 8, of this Form 10-K, herein by this reference.
We expect our expenses and operating losses will remain relatively flat as compared to 2023, as we continue our development of and seek regulatory approvals for seralutinib, including the conduct of ongoing and planned clinical trials and other research and development activities; and as we hire additional personnel, protect our intellectual property and incur additional costs associated with being a public company.
We expect to incur expenses and operating losses for the foreseeable future as we continue our development of and seek regulatory approvals for seralutinib, including the conduct of ongoing and planned clinical trials and other research and development activities; and as we hire additional personnel, protect our intellectual property and incur additional costs associated with being a public company.
As of December 31, 2023, we had cash, cash equivalents and marketable securities of $296.4 million. Cash in excess of immediate requirements is invested in accordance with our investment policy, primarily with a view to capital preservation and liquidity.
As of December 31, 2024, we had cash, cash equivalents and marketable securities of $294.5 million. Cash in excess of immediate requirements is invested in accordance with our investment policy, primarily with a view to capital preservation and liquidity.
As of December 31, 2023, we had $296.4 million in cash, cash equivalents and marketable securities. We have incurred significant operating losses since our inception and expect to continue to incur significant operating losses for the foreseeable future. For the years ended December 31, 2023 and 2022, our net loss was $179.8 million and $229.4 million, respectively.
As of December 31, 2024, we had $294.5 million in cash, cash equivalents and marketable securities. We have incurred significant operating losses since our inception and expect to continue to incur significant operating losses for the foreseeable future. For the years ended December 31, 2024 and 2023, our net loss was $56.5 million and $179.8 million, respectively.
On August 18, 2023, we filed a registration statement on Form S-3 registering the resale of the shares of common stock and shares of common stock issuable upon the exercise of warrants issued in the private placement, which was declared effective on August 28, 2023.
On August 18, 2023, we filed a registration statement on Form S-3 registering the resale of the shares of common stock and shares of common stock issuable upon the exercise of warrants issued in the private placement, which was declared effective on August 28, 2023. On May 3, 2024, we entered into the collaboration agreement with Chiesi.
From our inception through the year ended December 31, 2023, our operations have been financed primarily by proceeds of $1,263.2 million from the sale of Series A and Series B convertible preferred stock, proceeds from our IPO, proceeds from our Credit Facility and 2027 Notes, proceeds from issuance of common stock in May 2020 and July 2022 and proceeds from issuance of common stock and accompanying warrants in July 2023.
From our inception through the year ended December 31, 2024, our operations have been financed primarily by proceeds of $1,401.1 million from the sale of Series A and Series B convertible preferred stock, proceeds from our IPO, proceeds from the 2027 Notes, proceeds from issuance of common stock in May 2020 and July 2022, proceeds from issuance of common stock and accompanying warrants in July 2023 and the collaboration agreement with Chiesi.
As of December 31, 2023, we were unable to estimate the timing or likelihood of achieving the milestones or making future product sales. Other contractual obligations include future payments under our Credit Facility, 2027 Notes and existing operating leases.
As of December 31, 2024, we were 84 Table of Contents unable to estimate the timing or likelihood of achieving the milestones or making future product sales. Other contractual obligations include future payments under the 2027 Notes and existing operating leases.
Research and development expenses are recognized as incurred and payments made prior to the receipt of goods or services to be used in research and development are capitalized until the goods or services are received. 78 Table of Contents Research and development expenses include or could include: • salaries, payroll taxes, employee benefits, and stock-based compensation charges for those individuals involved in research and development efforts; • external research and development expenses incurred under agreements with contract research organizations, or CROs, investigative sites and consultants to conduct our clinical trials and preclinical and non-clinical studies; • laboratory supplies; • costs related to manufacturing our product candidates for clinical trials and preclinical studies, including fees paid to third-party manufacturers; • costs related to compliance with regulatory requirements; and • facilities, depreciation and other allocated expenses, which include direct and allocated expenses for rent, maintenance of facilities, insurance, equipment and other supplies.
Research and development expenses include or could include: • salaries, payroll taxes, employee benefits, and stock-based compensation charges for those individuals involved in research and development efforts; • external research and development expenses incurred under agreements with contract research organizations, or CROs, investigative sites and consultants to conduct our clinical trials and preclinical and non-clinical studies; • laboratory supplies; • costs related to manufacturing our product candidates for clinical trials and preclinical studies, including fees paid to third-party manufacturers; • costs related to compliance with regulatory requirements; and • facilities, depreciation and other allocated expenses, which include direct and allocated expenses for rent, maintenance of facilities, insurance, equipment and other supplies.
We raised $1,263.2 million from October 2017 through December 31, 2023 through the sale of Series A and Series B convertible preferred stock, issuance of convertible notes, proceeds from our initial public offering, or IPO, completed in February 2019, proceeds from the Credit Facility and 2027 Notes (as defined below), issuance of common stock in May 2020 and July 2022 and issuance of common stock and accompanying warrants in July 2023.
We raised $1,401.1 million from October 2017 through December 31, 2024 through the sale of Series A and Series B convertible preferred stock, issuance of convertible notes, proceeds from our IPO, completed in February 2019, proceeds from 2027 Notes (as defined below), issuance of common stock in May 2020 and July 2022, issuance of common stock and accompanying warrants in July 2023 and entry into the collaboration agreement in May 2024.
We expect to report topline data from the PROSERA study in the fourth quarter of 2025. In addition to PAH, we believe that seralutinib holds potential as a therapeutic for the treatment of PH-ILD. We are actively pursuing clinical development plans for seralutinib in PH-ILD.
In the fourth quarter of 2023, we initiated the registrational Phase 3 PROSERA Study in PAH. We expect to report topline data from the PROSERA study in the fourth quarter of 2025. In addition to PAH, we believe that seralutinib holds potential as a therapeutic for the treatment of PH-ILD.
During the year ended December 31, 2021, investing activities used approximately $117.4 million of cash, primarily resulting from the purchase of marketable securities of $152.0 million, partially offset by maturities of marketable securities of $36.2 million. 83 Table of Contents Financing activities During the year ended December 31, 2023, financing activities provided $190.2 million of cash, resulting from proceeds from the issuance of common stock and warrants in a private offering of $201.3 million, reduced by the principal repayments of long-term debt of $11.6 million.
During the year ended December 31, 2023, financing activities provided $190.2 million of cash, primarily resulting from proceeds from the issuance of common stock and warrants in a private offering of $201.3 million, reduced by the principal repayments of long-term debt of $11.6 million.
Our goal is to be an industry leader in, and to enhance the lives of patients living with PH. In December 2022, we announced positive topline results from the Phase 2 TORREY Study in PAH patients. In the fourth quarter of 2023, we initiated the registrational Phase 3 PROSERA Study in PAH.
Our goal is to be an industry leader in, and to enhance the lives of patients living with PH. In May 2024, we entered into the collaboration agreement for seralutinib with Chiesi. In December 2022, we announced positive topline results from the Phase 2 TORREY Study in PAH patients.
General and administrative General and administrative expenses were $38.5 million for the year ended December 31, 2023, compared to $47.6 million for the year ended December 31, 2022, for a decrease of $9.2 million, which was primarily attributable to a $5.5 million decrease in stock-based compensation expense, a decrease of $1.3 million in professional services expense, a decrease of $0.7 million in insurance costs and a decrease of $0.9 million in other operating expense. 81 Table of Contents Other income (expense), net Other income, net was $3.9 million for the year ended December 31, 2023, compared to other expense, net of $10.8 million for the year ended December 31, 2022, for an increase of $14.7 million, which was primarily attributable to a $8.7 million increase in investment accretion, a $5.2 million increase in other income related to $2.8 million of employee retention credit under the CARES Act and $2.1 million of Ireland Corporate R&D tax credit, a $0.4 million increase in interest income and a $0.4 million decrease in interest expense.
Other income (expense), net Other income, net was $4.3 million for the year ended December 31, 2024, compared to other income, net of $3.9 million for the year ended December 31, 2023, for an increase of $0.3 million, which was primarily attributable to a $3.2 million increase in investment accretion and a $2.0 million decrease in interest expense, offset by a $3.6 million decrease in other income primarily related to $2.8 million of employee retention credit under the CARES Act and $1.0 million of Ireland Corporate R&D tax credit.
As of December 31, 2023, we had an accumulated deficit of $1,212.0 million.
As of December 31, 2024, we had an accumulated deficit of $1,268.6 million.
The following table shows a summary of our cash flows for each of the years shown below: Years Ended December 31, 2023 2022 2021 (in thousands) Net cash used in operating activities $ (159,158) $ (187,032) $ (188,890) Net cash used in investing activities (110,970) (1,035) (117,427) Net cash provided by financing activities 190,154 117,090 3,329 Effect of exchange rate changes on cash, cash equivalents and restricted cash 110 (517) (165) Net decrease in cash, cash equivalents and restricted cash $ (79,864) $ (71,494) $ (303,153) Operating activities During the year ended December 31, 2023, operating activities used approximately $159.2 million of cash, primarily resulting from a net loss of $179.8 million and changes in accrued research and development expenses of $7.8 million, changes in amortization of premium on investments of $9.5 million, reduced by stock-based compensation expense of $28.5 million and in process research and development expense of $10.0 million.
The following table shows a summary of our cash flows for each of the years shown below: Years Ended December 31, 2024 2023 2022 (in thousands) Net cash used in operating activities $ (3,468) $ (159,158) $ (187,032) Net cash provided by (used in) investing activities 29,023 (110,970) (1,035) Net cash provided by (used in) financing activities (11,488) 190,154 117,090 Effect of exchange rate changes on cash and cash equivalents (102) 110 (517) Net increase (decrease) in cash and cash equivalents $ 13,965 $ (79,864) $ (71,494) Operating activities During the year ended December 31, 2024, operating activities used approximately $3.5 million of cash, primarily resulting from a net loss of $56.5 million and changes in amortization of premium on investments, net of accretion of 85 Table of Contents discount, of $13.1 million, reduced by stock-based compensation expense of $20.6 million and changes in contract liabilities of $55.9 million.
Until such time as we can generate substantial product revenues to support our cost structure, if ever, we expect to finance our cash needs through equity offerings, our Credit Facility, debt financings or other capital sources, including potentially collaborations, licenses and other similar arrangements. 84 Table of Contents However, we may be unable to raise additional funds or enter into such other arrangements when needed on favorable terms or at all.
Until such time as we can generate substantial product revenues to support our cost structure, if ever, we expect to finance our cash needs through equity offerings, debt financings or other capital sources, including potentially collaborations, licenses and other similar arrangements.
Advance payments for goods and services that will be used in future research and development activities are expensed when the activity has been performed or when the goods have been received rather than when the payment is made. 80 Table of Contents Although we do not expect our estimates to be materially different from amounts actually incurred, if our estimates of the status and timing of services performed differ from the actual status and timing of services performed, it could result in us reporting amounts that are too high or too low in any particular period.
Although we do not expect our estimates to be materially different from amounts actually incurred, if our estimates of the status and timing of services performed differ from the actual status and timing of services performed, it could result in us reporting amounts that are too high or too low in any particular period.
During the year ended December 31, 2021, operating activities used approximately $188.9 million of cash, primarily resulting from a net loss of $234.0 million, partially reduced by stock-based compensation expense of $32.0 million, amortization of long-term debt discount and issuance costs of $6.7 million and accrued research and development expenses of $5.8 million.
During the year ended December 31, 2023, operating activities used approximately $159.2 million of cash, primarily resulting from a net loss of $179.8 million and changes in accrued research and development expenses of $7.8 million, changes in amortization of premium on investments of $9.5 million, reduced by stock-based compensation expense of $28.5 million and in process research and development expense of $10.0 million.
If we are unable to raise additional capital when needed, we could be forced to delay, limit, reduce or terminate seralutinib development or future commercialization efforts or grant rights to develop and market seralutinib even if we would otherwise prefer to develop and market seralutinib ourselves.
If we are unable to raise additional capital when needed, we could be forced to delay, limit, reduce or terminate seralutinib development or future commercialization efforts or grant additional rights to develop and market seralutinib even if we would otherwise prefer to retain such right. 79 Table of Contents Components of Results of Operations Revenue To date, we have generated all of our revenue from our collaboration agreement with Chiesi.
Our ultimate goal is to enhance and extend the lives of patients. We were incorporated in October 2015 and commenced operations in 2017. To date, we have focused primarily on organizing and staffing our company, business planning, raising capital, identifying, acquiring and in-licensing our product candidates and conducting preclinical studies and clinical trials.
To date, we have focused primarily on organizing and staffing our company, business planning, raising capital, identifying, acquiring and in-licensing our product candidates and conducting preclinical studies and clinical trials. We have funded our operations primarily through equity financings and the collaboration agreement.
The following table shows our research and development expenses by program for the years ended December 31, 2023 and 2022: Years Ended December 31, 2023 2022 (in thousands) Seralutinib $ 93,158 $ 62,983 Terminated programs 42,146 107,936 Total research and development $ 135,304 $ 170,919 In process research and development IPR&D expenses for the year ended December 31, 2023 were $10.0 million, which was attributable to a milestone obligation incurred upon the initiation of the Phase 3 clinical trial of seralutinib in the fourth quarter of 2023 and paid to Pulmokine in 2024.
IPR&D expenses for the year ended December 31, 2023 were $10.0 million, which was attributable to a milestone obligation incurred upon the initiation of the Phase 3 clinical trial of seralutinib in the fourth quarter of 2023 and paid to Pulmokine in 2024.
Other income (expense), net Other income (expense), net consists of (1) interest income on our cash, cash equivalents and marketable securities, (2) investment accretion, (3) sublease income, (4) interest expense related to our Credit Facility and our 2027 Notes, (5) employee retention credit under the Coronavirus Aid, Relief, and Economic Security Act, or the CARES Act, (6) Ireland Corporate R&D tax credit and (7) other miscellaneous income (expense).
Other income (expense), net Other income (expense), net consists of (1) interest income on our cash, cash equivalents and marketable securities, (2) investment accretion, (3) interest expense related to our Credit Facility, prior to its termination and the 2027 Notes, (4) research and development tax credit and (5) other miscellaneous income (expense).
Critical Accounting Policies and Estimates Our management’s discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States, or GAAP.
Provision for income taxes Our tax provision from income taxes is determined using an estimate of our annual effective tax rate, adjusted for discrete items, if any, that are taken into account in the relevant period. 81 Table of Contents Critical Accounting Policies and Estimates Our management’s discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States, or GAAP.
We do not expect to generate any revenue from product sales unless and until we successfully complete development and obtain regulatory approval for seralutinib, which we expect will take a number of years. If we obtain regulatory approval for seralutinib, we expect to incur significant commercialization expenses related to product sales, marketing, manufacturing and distribution.
If we obtain regulatory approval for seralutinib, we expect to incur significant commercialization expenses related to product sales, marketing, manufacturing and distribution.
We have assembled a deeply experienced and highly skilled group of industry veterans, scientists, clinicians and key opinion leaders from leading biotechnology and pharmaceutical companies, as well as leading academic centers from around the world. Our employees are a team of highly dedicated, passionate individuals who pride themselves on a culture of respect, humility, transparency, inclusion, dedication, collaboration and fun.
We expect to activate clinical sites for a global registrational Phase 3 for the treatment of PH-ILD in the second half of 2025. We have assembled a deeply experienced and highly skilled group of industry veterans, scientists, clinicians and key opinion leaders from leading biotechnology and pharmaceutical companies, as well as leading academic centers from around the world.
During the year ended December 31, 2021, financing activities provided $3.3 million of cash, resulting from proceeds from the exercise of stock options of $2.0 million, and from the purchase of shares pursuant to the ESPP of $1.3 million.
Financing activities During the year ended December 31, 2024, financing activities used $11.5 million of cash, resulting from the principal repayment of long-term debt of $12.6 million, reduced by the proceeds from the issuance of equity option pursuant to stock purchase agreement with Chiesi of $0.5 million and the proceeds from issuance of common stock pursuant to the ESPP of $0.6 million.
To date, there have been no material differences between our estimates of such expenses and the amounts actually incurred.
To date, there have been no material differences between our estimates of such expenses and the amounts actually incurred. Collaborative Arrangements We assess whether our licensing and other agreements are collaborative arrangements based on whether they involve joint operating activities and whether both parties have active participation in the arrangement and are exposed to significant risks and rewards.
Removed
We have funded our operations primarily through equity and debt financings.
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Our employees are a team of highly dedicated, passionate individuals who pride themselves on a culture of respect, humility, transparency, inclusion, dedication, collaboration and fun. Our ultimate goal is to enhance and extend the lives of patients. We were incorporated in October 2015 and commenced operations in 2017.
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Components of Results of Operations Revenue We have not generated any revenue since our inception and do not expect to generate any revenue from the sale of products for the foreseeable future.
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On May 3, 2024, we announced a strategic global partnership with Chiesi. Under the terms of the collaboration agreement, we granted Chiesi exclusive licenses for the worldwide development, manufacture and commercialization of seralutinib and licensed products and an Equity Option to purchase our common stock.
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There were no significant IPR&D expenses for the year ended December 31, 2022.
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The total potential transaction value includes the one-time $160.0 million development cost reimbursement payment for licenses, research and development funding, and certain regulatory and commercial milestones.
Removed
On May 2, 2019, we entered into a credit, guaranty and security agreement, as amended on September 18, 2019, July 2, 2020, December 7, 2022 and February 14, 2023, pursuant to which the lenders party thereto agreed to make term loans available to us for working capital and general business purposes, in a principal amount of up to $150.0 million in term loan commitments, including a $30.0 million term loan which was funded at the closing date, with the ability to access the remaining $120.0 million in two additional tranches (each $60.0 million), subject to specified availability periods, the achievement of certain clinical development milestones, minimum cash requirements and other customary conditions, or the Credit Facility.
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We and Chiesi share equally in the costs of ongoing global seralutinib clinical development and the costs of commercialization in the United States, with the exception of the PROSERA Phase 3 study, for which we bear all costs.
Removed
As of December 31, 2023, no tranches under the Credit Facility were available to be drawn.
Added
We are also eligible for double-digit royalties in the mid-to-high teens percentage on tiers of annual net sales outside of the U.S. and to an equal share of profits and losses from the commercialization of seralutinib and licensed products in the U.S. .
Added
For additional information regarding the collaboration agreement, as well as our license agreement with Pulmokine, see the section titled “Business—License and Collaboration Agreements” in this annual report. We do not expect to generate any revenue from product sales unless and until we successfully complete development and obtain regulatory approval for seralutinib, which we expect will take a number of years.
Added
Our revenue consists of a one-time development cost reimbursement payment for licenses and ongoing cost-sharing payments for performance of research and development services classified as revenue from contracts with collaborators.
Added
In the future, we may generate revenue from a combination of license fees and other upfront payments, other funded research and development agreements, milestone payments, product sales, other third-party funding, US profit/loss share and royalties in connection with strategic alliances.
Added
We expect that any revenue we generate will fluctuate from quarter-to-quarter as a result of the timing of performance of research and development services, the timing of our achievement of regulatory and commercialization milestones, the timing and amount of payments relating to such milestones and the extent to which any of our products are approved and successfully commercialized.
Added
If we are unable to fund our development costs or we are unable to develop product candidates in a timely manner or obtain regulatory approval for them, our ability to generate future revenues and our results of operations and financial position would be adversely affected.
Added
Research and development expenses are recognized as incurred and payments made prior to the receipt of goods or services to be used in research and development are capitalized until the goods or services are received.
Added
Advance payments for goods and services that will be used in future research and development activities are expensed when the activity has been performed or when the goods have been received rather than when the payment is made.
Added
For arrangements that we determine are collaborations, we identify each unit of account, and then determine whether a customer relationship exists for that unit of account. If we determine a performance obligation within the collaborative arrangement to be with a customer, we apply our revenue recognition accounting policy.
Added
If a portion of a distinct bundle of goods or services within the collaborative arrangement is not with a customer, we apply recognition and measurement based on an analogy to authoritative accounting literature or, if there is no appropriate analogy, a reasonable, rational and consistently applied accounting policy election.
Added
To the extent the arrangement is within the scope of Accounting Standards Codification, or ASC, Topic 808, we assess whether aspects of the arrangement between us and the collaboration partner are within the scope of other accounting literature.
Added
If we conclude that some or all aspects of the arrangement represent a transaction with a customer, we account for those aspects of the arrangement within the scope of ASC Topic 606, Revenue from Contracts with Customers (ASC 606).
Added
Revenue Recognition We recognize revenue in accordance with ASC 606, Revenue from Contracts with Customers, or Topic 606, which applies to all contracts with customers, except for contracts that are within the scope of other standards, such as leases, insurance, collaboration arrangements and financial instruments.
Added
Under Topic 606, we recognize revenue when our customer obtains control of promised goods or services, in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services.
Added
To determine revenue recognition for contracts with customers, we perform the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine 82 Table of Contents the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation.
Added
We only apply the five-step model to contracts when it is probable that we will collect the consideration we are entitled to in exchange for the goods or services we transfer.
Added
At contract inception, once the contract is determined to be within the scope of Topic 606, we assess the goods or services promised within each contract, determine those that are performance obligations, and assess whether each promised good or service is distinct.
Added
We then recognize as revenue the amount of the transaction price, reduced by a consideration payable to a customer, that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.
Added
We utilize key assumptions to determine a stand-alone selling price for performance obligations, which may include forecasted revenues or costs, expected development timelines, discount rates and probabilities of technical and regulatory success.
Added
Our revenue is generated from our ongoing collaboration with Chiesi and consists of a one-time development cost reimbursement payment for the licenses and ongoing cost-sharing payments for performance of research and development and pre-commercial services.
Added
Research and development expenses Research and development expenses were $138.5 million for the year ended December 31, 2024, compared to $135.3 million for the year ended December 31, 2023, for an increase of $3.2 million, which was primarily attributable to an increase of $36.1 million of costs associated with clinical trials for seralutinib, offset by a decrease of $32.9 million of costs associated with preclinical studies and clinical trials for terminated programs. 83 Table of Contents The following table shows our research and development expenses by program for the years ended December 31, 2024 and 2023: Years Ended December 31, 2024 2023 (in thousands) Seralutinib $ 129,247 $ 93,158 Terminated programs 9,240 42,146 Total research and development $ 138,487 $ 135,304 In process research and development expenses There were no IPR&D expenses for the year ended December 31, 2024.
Added
General and administrative expenses General and administrative expenses were $36.1 million for the year ended December 31, 2024, compared to $38.5 million for the year ended December 31, 2023, for a decrease of $2.3 million, which was primarily attributable to a $2.2 million decrease in stock-based compensation expense, a decrease of $0.8 million in legal expense, a decrease of $0.6 million in insurance costs, offset by an increase of $0.6 million in professional services expense and an increase of $0.4 million in travel costs.
Added
Provision for income taxes For the year ended December 31, 2024, the tax expense was $0.9 million, which was primarily attributable to the treatment of the Chiesi income and a partial release of the valuation allowance. There was no provision for income taxes for the year ended December 31, 2023.
Added
In consideration and as reimbursement for our development costs, Chiesi paid us an up-front, nonrefundable payment of $160.0 million. In addition, we and Chiesi share equally in the costs of ongoing global seralutinib clinical development, with the exception of the PROSERA Phase 3 study, and the costs of commercialization in the United States.
Added
For the year ended on December 31, 2024, we received cost-sharing payments from Chiesi in the amount of $7.8 million.
Added
Investing activities During the year ended December 31, 2024, investing activities provided approximately $29.0 million of cash, primarily resulting from the maturities of marketable securities of $523.8 million, offset by purchases of marketable securities of $494.8 million.
Added
However, we may be unable to raise additional funds or enter into such other arrangements when needed on favorable terms or at all.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

6 edited+0 added−3 removed1 unchanged
Biggest changeA 100 basis points change in interest rates would not have a significant impact on the total value of our portfolio.
Biggest changeA 100 basis points change in interest rates would not have a significant impact on the total value of our portfolio. We are exposed to market risk related to changes in foreign currency exchange rates associated with our foreign operations where we conduct business in local currencies.
Although we do not believe that inflation had a material effect on our business, financial condition or results of operations during the periods presented, we may experience adverse effects if inflation rates remain elevated. Significant adverse changes in inflation and prices in the future could result in material losses.
Although we do not believe that inflation had a material effect on our business, financial condition or results of operations during the periods presented, we may experience adverse effects if inflation rates increase. Significant adverse changes in inflation and prices in the future could result in material losses.
As of December 31, 2023 and 2022, we had minimal assets and liabilities denominated in foreign currencies and an immediate change of 10% in the exchange rate of the foreign currencies would result in a net impact of approximately $0.2 million in our consolidated balance sheets and consolidated statement of operations and comprehensive loss.
As of December 31, 2024 and 2023, we had minimal assets and liabilities denominated in foreign currencies and an immediate 87 Table of Contents change of 10% in the exchange rate of the foreign currencies would result in a net impact of approximately $0.1 million in our consolidated balance sheets and consolidated statement of operations and comprehensive loss.
As of December 31, 2023 our cash and cash equivalents consisted of cash, money market funds and commercial paper, and our marketable securities consisted of commercial paper, corporate debt securities and U.S. Treasury and agency securities. Due to the conservative nature of these instruments, we do not believe that we have a material exposure to interest rate risk.
As of December 31, 2024 our cash and cash equivalents consisted of cash, money market funds and commercial paper, and our marketable securities consisted of commercial paper, corporate debt securities and U.S. Treasury and agency securities. We do not believe that we have a material exposure to interest rate risk.
Inflation generally affects us by increasing our cost of labor and clinical trial costs. Inflation increased during the year ended December 31, 2023. Inflationary factors, such as increases in the cost of our materials, supplies, and overhead costs may adversely affect our operating results.
Inflation generally affects us by increasing our cost of labor and clinical trial costs. Inflationary factors, such as increases in the cost of our materials, supplies, and overhead costs may adversely affect our operating results.
We are subject to fluctuations in foreign currency rates in connection with these arrangements. We do not currently hedge our foreign currency exchange rate risk.
We also contract with vendors that are located outside of the United States and certain invoices are denominated in foreign currencies. We are subject to fluctuations in foreign currency rates in connection with these arrangements. We do not currently hedge our foreign currency exchange rate risk.
Removed
Our outstanding debt under the Credit Facility bears interest at an annual rate equal to the sum of (i) the secured overnight financing rate, or SOFR, plus a corresponding spread, plus (ii) 7.00%, subject to a SOFR floor of 2.00% and an interest rate ceiling of 16%.
Removed
Given the ceiling of the interest rate, an increase in market interest rates would increase annual interest expense and decrease cash flows by a maximum of $1 million. On December 7, 2022, we entered into the Third Amendment to the Credit Facility which implemented SOFR as the replacement of LIBOR as the benchmark interest rate for borrowings.
Removed
We are exposed to market risk related to changes in foreign currency exchange rates associated with our foreign operations where we conduct business in local currencies. We also contract with vendors that are located outside of the United States and certain invoices are denominated in foreign currencies.

Other GOSS 10-K year-over-year comparisons