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What changed in FRACTYL HEALTH, INC.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of FRACTYL HEALTH, 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.

+905 added−923 removedSource: 10-K (2025-03-03) vs 10-K (2024-04-01)

Top changes in FRACTYL HEALTH, INC.'s 2024 10-K

905 paragraphs added · 923 removed · 618 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

317 edited+155 added−179 removed330 unchanged
Biggest changeThe following table summarizes our development pipeline and potential clinical opportunities across the spectrum of metabolic disease, from advanced T2D on insulin to obesity and prediabetes: *Revita has been granted Breakthrough Device designation for the hydrothermal ablation of the duodenal mucosa to improve glycemic control and eliminate insulin needs in T2D patients inadequately controlled on long-acting insulin; and CE mark obtained from EU and UK in 2016 for Revita for the improvement of glycemic control in patients with inadequately controlled T2D despite oral and/or injectable glucose lowering medications and/or long-acting insulin; ** Product candidates under our Rejuva gene therapy platform will undergo Phase 1, Phase 2 and Phase 3 clinical trials ***The Revitalize-1 study is a pivotal study in patients with inadequately controlled T2D despite being on up to three ADAs and daily insulin; ****If PMA approved; *****subject to IND approval IND = Investigational New Drug Application with FDA or comparable regulatory body; IDE = Investigational Device Exemption with FDA or comparable regulatory body; FIH = first-in-human; PMA = Premarket Approval What Sets Us Apart Our vision is to develop transformative therapies that can prevent and eliminate metabolic disease.
Biggest changeThe following table summarizes our development pipeline and potential clinical opportunities across the spectrum of metabolic disease, from obesity (with or without prediabetes) to advanced T2D. *Revita has been granted Breakthrough Device designation for weight maintenance after GLP-1 discontinuation in patients living with obesity or who are overweight **Product candidates under our Rejuva gene therapy platform may undergo Phase 1, Phase 2 and/or Phase 3 clinical studies ***CTA = Clinical Trial Application. 1.
Developing Disease-Modifying Therapies that Provide Long-Term Metabolic Benefits and the Potential to Shift the Treatment Paradigm in T2D and Obesity Our Revita and Rejuva programs are designed to target dysfunction in the duodenum and pancreas, respectively, to provide long-term metabolic benefits from a single administration.
Developing Disease-Modifying Therapies that Provide Long-Term Metabolic Benefits and the Potential to Shift the Treatment Paradigm in Obesity and T2D Our Revita and Rejuva programs are designed to target dysfunction in the duodenum and pancreas, respectively, to provide long-term metabolic benefits from a single administration.
Aligning Interests of Key Stakeholders: Patients, Referring Physicians, Providers, and Payors We believe Revita and Rejuva, if approved, have the potential to offer clinical and economic benefits while reducing the burden of disease management compared to the current standard of care in T2D and obesity.
Aligning Interests of Key Stakeholders: Patients, Referring Physicians, Providers, and Payors We believe Revita and Rejuva, if approved, have the potential to offer clinical and economic benefits while reducing the burden of disease management compared to the current standard of care in obesity and T2D.
Significant health economic benefits for payors who are currently struggling with the increasing expenses of T2D and obesity, driven primarily by unchecked disease progression and the lack of disease-modifying therapies.
Significant health economic benefits for payors who are currently struggling with the increasing expenses of obesity and T2D, driven primarily by unchecked disease progression and the lack of disease-modifying therapies.
The versatility of the Rejuva platform has the potential to underpin a comprehensive, next-generation modality capable of targeting the root causes of various metabolic diseases. Addressing Interlinked Metabolic Conditions: T2D and Obesity Metabolic syndrome represents a spectrum of disorders that are primarily characterized by disturbances in the body’s ability to properly metabolize glucose, lipids, and other essential molecules.
The versatility of the Rejuva platform has the potential to underpin a comprehensive, next-generation modality capable of targeting the root causes of various metabolic diseases. Addressing Interlinked Metabolic Conditions: Obesity and T2D Metabolic syndrome represents a spectrum of disorders that are primarily characterized by disturbances in the body’s ability to properly metabolize glucose, lipids, and other essential molecules.
Despite the development of highly potent medicines that can improve glucose control and weight, significant unmet needs remain in these diseases due to high rates of drug discontinuation over time, the loss of metabolic benefit upon drug discontinuation, and the inability of medicines to arrest the progressive nature of these conditions.
Despite the development of highly potent medicines that can improve glucose control and weight loss, significant unmet needs remain in these diseases due to high rates of drug discontinuation over time, the loss of metabolic benefit upon drug discontinuation, and the inability of medicines to arrest the progressive nature of these conditions.
Our product candidates have the potential to offer a major advance in healthcare because they are designed as disease-modifying treatments that provide long-term metabolic benefits from a single administration, and are therefore potentially positioned to target the prevention and remission of disease, critically important categories in T2D and obesity treatment that cannot be addressed with current pharmacology.
Our product candidates have the potential to offer a major advance in healthcare because they are designed as disease-modifying treatments that provide long-term metabolic benefits from a single administration, and are therefore potentially positioned to target the prevention and remission of disease, critically important categories in obesity and T2D treatment that cannot be addressed with current pharmacology.
Accordingly, we believe our candidates have the capacity to revolutionize treatment of T2D and obesity and, at their fullest potential, significantly reduce the burden of metabolic disease globally.
Accordingly, we believe our candidates have the capacity to revolutionize treatment of obesity and T2D and, at their fullest potential, significantly reduce the burden of metabolic disease globally.
By employing Revita and Rejuva to target the prevention and remission of T2D and obesity, we believe it is possible to provide a step change in outcomes for patients above and beyond the current chronic management strategies that exist today.
By employing Revita and Rejuva to target the prevention and remission of obesity and T2D, we believe it is possible to provide a step change in outcomes for patients above and beyond the current chronic management strategies that exist today.
This new research provides, for the first time, an accessible potential target of pathology within the gut that sits at the apex of the complex metabolic changes throughout the body underlying metabolic diseases, including T2D and obesity.
This new research provides, for the first time, an accessible potential target of pathology within the gut that sits at the apex of the complex metabolic changes throughout the body underlying metabolic diseases, including obesity and T2D.
Structural and functional changes in the duodenal lining occur in response to high fat, high sugar diets, and can lead to T2D and obesity After food passes through the stomach, it moves to the duodenum, which is approximately the first 25 cm to 30 cm of the small intestine, where nutrient absorption first begins in the body.
Structural and functional changes in the duodenal lining occur in response to high fat, high sugar diets, and can lead to obesity and T2D After food passes through the stomach, it moves to the duodenum, which is approximately the first 25 cm to 30 cm of the small intestine, where nutrient absorption first begins in the body.
Source: Duca et al., Nat Commun . 2021; 12: 903; http://creativecommons.org/licenses/by/4.0/ We believe that, taken together, this recent preclinical and clinical evidence demonstrates that abnormal neurohormonal signaling from the duodenum to the rest of the body is an important contributor to metabolic dysfunction, which can increase the risk of T2D and obesity.
Source: Duca et al., Nat Commun . 2021; 12: 903; http://creativecommons.org/licenses/by/4.0/ We believe that, taken together, this recent preclinical and clinical evidence demonstrates that abnormal neurohormonal signaling from the duodenum to the rest of the body is an important contributor to metabolic dysfunction, which can increase the risk of obesity and T2D.
There is abundant and compelling surgical experience (performed in hundreds of thousands of patients with millions of patient-years of follow-up) showing significant and durable metabolic improvements that come from bypassing the duodenum in people with T2D and obesity.
There is abundant and compelling surgical experience (performed in hundreds of thousands of patients with millions of patient-years of follow-up) showing significant and durable metabolic improvements that come from bypassing the duodenum in people with obesity and T2D.
A favorable benefit-risk profile of the device delivery can be enabled by directing the needle toward the body and tail of the pancreas, where a majority of pancreatic islets reside, and by avoiding the pancreatic duct in the head of the pancreas, where the risk of procedural pancreatitis would be higher.
A favorable benefit-risk profile of the delivery device can be enabled by directing the needle toward the body and tail of the pancreas, where a majority of pancreatic islets reside, and by avoiding the pancreatic duct in the head of the pancreas, where the risk of procedural pancreatitis would be higher.
In small animal pharmacology studies, we observed that our potential GLP-1 PGTx candidates were generally well tolerated, improved glycemic control, delayed T2D progression and reduced weight compared to vehicle or control and semaglutide.
In small animal pharmacology studies, we observed that our potential GLP-1 PGTx candidates were generally well tolerated, reduced weight, improved glycemic control, and delayed T2D progression compared to vehicle or control and semaglutide.
We are dedicated to ongoing innovation with respect to Revita, the DMR procedure, Rejuva, and to expanding our pipeline of product candidates and their applications to treat T2D, obesity, and other metabolic diseases. Competition The medical device and biopharmaceutical industries are characterized by rapid advancement of novel technologies, significant competition and a strong defense of intellectual property rights.
We are dedicated to ongoing innovation with respect to Revita, the DMR procedure, Rejuva, and to expanding our pipeline of product candidates and their applications to treat obesity, T2D and other metabolic diseases. Competition The medical device and biopharmaceutical industries are characterized by rapid advancement of novel technologies, significant competition and a strong defense of intellectual property rights.
The PMA must also contain a full description of the device and its components, a full description of the methods, facilities, and controls used for manufacturing, and proposed labeling. Following receipt of a PMA, the FDA determines whether the application is sufficiently complete to permit a substantive review.
The PMA must also contain a full description of the device and its components, a full description of the methods, facilities, and controls used for manufacturing, and proposed labeling. Following receipt of a PMA application, the FDA determines whether the application is sufficiently complete to permit a substantive review.
During a study, the sponsor is required to comply with the applicable FDA requirements, including, for example, trial monitoring, selecting clinical investigators and providing them with the investigational plan, ensuring IRB review, adverse event reporting, record keeping and prohibitions on the promotion of investigational devices or on making safety or effectiveness claims for them.
During a study, the sponsor is required to comply with applicable FDA requirements, including, for example, trial monitoring, selecting clinical investigators and providing them with the investigational plan, ensuring IRB review, adverse event reporting, record keeping and prohibitions on the promotion of investigational devices or on making safety or effectiveness claims for them.
While the Clinical Trials Directive required a separate CTA to be submitted in each member state in which the clinical trial takes place, to both the competent national health authority and an independent ethics committee, much like the FDA and IRB respectively, the CTR introduces a centralized process and only requires the submission of a single application for multi-center trials.
While the EU Clinical Trials Directive required a separate CTA to be submitted in each member state in which the clinical trial takes place, to both the competent national health authority and an independent ethics committee, much like the FDA and IRB respectively, the CTR introduces a centralized process and only requires the submission of a single application for multi-center trials.
Similar sanctions and penalties, as well as imprisonment, also can be imposed upon executive officers and employees of such companies. European Healthcare Laws Many EU member states have adopted specific anti-gift statutes that further limit commercial practices for medical devices and medicinal products, in particular vis-à-vis healthcare professionals and organizations.
Similar sanctions and penalties, as well as imprisonment, also can be imposed upon executive officers and employees of such companies. European Healthcare Laws Many EU member states have adopted specific anti-gift statutes that further limit commercial practices for medical devices and medicinal products, in particular vis-à-vis healthcare professionals and organizations.
The human body has complex mechanisms to regulate weight, often compared to a thermostat that sets a “weight setpoint.” This setpoint is determined by a variety of factors, including genetics, environment, and behavior, and is regulated by a multitude of neural and hormonal signals originating in the intestine, pancreas, and adipose tissue, converging in the hypothalamus and other regions of the brain.
The human body has complex mechanisms to regulate weight, often compared to a thermostat that sets a "weight setpoint.” This setpoint is determined by a variety of factors, including genetics, environment, and behavior, and is regulated by a multitude of neural and hormonal signals originating in the intestine, pancreas, and adipose tissue, converging in the hypothalamus and other regions of the brain.
We believe that the clinical evidence generated from our program will continue to support our messaging to key leaders in the field of endocrinology and gastroenterology. If Revita is approved, we intend to commercially launch with the PMA approved console design and plan to submit a supplemental PMA for our next generation commercial console design shortly thereafter.
We believe that the clinical evidence generated from our program will continue to support our messaging to key leaders in the field of metabolic endocrinology and gastroenterology. If Revita is approved, we intend to commercially launch with the PMA approved console design and plan to submit a supplemental PMA for our next generation commercial console design shortly thereafter.
Preclinical Data Overview: Rejuva Gene Therapy Platform We have evaluated potential GLP-1 PGTx candidates in large and small animal studies. In survival studies in over 50 large animals, we have observed 100% technical success with our Rejuva device using our proposed clinical route of administration with no device-related adverse events observed thus far.
Preclinical Data Overview: Rejuva Gene Therapy Platform We have evaluated potential GLP-1 PGTx candidates in large and small animal studies. In survival studies in over 100 large animals, we have observed 100% technical success with our Rejuva device using our proposed clinical route of administration with no device-related adverse events observed thus far.
Overview of Revita Revita is an outpatient procedural therapy designed to durably modify duodenal dysfunction, a major pathologic consequence of a high fat high sugar diet, which can initiate T2D and obesity in humans. The duodenum is the first segment of the small intestine and the first site of nutrient absorption within the body.
Overview of Revita Revita is an investigational outpatient procedural therapy designed to durably modify duodenal dysfunction, a major pathologic consequence of a high fat high sugar diet, which can initiate obesity and T2D in humans. The duodenum is the first segment of the small intestine and the first site of nutrient absorption within the body.
A CRL will describe all of the deficiencies that the FDA has identified in the BLA, except that where the FDA determines that the data supporting the application are inadequate to support approval, the FDA may issue the CRL without first conducting required inspections, testing submitted product lots, and/or reviewing proposed labeling.
A CRL will generally describe all of the deficiencies that the FDA has identified in the BLA, except that where the FDA determines that the data supporting the application are inadequate to support approval, the FDA may issue the CRL without first conducting required inspections, testing submitted product lots, and/or reviewing proposed labeling.
Fast track designation applies to the combination of the product candidate and the specific indication for which it is being studied. The sponsor of a fast track-designated product candidate has opportunities for more frequent interactions with the applicable FDA review team during product development and, once a BLA is submitted, the product candidate may be eligible for priority review.
Fast track designation applies to the combination of the product candidate and the specific indication for which it is being studied. The sponsor of a fast track-designated product candidate has opportunities for more frequent interactions with the applicable FDA review team during product development and, once a BLA is submitted, the application may be eligible for priority review.
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 the Centers for Medicare & Medicaid Services, or 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 (physician assistants, nurse practitioners, clinical nurse specialists, anesthesiologist assistants, certified registered nurse anesthetists, anesthesiology assistants and certified nurse midwives), and teaching hospitals and physician ownership and investment interests, including such ownership and investment interests held by a physician’s 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 (physician assistants, nurse practitioners, clinical nurse specialists, anesthesiologist assistants, certified registered nurse anesthetists, anesthesiology assistants and certified nurse midwives), and teaching hospitals and physician ownership and investment interests, including such ownership and investment interests held by a physician’s immediate family members.
FDA Premarket Clearance and Approval Requirements Unless an exemption applies, each medical device commercially distributed in the United States requires either FDA clearance of a premarket notification submitted under Section 510(k) of the FDCA, classification of FDA’s de novo classification process or approval of a PMA.
FDA Premarket Clearance and Approval Requirements Unless an exemption applies, each medical device commercially distributed in the United States requires either FDA clearance of a premarket notification submitted under Section 510(k) of the FDCA, classification under FDA’s de novo classification process or approval of a PMA application.
The FDA may condition PMA approval on some form of post-market surveillance when deemed necessary to protect the public health or to provide additional safety and efficacy data for the device in a larger population or for a longer period of use.
The FDA also may condition PMA approval on some form of post-market surveillance when deemed necessary to protect the public health or to provide additional safety and efficacy data for the device in a larger population or for a longer period of use.
Manufacturing processes for medical devices are required to comply with the applicable portions of the QSR, which cover the methods and the facilities and controls for the design, manufacture, testing, production, processes, controls, quality assurance, labeling, packaging, distribution, installation and servicing of finished devices intended for human use.
Manufacturing processes for medical devices are required to comply with the applicable portions of the QSR, which currently cover the methods and the facilities and controls for the design, manufacture, testing, production, processes, controls, quality assurance, labeling, packaging, distribution, installation and servicing of finished devices intended for human use.
This six-month exclusivity, which runs from the end of other exclusivity protection or patent term, may be granted based on the voluntary completion of a pediatric study in accordance with an FDA-issued “Written Request” for such a study.
This six-month exclusivity, which runs from the end of other existing exclusivity protection or patent term, may be granted based on the voluntary completion of a pediatric study in accordance with an FDA-issued “Written Request” for such a study.
As a general rule, demonstration of conformity of medical devices and their manufacturers with the essential requirements must be based, among other things, on the evaluation of clinical data supporting the safety and performance of the products during normal conditions of use.
As a general rule, demonstration of conformity of medical devices and their manufacturers with the general safety and performance requirements must be based, among other things, on the evaluation of clinical data supporting the safety and performance of the products during normal conditions of use.
EECs sense the presence or absence of nutrients in the duodenum and send chemical signals via the bloodstream and direct connections to nerve cells in the gut to the brain and body to help mediate glucose control, as depicted below. 12 Table of Contents EECs in Duodenal Lining Send Neurohormonal Signals to Brain and Body Studies analyzing the small intestine in diabetic patients and animal models have identified functional maladaption of the intestinal mucosa after chronic dietary exposure to high concentrations of fat and sugar similar to the composition of modern diets.
EECs sense the presence or absence of nutrients in the duodenum and send chemical signals via the bloodstream and direct connections to nerve cells in the gut to the brain and body to help mediate glucose control, as depicted below. 17 Table of Contents EECs in Duodenal Lining Send Neurohormonal Signals to Brain and Body Studies analyzing the small intestine in diabetic patients and animal models have identified functional maladaption of the intestinal mucosa after chronic dietary exposure to high concentrations of fat and sugar similar to the composition of modern diets.
We believe our vision is supported by the following strengths: Pioneering New Approaches Based on Deep Understanding of Metabolic Diseases We are pioneering the development of disease-modifying therapies targeting the organ level root cause of metabolic disease.
Our vision is supported by the following strengths: Pioneering New Approaches Based on Deep Understanding of Metabolic Diseases We are pioneering the development of disease-modifying therapies targeting the organ level root cause of metabolic disease.
In addition, the ACA has subjected biologic products to potential competition by lower-cost biosimilars; increased the minimum Medicaid rebates owed by most manufacturers 62 Table of Contents under the Medicaid Drug Rebate Program; extended the Medicaid Drug Rebate program to utilization of prescriptions of individuals enrolled in Medicaid managed care organizations; subjected manufacturers to new annual fees and taxes for certain branded prescription drugs; created a Medicare Part D coverage gap discount program, in which manufacturers must agree to offer 70% 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; and provided incentives to programs that increase the federal government’s comparative effectiveness research.
In addition, the ACA has subjected biologic products to potential competition by lower-cost biosimilars; increased the minimum Medicaid rebates owed by most manufacturers under the Medicaid Drug Rebate Program; extended the Medicaid Drug Rebate program to utilization of prescriptions of individuals enrolled in Medicaid managed care organizations; subjected manufacturers to new annual fees and taxes for certain branded prescription drugs; created a Medicare Part D coverage gap discount program, in which manufacturers must agree to offer 70% 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; and provided incentives to programs that increase the federal government’s comparative effectiveness research.
Clinical study in patients with suboptimally controlled T2D despite being on an OAD and/or metformin Completed • Randomized, double‑ blind, crossover, sham‑ controlled, multi‑center • ~10 cm DMR • Two arms: DMR and sham • 108 patients • Evaluate the safety and efficacy of the Revita DMR Procedure on certain T2Drelated endpoints • Baseline reduction of HbA1c, MRI‑PDFF, HOMA‑IR and weight when compared to the sham arm (p*= • The Revita DMR Procedure was generally well tolerated INSPIRE .
Clinical study in patients with suboptimally controlled T2D despite being on an OAD and/or metformin Completed • Randomized, double-blind, crossover, sham controlled, multi‑center • ~10 cm DMR • Two arms: DMR and sham • 108 patients • Evaluate the safety and efficacy of the Revita DMR procedure on certain T2D related endpoints • Baseline reduction of HbA1c, MRI‑PDFF, HOMA‑IR and weight when compared to the sham arm (p*= • The Revita DMR procedure was generally well tolerated INSPIRE .
Other potential consequences include, among other things: • restrictions on the marketing or manufacturing of the product, complete withdrawal of the product from the market or product recalls; • fines, warning letters, or untitled letters; • clinical holds on clinical studies; 50 Table of Contents • refusal of the FDA to approve pending applications or supplements to approved applications, or suspension or revocation of product license approvals; • product seizure or detention, or refusal to permit the import or export of products; • consent decrees, corporate integrity agreements, debarment or exclusion from federal healthcare programs; • mandated modification of promotional materials and labeling and the issuance of corrective information; • the issuance of safety alerts, Dear Healthcare Provider letters, press releases and other communications containing warnings or other safety information about the product; or • injunctions or the imposition of civil or criminal penalties.
Other potential consequences include, among other things: • restrictions on the marketing or manufacturing of the product, complete withdrawal of the product from the market or product recalls; • fines, warning letters, or untitled letters; • clinical holds on clinical studies; • refusal of the FDA to approve pending applications or supplements to approved applications, or suspension or revocation of product license approvals; • product seizure or detention, or refusal to permit the import or export of products; • consent decrees, corporate integrity agreements, debarment or exclusion from federal healthcare programs; • mandated modification of promotional materials and labeling and the issuance of corrective information; • the issuance of safety alerts, Dear Healthcare Provider letters, press releases and other communications containing warnings or other safety information about the product; or • injunctions or the imposition of civil or criminal penalties.
In the United States, we and some of our sub-assembly component manufacturers will be required to manufacture any products that we sell in compliance with the FDA’s Quality System Regulation, or QSR, or the FDA’s current good manufacturing practices, or cGMPs, which cover the methods used in, and the facilities used for, the design, testing, control, manufacturing, sterilization, labeling, quality assurance, packaging, storage and shipping of our product candidates.
In the United States, we and some of our sub-assembly component manufacturers will be required to manufacture any products that we sell in compliance with the FDA’s Quality System Regulation (“QSR”), and the FDA’s current good manufacturing practices, or cGMPs, which cover the methods used in, and the facilities used for, the design, testing, control, manufacturing, sterilization, labeling, quality assurance, packaging, storage and shipping of our product candidates.
Develop Rejuva Gene Therapy Platform to Enable Long-Term Remission of T2D and Obesity To further our core strategy to treat and significantly reduce the burden of T2D and obesity, we are developing the Rejuva gene therapy platform.
Rejuva Gene Therapy Platform to Enable Long-Term Remission of T2D and Obesity To further our core strategy to treat and significantly reduce the burden of T2D and obesity, we are developing the Rejuva gene therapy platform.
If approved, longer term follow-up studies beyond 48 weeks will likely be performed as part of a post-approval study, or PAS, including potentially studying the safety and effectiveness of repeat procedures, should they be necessary. Based on regulatory precedent, we believe a PAS may be conducted in parallel with the commercial launch of Revita.
If approved, we believe longer-term follow-up studies beyond 52 weeks will likely be performed as part of a post-approval study, or PAS, including potentially studying the safety and effectiveness of repeat procedures, should they be necessary. Based on regulatory precedent, we believe a PAS may be conducted in parallel with the commercial launch of Revita.
High Fat and Sugar Diets May Cause Overgrowth and Dysfunction of Duodenal Mucosa 13 Table of Contents This finding of a nutrient-induced stem cell division process that causes structural and functional changes of the duodenal mucosa has now been replicated by multiple independent groups in the United States and Europe, and across organism species and disease models.
High Fat and Sugar Diets May Cause Overgrowth and Dysfunction of Duodenal Mucosa This finding of a nutrient-induced stem cell division process that causes structural and functional changes of the duodenal mucosa has now been replicated by multiple independent groups in the United States and Europe, and across 18 Table of Contents organism species and disease models.
England, Wales and Scotland) medical device market according to the requirements provided in the Medical Devices Regulations 2002 (SI 2002 No 618, as amended) that sought to give effect to the three pre-existing EU directives governing active implantable medical devices, general medical devices and in vitro diagnostic medical devices whereas, broadly, Northern Ireland continues to be governed by EU rules according to the Northern Ireland Protocol.
England, Wales and Scotland) medical device market according to the requirements provided in the Medical Devices Regulations 2002 (SI 2002 No 618, as amended), or UK Medical Devices Regulations, that sought to give effect to the three pre-existing EU directives governing active implantable medical devices, general medical devices and in vitro diagnostic medical devices whereas, broadly, Northern Ireland continues to be governed by EU rules according to the Northern Ireland Protocol.
While Congress has not passed comprehensive repeal legislation, bills affecting the implementation of certain taxes under the ACA have been signed into law, including the TCJA, which includes a provision repealing, effective January 1, 2019, the tax-based shared responsibility payment imposed by the ACA on certain individuals who fail to maintain qualifying health coverage for all or part of a year that is commonly referred to as the “individual mandate.” On June 17, 2021, the U.S.
While Congress has not passed comprehensive repeal legislation, bills affecting the implementation of certain taxes under the ACA have been signed into law, including the TCJA, which includes a provision repealing, effective January 1, 2019, 63 Table of Contents the tax-based shared responsibility payment imposed by the ACA on certain individuals who fail to maintain qualifying health coverage for all or part of a year that is commonly referred to as the “individual mandate.” On June 17, 2021, the U.S.
Pilot study in patients with sub‑optimally controlled T2D despite being on metformin in combination with one to two additional OADs Completed (prematurely ended) • Randomized (2:1), double‑blind, crossover, sham‑controlled, multi‑center • Two arms: DMR and sham • 9 patients • ~10 cm DMR • No formal statistical powering • Evaluate the safety and efficacy of the Revita DMR Procedure on certain glycemic endpoints • The Revita DMR Procedure was generally well tolerated • As agreed with the FDA, the study was prematurely ended due to the COVID‑19 pandemic and subsequent authorization to proceed with the Revitalize‑1 study Revita‑2 .
Pilot study in patients with suboptimally controlled T2D despite being on metformin in combination with one to two additional OADs Completed (prematurely ended) • Randomized (2:1), double-blind, crossover, sham controlled, multi‑center • Two arms: DMR and sham • 9 patients • ~10 cm DMR • No formal statistical powering • Evaluate the safety and efficacy of the Revita DMR procedure on certain glycemic endpoints • The Revita DMR procedure was generally well tolerated • As agreed with the FDA, the study was prematurely ended due to the COVID‑19 pandemic and subsequent authorization to proceed with the REVITALIZE-1 study Revita‑2 .
BLA Submission and Review by the FDA Assuming successful completion of all required testing in accordance with all applicable regulatory requirements, the results of product development, preclinical studies and clinical trials are submitted to the FDA as part of a BLA requesting approval to market the product candidate for one or more indications.
BLA Submission and Review by the FDA Assuming successful completion of all required testing in accordance with all applicable regulatory requirements, the results of product development, including results from preclinical studies and clinical trials are submitted to the FDA as part of a BLA requesting approval to market the product candidate for one or more indications.
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. 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 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. 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.
Any patents that may issue from our pending patent applications related to Rejuva are expected to expire between February 2042 and January 2045, excluding any possible patent term adjustments or extensions and assuming payment of all appropriate maintenance, renewal, annuity or other governmental fees, as applicable.
Any patents that may issue from our pending patent applications related to Rejuva are expected to expire between February 2042 and December 2045, excluding any possible patent term adjustments or extensions and assuming payment of all appropriate maintenance, renewal, annuity or other governmental fees, as applicable.
Our team aims to continuously advance and expand upon our body of knowledge in order to establish and maintain a scientific leadership position in our therapeutic areas of focus. We do so by collaborating with expert advisors who are leaders in metabolic disease, endocrine signaling and endoscopy.
Our team aims to continuously advance and expand upon our body of knowledge in order to establish and maintain a scientific leadership position in our therapeutic areas of focus. We do so by collaborating with expert advisors who are leaders in metabolic disease, weight maintenance, endocrine signaling and endoscopy.
After securing reimbursement for Revita in 2022, in the first half of 2023 we initiated a limited commercial pilot in a single center in Dusseldorf, Germany, along with a German Real-World Registry, designed to evaluate real-world evidence of Revita’s safety and effectiveness in people with inadequately controlled T2D.
After securing reimbursement for Revita in 2022, in the first half of 2023 we initiated a limited commercial pilot in a single center in Dusseldorf, Germany, along with a Germany Real-World Registry study, designed to evaluate real-world evidence of Revita’s safety and effectiveness in people with inadequately controlled T2D.
The gene therapy candidates from our Rejuva platform benefit from the extensive clinical and real-world experience that we have accumulated through our Revita program. Rejuva PGTx candidates can be delivered by the same treating physicians and in the same setting as the DMR procedure, utilizing the same Revita console and leveraging the same distribution network.
The gene therapy candidates from our Rejuva platform benefit from the extensive clinical and real-world experience that we have accumulated through our Revita program. Rejuva PGTx candidates can be delivered by the same treating physicians and in the same setting as the Revita DMR procedure, utilizing the same distribution network.
The Inflation Reduction Act of 2022, or IRA, includes several provisions that may impact our business to varying degrees, including provisions that reduce the out-of-pocket spending cap for Medicare Part D beneficiaries from $7,050 to $2,000 starting in 2025, thereby effectively eliminating the coverage gap; impose new manufacturer financial liability on certain drugs under Medicare Part D; allow the U.S. government to negotiate Medicare Part B and Part D price caps for certain high-cost drugs and biologics without generic or biosimilar competition; require companies to pay rebates to Medicare for 63 Table of Contents certain drug prices that increase faster than inflation; and delay until January 1, 2032 the implementation of the HHS rebate rule that would have limited the fees that pharmacy benefit managers can charge.
The Inflation Reduction Act of 2022, or IRA, includes several provisions that may impact our business to varying degrees, including provisions that reduced the out-of-pocket spending cap for Medicare Part D beneficiaries from $7,050 to $2,000 starting in 2025, thereby effectively eliminating the coverage gap; impose new manufacturer financial liability on certain drugs under Medicare Part D; allow the U.S. government to negotiate Medicare Part B and Part D price caps for certain high-cost drugs and biologics without generic or biosimilar competition; require companies to pay rebates to Medicare for certain drug prices that increase faster than inflation; and delay until January 1, 2032 the implementation of the HHS rebate rule that would have limited the fees that pharmacy benefit managers can charge.
Our Solutions We believe there is a significant market opportunity for disease-modifying treatments that provide long-term metabolic benefits across the spectrum of T2D and obesity and we are developing a suite of product candidates that will target all phases of these diseases.
Our Solutions We believe there is a significant market opportunity for disease-modifying treatments that provide long-term metabolic benefits across the spectrum of obesity and T2D and we are developing a suite of product candidates that will target different phases of these metabolic diseases.
We believe these results indicate that GLP-1 PGTx candidates have the potential to improve glucose control and beta cell insulin production and secretion in a durable manner. In a head-to-head preclinical in vivo study in a db/db mouse model, we evaluated two GLP-1 PGTx candidates compared to semaglutide.
We believe these results indicate that GLP-1 PGTx candidates have the potential to improve glucose control and beta cell insulin production and secretion in a durable manner. In a head-to-head preclinical in vivo study in a db/db mouse model, we evaluated a GLP-1 PGTx candidate compared to semaglutide.
Biologics Regulation The process required by the FDA before biologics may be marketed in the United States generally involves the following: • completion of preclinical laboratory tests and animal studies performed in accordance with the FDA’s Good Laboratory Practice requirements, or GLPs; • submission to the FDA of an IND, which must become effective before clinical trials may begin; • approval by an IRB or ethics committee at each clinical site before the trial is commenced; • performance of adequate and well-controlled human clinical trials to establish the safety, purity and potency of the proposed biologic product candidate for its intended use in accordance with good clinical practice requirements, or GCPs; • preparation of and submission to the FDA of a BLA, after completion of all pivotal clinical trials and other necessary studies; • satisfactory completion of an FDA advisory committee review, if applicable; • a determination by the FDA within 60 days of its receipt of a BLA to file the application for review; • satisfactory completion of an FDA pre-approval inspection of the manufacturing facility or facilities at which the proposed product is produced to assess compliance with cGMPs (including the QSR in the case of the 46 Table of Contents device component of any biologic/device combination product), and to assure that the facilities, methods and controls are adequate to preserve the biological product’s continued safety, purity and potency, and of selected clinical investigation sites to assess compliance with GCPs; and • FDA review and approval of the BLA to permit commercial marketing of the product for particular indications for use in the United States.
Biologics Regulation The process required by the FDA before biologics may be marketed in the United States generally involves the following: • completion of certain preclinical laboratory tests and animal studies performed in accordance with the FDA’s Good Laboratory Practice requirements, or GLPs; • submission to the FDA of an IND, which must become effective before clinical trials may begin; • approval by an IRB or ethics committee at each clinical site before the trial is commenced; • performance of adequate and well-controlled human clinical trials to establish the safety, purity and potency of the proposed biologic product candidate for its intended use in accordance with good clinical practice requirements, or GCPs; 46 Table of Contents • preparation of and submission to the FDA of a BLA; • satisfactory completion of an FDA advisory committee review, if applicable; • a determination by the FDA within 60 days of its receipt of a BLA to file the application for review; • satisfactory completion of an FDA pre-approval inspection of the manufacturing facility or facilities at which the proposed product is produced to assess compliance with cGMPs (including the QSR in the case of the device component of any biologic/device combination product), and to assure that the facilities, methods and controls are adequate to preserve the biological product’s continued safety, purity and potency, • satisfactory completion of potential FDA inspection of selected clinical investigation sites to assess compliance with GCPs; and • FDA review and approval of the BLA to permit commercial marketing of the product for particular indications for use in the United States.
Class I includes devices with the lowest risk to the patient and are those for which safety and effectiveness can be assured by adherence to the FDA’s General Controls for medical devices, which include compliance with the applicable portions of the QSR, establishment registration and device listing, reporting of adverse medical events and certain device malfunctions, known as medical device reporting, 41 Table of Contents or MDR, and truthful and non-misleading labeling, advertising, and promotional materials.
Class I includes devices with the lowest risk to the patient and are those for which safety and effectiveness can be assured by adherence to the FDA’s General Controls for medical devices, which include compliance with the applicable portions of the QSR, establishment registration and device listing, reporting of adverse medical events and certain device malfunctions, known as medical device reporting, or MDR, and truthful and non-misleading labeling, advertising, and promotional materials.
It is compulsory for certain types of products, such as (i) 55 Table of Contents medicinal products derived from biotechnological processes, (ii) designated orphan medicinal products, (iii) ATMPs, such as gene therapy, somatic cell-therapy or tissue-engineered medicines and (iv) medicinal products containing a new active substance indicated for the treatment of HIV/AIDS, cancer, neurodegenerative diseases, diabetes, auto-immune and other immune dysfunctions and viral diseases.
It is compulsory for certain types of products, such as (i) medicinal products derived from biotechnological processes, (ii) designated orphan medicinal products, (iii) ATMPs, such as gene therapy, somatic cell-therapy or tissue-engineered medicines and (iv) medicinal products containing a new active substance indicated for the treatment of HIV/AIDS, cancer, neurodegenerative diseases, diabetes, auto-immune and other immune dysfunctions and viral diseases.
Excluding any possible patent term adjustments or extensions and assuming payment of all appropriate maintenance, renewal, annuity or other governmental fees, as applicable: our owned issued U.S. patents are expected to expire between January 2032 and May 2036; our owned issued foreign patents are expected to expire between January 2032 and September 2038; any patents that may issue from our owned pending U.S. patent applications are expected to expire between October 2034 and January 2045; any patents that may issue from our owned pending foreign patent applications or PCT applications are expected to expire between January 2032 and February 2042.
Excluding any possible patent term adjustments or extensions and assuming payment of all appropriate maintenance, renewal, annuity or other governmental fees, as applicable: our owned issued U.S. patents are expected to expire between January 2032 and May 2036; our owned issued foreign patents are expected to expire between January 2032 and September 2038; any patents that may issue from our owned pending U.S. patent applications are expected to expire between October 2034 and December 2045; any patents that may issue from our owned pending foreign patent applications or PCT applications are expected to expire between January 2032 and January 2045.
The overall 10-year market exclusivity period can be extended to a maximum of eleven years if, during the first eight years of those 10 years, the MA holder obtains an authorization for one or more new therapeutic indications which, during the scientific evaluation prior to their authorization, are held to bring a significant clinical benefit in comparison with existing therapies.
The overall 10-year market exclusivity period can be extended to a maximum of eleven years if, during the first eight years of those 10 years, the MA holder obtains an authorization for one or more new therapeutic indications which, during the scientific evaluation prior to their authorization, are held to bring a significant 57 Table of Contents clinical benefit in comparison with existing therapies.
Concurrent with clinical trials, companies may complete additional animal studies and develop additional information about the biological characteristics of the product candidate, and must finalize a process for manufacturing the product in commercial quantities in accordance with cGMP requirements.
Concurrent with clinical trials, sponsors may complete additional animal studies and develop additional information about the biological characteristics of the product candidate, and must finalize a process for manufacturing the product in commercial quantities in accordance with cGMP requirements.
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 57 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.
Further, the TCA does not provide for the continued free movement of services between the UK and EU and also grants each of the UK and EU the ability, in certain circumstances, to unilaterally impose tariffs on one another. EU laws which have been transposed into UK law through secondary legislation continue to be applicable as “retained EU law”.
Further, the TCA does not provide for the continued free movement of services between the UK and EU and also grants each of the UK and EU the ability, in certain circumstances, to unilaterally impose tariffs on one another. 58 Table of Contents EU laws which have been transposed into UK law through secondary legislation continue to be applicable as “retained EU law”.
Violations of fraud and abuse laws, including federal and state anti-kickback and false claims laws, may be punishable by criminal and civil sanctions, including fines and civil monetary penalties, the possibility of exclusion from federal healthcare programs (including Medicare and Medicaid), disgorgement and corporate integrity agreements, which 60 Table of Contents impose, among other things, rigorous operational and monitoring requirements on companies.
Violations of fraud and abuse laws, including federal and state anti-kickback and false claims laws, may be punishable by criminal and civil sanctions, including fines and civil monetary penalties, the possibility of exclusion from federal healthcare programs (including Medicare and Medicaid), disgorgement and corporate integrity agreements, which impose, among other things, rigorous operational and monitoring requirements on companies.
Additionally, product candidates studied for their safety and effectiveness in treating serious or life-threatening diseases or conditions may receive accelerated approval upon a determination that the product candidate has an effect on a surrogate endpoint that is reasonably likely to predict clinical benefit, or on a clinical endpoint that can be measured earlier than irreversible morbidity or mortality, that is reasonably likely to predict an effect on irreversible morbidity or mortality or other clinical benefit, taking into account the severity, rarity, or prevalence of the condition and the availability or lack of alternative treatments.
Additionally, depending on the design of the applicable clinical studies, product candidates studied for their safety and effectiveness in treating serious or life-threatening diseases or conditions may receive accelerated approval upon a determination that the product candidate has an effect on a surrogate endpoint that is reasonably likely to predict clinical benefit, or on a clinical endpoint that can be measured earlier than irreversible morbidity or mortality, that is reasonably likely to predict an effect on irreversible morbidity or mortality or other clinical benefit, taking into account the severity, rarity, or prevalence of the condition and the availability or lack of alternative treatments.
In order to be maximally impactful, these therapies must also be delivered at a scale that can match the incidence and prevalence of metabolic disease around the world. We believe our product candidates are not only unique in their potential for disease modification, but also in their design for broad 8 Table of Contents accessibility for large populations.
In order to be maximally impactful, these therapies must also be delivered at a scale that can match the incidence and prevalence of metabolic disease around the world. We believe our product candidates are not only unique in their potential for disease modification, but also in their design for broad accessibility for large populations.
In addition, the FDA will generally conduct a pre-approval inspection of the applicant or its third-party manufacturers’ or suppliers’ manufacturing facility or facilities to ensure compliance with the QSR, which set forth cGMPs for devices. PMA applications are also subject to the payment of user fees, which are higher than in the 510(k) process.
In addition, the FDA will generally conduct a pre-approval inspection of the applicant or its third-party manufacturers’ or suppliers’ manufacturing facility or facilities to ensure compliance with the QSR, which currently sets forth cGMPs for devices. PMA applications are also subject to the payment of user fees, which are higher than in the 510(k) process.
The TCA includes specific provisions concerning pharmaceuticals, which include the mutual recognition cGMP inspections of manufacturing facilities for medicinal products and cGMP documents issued, but does not foresee wholesale mutual recognition of UK and EU pharmaceutical regulations.
The TCA includes specific provisions concerning pharmaceuticals, which include the mutual recognition of GMP inspections of manufacturing facilities for medicinal products and GMP documents issued, but does not foresee wholesale mutual recognition of UK and EU pharmaceutical regulations.
Additionally, there has been a recent trend of increased regulation of payments and transfers of value provided to healthcare professionals or entities and many EU member states have adopted national “Sunshine Acts” which impose reporting and transparency requirements (often on an annual basis), similar to the requirements in the United States, on manufacturers.
Additionally, there has been a recent trend of increased regulation of payments and transfers of value provided to healthcare professionals or entities and many EU member states have adopted national “Sunshine Acts” which impose reporting and transparency 61 Table of Contents requirements (often on an annual basis), similar to the requirements in the United States, on manufacturers.
With new innovations achieving greater degrees of potency than earlier agents, the obesity market is poised for immense growth, with industry expectations of approximately $50 billion in drug sales by the end of the decade.
With new innovations achieving greater degrees of potency than earlier agents, the obesity market is poised for immense growth, with industry expectations of approximately $250 billion in drug sales by the end of the decade.
Our inclusion criteria includes patients ages 18 and over, with a baseline HbA1c between 7.0% and 10.0%, a BMI of less than or equal to 45 and on at least one ADA.
Our inclusion criteria included patients ages 18 and over, with a baseline HbA1c between 7.0% and 10.0%, a BMI of less than or equal to 45 and on at least one ADA.
Current and future legislative proposals to further reform healthcare or reduce healthcare costs may limit coverage of or lower reimbursement for the procedures associated with the use of our products, when and if approved.
Current and future legislative proposals and executive actions to further reform healthcare or reduce healthcare costs may limit coverage of or lower reimbursement for the procedures associated with the use of our products, when and if approved.
We also enter into invention assignment agreements with our employees and consultants that 40 Table of Contents obligate them to assign to us any inventions they have developed while working for us. We generally control access to our proprietary and confidential information through the use of internal and external controls that are subject to periodic review.
We also enter into invention assignment agreements with our employees and consultants that obligate them to assign to us any inventions they have developed while working for us. We generally control access to our proprietary and confidential information through the use of internal and external controls that are subject to periodic review.
We believe the current symptom-driven approach to T2D management is misdirected and unreasonable. It asks patients for dietary and lifestyle changes in the face of an altered physiologic set-point in the body, rigorous and lifelong patient adherence and persistence to medicines, and unquestioning willingness to accede to increasingly complex therapies.
We believe the current symptom-driven approach to T2D management is misdirected and unreasonable. It asks patients for dietary and lifestyle changes in the face of an altered physiologic set-point in the body, rigorous and lifelong 9 Table of Contents patient adherence and persistence to medicines, and unquestioning willingness to accede to increasingly complex therapies.
In preclinical survival studies in Yucatan pigs, we demonstrated the feasibility and technical success of the Rejuva device and proposed clinical route of administration for local delivery of Rejuva PGTx candidates. We evaluated dose-dependent AAV-transgene expression in the pig pancreas by using green fluorescent protein, or GFP, in our AAV vector.
In preclinical survival studies in Yucatan pigs, we 35 Table of Contents demonstrated the feasibility and technical success of the Rejuva device and proposed clinical route of administration for local delivery of Rejuva PGTx candidates. We evaluated dose-dependent AAV-transgene expression in the pig pancreas by using green fluorescent protein, or GFP, in our AAV vector.
Clinical trials involve the administration of the investigational product to human subjects under the supervision of qualified investigators, generally physicians not employed by or under the trial sponsor’s control, in accordance with GCPs, which include the requirement that all research subjects provide their informed consent for their participation in any clinical study.
Clinical trials involve the administration of the investigational product to human subjects under the supervision of qualified investigators, generally physicians not employed by or under the trial sponsor’s control, in accordance with GCPs, which include among other things, the requirement that all research subjects provide their informed consent for their participation in any clinical study.
Foreign Government Regulation In addition to U.S. regulations, we are subject to a variety of foreign government regulations applicable to medical devices, medicinal products and combination products. 51 Table of Contents Regulation of Medical Devices in the European Union The EU has adopted specific directives and regulations regulating the design, manufacture, clinical investigation, conformity assessment, labeling and adverse event reporting for medical devices.
Foreign Government Regulation In addition to U.S. regulations, we are subject to a variety of foreign government regulations applicable to medical devices, medicinal products and combination products. Regulation of Medical Devices in the European Union The EU has adopted specific directives and regulations regulating the design, manufacture, clinical investigation, conformity assessment, labeling and adverse event reporting for medical devices.
Because of our broadly accessible and disease-modifying approach, we intend to make Revita a backbone procedural therapy that can potentially significantly reduce the burden of T2D and obesity globally.
Because of our broadly accessible and disease-modifying approach, we intend to make Revita a backbone procedural therapy that can potentially significantly reduce the burden of obesity, T2D and prediabetes.
We believe both programs have the potential to broadly align interests across key stakeholders involved in the treatment of T2D and obesity, and may have the following benefits to these groups: • Patients. Improving weight and glycemic control while reducing the number and burden of therapies required to adequately control T2D and obesity. • Referring Physicians.
We believe both programs have the potential to broadly align interests across key stakeholders involved in the treatment of obesity and T2D, and may have the following benefits to these groups: • Patients. Improving weight loss maintenance, and glycemic control while reducing the number and burden of therapies required to adequately manage obesity and T2D. • Referring Physicians.
For this reason, the brain triggers a set of compensatory mechanisms, including increased hunger and decreased energy expenditure to try to restore 7 Table of Contents the previous, but higher weight setpoint. The potential correction of the body’s altered metabolic setpoint can enable lasting benefits and translate to superior real-world outcomes.
For this reason, the brain triggers a set of compensatory mechanisms, including increased hunger and decreased energy expenditure to try to restore the previous, but higher weight setpoint. The potential correction of the body’s altered metabolic setpoint can enable lasting benefits and translate to superior real-world outcomes.
We believe the console enables a targeted delivery process by enabling a proprietary safety mechanism that controls the parameters of 31 Table of Contents delivery that are required to ensure minimal disruption to the pancreatic tissue, and potentially reduces the risk of physician error by automating certain steps of the treatment process by guiding the physician step-by-step through the procedure.
We believe the console enables a targeted delivery process by enabling a proprietary safety mechanism that controls the parameters of delivery that are required to ensure minimal disruption to the pancreatic tissue, and potentially reduces the risk of physician error by automating certain steps of the treatment process by guiding the physician step-by-step through the procedure.
Based on the data observed in our previously conducted clinical studies, we believe that the Revita DMR Procedure has the potential to procedurally treat the organ-level root cause of metabolic diseases, such as T2D and obesity. The table below summarizes our ongoing, planned and completed clinical studies for the Revita DMR Procedure.
Based on the data observed in our previously conducted clinical studies, we believe that the Revita DMR procedure has the potential to treat the organ-level root cause of metabolic diseases, such as obesity and T2D. The table below summarizes our ongoing, paused and completed clinical studies for the Revita DMR procedure.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe credit agreement contains the following financial covenants: (i) a minimum liquidity covenant requiring us to maintain a minimum $10.0 million balance in cash and cash equivalents on deposit in accounts, subject to certain exceptions, and (ii) a financing milestone covenant requiring that (a) we have received proceeds from an equity financing or series of financings (including the net proceeds from the IPO) of at least $40.0 million during the period commencing on September 7, 2023 and ending on or prior to February 15, 2024, and (b) we have received equity financing or series of financings of at least $100.0 million (inclusive of such equity financing or series of financings in the preceding clause (a)) during the period commencing as of September 7, 2023 and prior to June 30, 2024.
Biggest changeThe credit agreement contains financial covenants including a minimum liquidity covenant requiring us to maintain a minimum $10.0 million balance in cash and cash equivalents on deposit in accounts, subject to certain exceptions. We may not be able to maintain the minimum liquidity covenant related to the credit agreement without additional financing.
As a result of the UK leaving the EU, since January 1, 2021, the regulatory framework and regimes for medical devices in the UK and EU have diverged. Northern Ireland has adopted a hybrid approach as a result of the divergence in accordance with the Northern Ireland Protocol.
As a result of the UK leaving the EU, since January 1, 2021, the regulatory framework and regimes for medical devices in the UK and the EU have diverged. Northern Ireland has adopted a hybrid approach as a result of the divergence in accordance with the Northern Ireland Protocol.
These hurdles may make it difficult to demonstrate to physicians, hospitals and other healthcare providers that the Revita DMR Procedure and our Rejuva gene therapy candidates are an appropriate option for treating metabolic diseases, such as T2D and obesity, may be superior to available treatments and may be more cost-effective than alternative technologies.
These hurdles may make it difficult to demonstrate to physicians, hospitals and other healthcare providers that the Revita DMR procedure and our Rejuva gene therapy candidates are an appropriate option for treating metabolic diseases, such as obesity and T2D, may be superior to available treatments and may be more cost-effective than alternative technologies.
If we fail to educate PCPs and other medical professionals, or if we educate them but they disagree with the clinical merits, patient benefits and ease-of-use of the DMR procedure using Revita and/or our Rejuva gene therapy candidates, or do not modify their current referral pattern to refer T2D and/or obesity patients to diabetologists, gastroenterologists and interventional endoscopists to perform the DMR procedure using Revita, our ability to achieve our projected revenues may be impaired.
If we fail to educate PCPs and other medical professionals, or if we educate them but they disagree with the clinical merits, patient benefits and ease-of-use of the DMR procedure using Revita and/or our Rejuva gene therapy candidates, or do not modify their current referral pattern to refer obesity and/or T2D patients to diabetologists, gastroenterologists and interventional endoscopists to perform the DMR procedure using Revita, our ability to achieve our projected revenues may be impaired.
Collaborations involving our product candidates could pose numerous risks to us, including the following: • collaborators have significant discretion in determining the efforts and resources that they will apply to these collaborations and may not perform their obligations as expected; 95 Table of Contents • collaborators may deemphasize or not pursue development and commercialization of our product candidates or may elect not to continue or renew development or commercialization programs based on clinical study results, changes in the collaborators’ strategic focus, including as a result of a sale or disposition of a business unit or development function, or available funding or external factors such as an acquisition that diverts resources or creates competing priorities; • collaborators may delay clinical studies, provide insufficient funding for a clinical study program, stop a clinical study or abandon a product candidate, repeat or conduct new clinical studies or require a new formulation of a product candidate for clinical testing; • collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our product candidates if the collaborators believe that competitive products are more likely to be successfully developed or can be commercialized under terms that are more economically attractive than ours; • a collaborator with marketing and distribution rights to multiple products may not commit sufficient resources to the marketing and distribution of our product relative to other products; • collaborators may not properly obtain, maintain, defend or enforce our intellectual property rights or may use our proprietary information and intellectual property in such a way as to invite litigation or other intellectual property related proceedings that could jeopardize or invalidate our proprietary information and intellectual property or expose us to potential litigation or other intellectual property related proceedings; • disputes may arise between the collaborators and us that result in the delay or termination of the research, development or commercialization of our product candidates or that result in costly litigation or arbitration that diverts management attention and resources; • collaborations may be terminated and, if terminated, may result in a need for additional capital to pursue further development or commercialization of the applicable product candidates; • collaboration agreements may not lead to development or commercialization of product candidates in the most efficient manner or at all; and • if a collaborator of ours were to be involved in a business combination, the continued pursuit and emphasis on our drug development or commercialization program could be delayed, diminished or terminated.
Collaborations involving our product candidates could pose numerous risks to us, including the following: • collaborators have significant discretion in determining the efforts and resources that they will apply to these collaborations and may not perform their obligations as expected; • collaborators may deemphasize or not pursue development and commercialization of our product candidates or may elect not to continue or renew development or commercialization programs based on clinical study results, changes in the collaborators’ strategic focus, including as a result of a sale or disposition of a business 97 Table of Contents unit or development function, or available funding or external factors such as an acquisition that diverts resources or creates competing priorities; • collaborators may delay clinical studies, provide insufficient funding for a clinical study program, stop a clinical study or abandon a product candidate, repeat or conduct new clinical studies or require a new formulation of a product candidate for clinical testing; • collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our product candidates if the collaborators believe that competitive products are more likely to be successfully developed or can be commercialized under terms that are more economically attractive than ours; • a collaborator with marketing and distribution rights to multiple products may not commit sufficient resources to the marketing and distribution of our product relative to other products; • collaborators may not properly obtain, maintain, defend or enforce our intellectual property rights or may use our proprietary information and intellectual property in such a way as to invite litigation or other intellectual property related proceedings that could jeopardize or invalidate our proprietary information and intellectual property or expose us to potential litigation or other intellectual property related proceedings; • disputes may arise between the collaborators and us that result in the delay or termination of the research, development or commercialization of our product candidates or that result in costly litigation or arbitration that diverts management attention and resources; • collaborations may be terminated and, if terminated, may result in a need for additional capital to pursue further development or commercialization of the applicable product candidates; • collaboration agreements may not lead to development or commercialization of product candidates in the most efficient manner or at all; and • if a collaborator of ours were to be involved in a business combination, the continued pursuit and emphasis on our drug development or commercialization program could be delayed, diminished or terminated.
We cannot ensure that: • any of our pending patent applications, if issued, will include claims having a scope sufficient to protect our product candidates or otherwise provide any competitive advantage; • any of our pending patent applications will issue as patents at all; • we were the first to make inventions covered by any of our existing patent applications; • we were the first to file patent applications for our inventions; • we have not omitted that should be listed as inventors or included individuals that should not be listed as inventors in our patents and patent applications, which may cause these patents or patents issuing from these patent applications to be held invalid or unenforceable; 116 Table of Contents • others will not develop similar or alternative technologies that do not infringe our intellectual property, incorporate technology from the public domain, or will otherwise be able to design around our patents, should they issue; • others will not use preexisting technology to effectively compete against us; • any of our patents, if issued, will ultimately be found to be valid and enforceable; • there are no prior public disclosures that could invalidate our patents, or parts of our patents; • that there are no unpublished, third-party patent applications or applications maintained in secrecy that may later issue with claims covering our product candidate or technology; • third parties will not compete with us in jurisdictions where we do not pursue and obtain patent protection; • the laws of foreign countries will protect our proprietary rights to the same extent as the laws of the United States; • the inventors of our patents or patent applications will not become involved with competitors to develop products or processes that design around our patents; • any patents issued to us will provide a basis for an exclusive market for our commercially-viable products, if approved, or provide us with any competitive advantages, or will not be challenged by third parties; or • our commercial activities or products will not infringe upon the patents or proprietary rights of others.
We cannot ensure that: • any of our pending patent applications, if issued, will include claims having a scope sufficient to protect our product candidates or otherwise provide any competitive advantage; • any of our pending patent applications will issue as patents at all; • we were the first to make inventions covered by any of our existing patent applications; • we were the first to file patent applications for our inventions; • we have not omitted that should be listed as inventors or included individuals that should not be listed as inventors in our patents and patent applications, which may cause these patents or patents issuing from these patent applications to be held invalid or unenforceable; 120 Table of Contents • others will not develop similar or alternative technologies that do not infringe our intellectual property, incorporate technology from the public domain, or will otherwise be able to design around our patents, should they issue; • others will not use preexisting technology to effectively compete against us; • any of our patents, if issued, will ultimately be found to be valid and enforceable; • there are no prior public disclosures that could invalidate our patents, or parts of our patents; • that there are no unpublished, third-party patent applications or applications maintained in secrecy that may later issue with claims covering our product candidate or technology; • third parties will not compete with us in jurisdictions where we do not pursue and obtain patent protection; • the laws of foreign countries will protect our proprietary rights to the same extent as the laws of the United States; • the inventors of our patents or patent applications will not become involved with competitors to develop products or processes that design around our patents; • any patents issued to us will provide a basis for an exclusive market for our commercially-viable products, if approved, or provide us with any competitive advantages, or will not be challenged by third parties; or • our commercial activities or products will not infringe upon the patents or proprietary rights of others.
Bribery Act, data privacy requirements, labor laws and anti-competition regulations; • export or import restrictions; • various reimbursement and insurance regimes; • laws and business practices favoring local companies; • longer payment cycles and difficulties in enforcing agreements and collecting receivables through certain foreign legal systems; • political and economic instability; • potentially adverse tax consequences, tariffs, customs charges, bureaucratic requirements and other trade barriers; • foreign exchange controls; • difficulties and costs of staffing and managing foreign operations; • difficulties protecting or procuring intellectual property rights; and • existence of additional third-party intellectual property rights of potential relevance.
Bribery Act, data privacy requirements, labor laws and anti-competition regulations; • export or import restrictions, including tariffs; • various reimbursement and insurance regimes; • laws and business practices favoring local companies; • longer payment cycles and difficulties in enforcing agreements and collecting receivables through certain foreign legal systems; • political and economic instability; • potentially adverse tax consequences, tariffs, customs charges, bureaucratic requirements and other trade barriers; • foreign exchange controls; • difficulties and costs of staffing and managing foreign operations; • difficulties protecting or procuring intellectual property rights; and • existence of additional third-party intellectual property rights of potential relevance.
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 to have committed a violation; • the federal transparency requirements under the Physician Payments Sunshine Act, created under the Affordable Care Act, which requires, among other things, certain manufacturers of drugs, devices, biologics 101 Table of Contents and medical supplies reimbursed under Medicare, Medicaid, or the Children’s Health Insurance Program to report to CMS information related to payments and other transfers of value provided to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain non-physician providers (physician assistants, nurse practitioners, clinical nurse specialists, anesthesiologist assistants, certified registered nurse anesthetists, anesthesiology assistants and certified nurse midwives), and teaching hospitals and physician ownership and investment interests, including such ownership and investment interests held by a physician’s immediate family members; • the FDCA, which prohibits, among other things, the adulteration or misbranding of drugs, biologics and medical devices; • federal and state consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harm consumers; • state and foreign law equivalents of each of the above federal laws, such as anti-kickback and false claims laws, that may impose similar or more prohibitive restrictions, and may apply to items or services reimbursed by any non-governmental third-party payors, including private insurers; and • state and foreign laws that require companies to implement compliance programs, comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government, or to track and report pricing, gifts, compensation and other remuneration provided to physicians and other health care providers or marketing expenditures; and state and local laws that require the registration of medical device sales representatives.
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 to have committed a violation; • the federal transparency requirements under the Physician Payments Sunshine Act, created under the Affordable Care Act, which requires, among other things, certain manufacturers of drugs, devices, biologics and medical supplies reimbursed under Medicare, Medicaid, or the Children’s Health Insurance Program to report to CMS information related to payments and other transfers of value provided to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain non-physician providers (physician assistants, nurse practitioners, clinical nurse specialists, anesthesiologist assistants, certified registered nurse anesthetists, anesthesiology assistants and certified nurse midwives), and teaching hospitals and physician ownership and investment interests, including such ownership and investment interests held by a physician’s immediate family members; • the FDCA, which prohibits, among other things, the adulteration or misbranding of drugs, biologics and medical devices; • federal and state consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harm consumers; • state and foreign law equivalents of each of the above federal laws, such as anti-kickback and false claims laws, that may impose similar or more prohibitive restrictions, and may apply to items or services reimbursed by any non-governmental third-party payors, including private insurers; and • state and foreign laws that require companies to implement compliance programs, comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government, or to track and report pricing, gifts, compensation and other remuneration provided to physicians and other health care providers or marketing expenditures; and state and local laws that require the registration of medical device sales representatives.
In addition, the FDA may disapprove of our IDE or withdraw approval of a previously-approved IDE if it finds that: • we have not complied with certain requirements of the IDE regulations, any other applicable regulations or statutes, or any condition of approval imposed by an IRB or the FDA; • the application or a report contains untrue statements or omits required material information; • we fail to respond to a request for additional information within the time prescribed by the FDA; • there is reason to believe that the risks to the human subjects are not outweighed by the anticipated benefits to the subjects or the importance of the knowledge to be gained; • the informed consent is inadequate; • the investigation, as proposed, is scientifically unsound; • there is reason to believe that the device as used is ineffective; or 76 Table of Contents • it is unreasonable to begin or to continue the investigation due to the way in which the device is used or the inadequacy of: • the report of prior investigations or the investigational plan; • the methods, facilities, and controls used for the manufacturing, processing, packaging, storage, and, where appropriate, installation of the device; or • the monitoring and review of the investigation.
In addition, the FDA may disapprove of our IDE or withdraw approval of a previously-approved IDE if it finds that: • we have not complied with certain requirements of the IDE regulations, any other applicable regulations or statutes, or any condition of approval imposed by an IRB or the FDA; • the application or a report contains untrue statements or omits required material information; • we fail to respond to a request for additional information within the time prescribed by the FDA; • there is reason to believe that the risks to the human subjects are not outweighed by the anticipated benefits to the subjects or the importance of the knowledge to be gained; • the informed consent is inadequate; • the investigation, as proposed, is scientifically unsound; • there is reason to believe that the device as used is ineffective; or • it is unreasonable to begin or to continue the investigation due to the way in which the device is used or the inadequacy of: 78 Table of Contents • the report of prior investigations or the investigational plan; • the methods, facilities, and controls used for the manufacturing, processing, packaging, storage, and, where appropriate, installation of the device; or • the monitoring and review of the investigation.
If any such adverse events occur, advancement of our preclinical and clinical studies could be halted or delayed, which would have a material adverse effect on our business and operations. Although Revita has received Breakthrough Device designation, there can be no guarantee that the designation will benefit the development and regulatory approval process.
If any such adverse events occur, advancement of our preclinical and clinical studies could be halted or delayed, which would have a material adverse effect on our business and operations. Although Revita has received Breakthrough Device designations, there can be no guarantee that the designation will benefit the development and regulatory approval process.
We and our third-party suppliers and manufacturers are required to comply with the FDA’s cGMPs, which in the case of medical devices is known as the Quality System Regulation, or QSR. The QSR covers the methods and documentation of the design, testing, production, control, quality assurance, labeling, packaging, sterilization, storage and shipping of our device product candidates.
We and our third-party suppliers and manufacturers are required to comply with the FDA’s cGMPs, which in the case of medical devices is currently known as the Quality System Regulation, or QSR. The QSR covers the methods and documentation of the design, testing, production, control, quality assurance, labeling, packaging, sterilization, storage and shipping of our device product candidates.
While the Clinical Trials Directive required a separate clinical trial application, or CTA, to be submitted in each member state in which the clinical trial takes place, to both the competent national health authority and an independent ethics committee, the CTR introduces a centralized process and only requires the submission of a single application for multi-center trials.
While the EU Clinical Trials Directive required a separate clinical trial application, or CTA, to be submitted in each member state in which the clinical trial takes place, to both the competent national health authority and an independent ethics committee, the CTR introduces a centralized process and only requires the submission of a single application for multi-center trials.
For as long as we continue to be an emerging growth company, we intend to take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including: • not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act; • not being required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding the communication of critical audit matters in the auditor’s report on financial statements; 123 Table of Contents • reduced disclosure obligations regarding executive compensation in this Annual Report on Form 10-K and our other periodic reports and proxy statements; and • exemptions from the requirements of holding nonbinding advisory stockholder votes on executive compensation and stockholder approval of any golden parachute payments not previously approved.
For as long as we continue to be an emerging growth company, we intend to take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including: • not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act; 127 Table of Contents • not being required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding the communication of critical audit matters in the auditor’s report on financial statements; • reduced disclosure obligations regarding executive compensation in this Annual Report on Form 10-K and our other periodic reports and proxy statements; and • exemptions from the requirements of holding nonbinding advisory stockholder votes on executive compensation and stockholder approval of any golden parachute payments not previously approved.
If we are unable to build our own distribution and marketing capabilities or to find suitable partners for the commercialization of our product candidates, we may not generate revenues from them or be able to reach or sustain profitability. The medical device, diabetes management and biopharmaceutical markets are highly competitive.
If we are unable to build our own distribution and marketing capabilities or to find suitable partners for the commercialization of our product candidates, we may not generate revenues from them or be able to reach or sustain profitability. The medical device, obesity and diabetes management and biopharmaceutical markets are highly competitive.
Physicians, hospitals and other healthcare providers may be hesitant to change their medical treatment practices for the following reasons, among others: • comfort and experience with current treatment regimens; • long-standing relationships with competitors and distributors that sell other products and such parties’ negative selling efforts; • perceived liability risks generally associated with the use of new products and procedures; 88 Table of Contents • lack or perceived lack of long-term clinical data relating to safety or effectiveness, including durable effectiveness; • difficulty in using Revita; • higher cost or perceived higher cost of our product candidate compared to currently available treatments; and • the additional time commitment that may be required for training.
Physicians, hospitals and other healthcare providers may be hesitant to change their medical treatment practices for the following reasons, among others: • comfort and experience with current treatment regimens; • long-standing relationships with competitors and distributors that sell other products and such parties’ negative selling efforts; • perceived liability risks generally associated with the use of new products and procedures; • lack or perceived lack of long-term clinical data relating to safety or effectiveness, including durable effectiveness; • difficulty in using Revita; 90 Table of Contents • higher cost or perceived higher cost of our product candidate compared to currently available treatments; and • the additional time commitment that may be required for training.
In particular, we are highly dependent on the management and business expertise of Harith Rajagopalan, M.D., Ph.D., our Chief Executive Officer, Jay D. Caplan, our President and Chief Product Officer, and Lisa A. Davidson, our Chief Financial Officer, each of whom is employed by us at will.
In particular, we are highly dependent on the management and business expertise of Harith Rajagopalan, M.D., Ph.D., our Chief Executive Officer, Jay D. Caplan, our President and Chief Product Officer, and Lisa A. Davidson, our Chief Financial Officer and Treasurer, each of whom is employed by us at will.
Our success depends on the medical and third-party payor communities’ acceptance of our product candidates as tools and/or therapies that are useful to diabetologists, gastroenterologists and interventional endoscopists in treating patients with T2D and other metabolic diseases.
Our success depends on the medical and third-party payor communities’ acceptance of our product candidates as tools and/or therapies that are useful to diabetologists, gastroenterologists and interventional endoscopists in treating patients with obesity, T2D and other metabolic diseases.
The Supreme Court’s Wayfair decision has removed a significant impediment to the enactment and enforcement of these laws, and it is possible that states may seek to tax out-of-state sellers on sales that occurred in prior tax years, which could create additional administrative burdens for us, put us at a competitive disadvantage if such states do not impose similar obligations on our competitors, and decrease our future sales, which could adversely affect our business, financial condition, and results of operations. 127 Table of Contents Item 1B.
The Supreme Court’s Wayfair decision has removed a significant impediment to the enactment and enforcement of these laws, and it is possible that states may seek to tax out-of-state sellers on sales that occurred in prior tax years, which could create additional administrative burdens for us, put us at a competitive disadvantage if such states do not impose similar obligations on our competitors, and decrease our future sales, which could adversely affect our business, financial condition, and results of operations. 131 Table of Contents Item 1B.
Although we try to ensure that our employees, consultants and advisors 114 Table of Contents do not use the intellectual property, proprietary information, know-how or trade secrets of others in their work for us, we may be subject to claims that these employees, consultants or advisors, or we, have inadvertently or otherwise used or disclosed trade secrets or other proprietary information of their former or concurrent employers, or that patents and applications we have filed to protect inventions of these employees, consultants or advisors, even those related to one or more of our product candidates or technologies, are rightfully owned by their former or concurrent employer.
Although we try to ensure that our employees, consultants and advisors do not use the intellectual property, proprietary information, know-how or trade secrets of others in their work for us, we 118 Table of Contents may be subject to claims that these employees, consultants or advisors, or we, have inadvertently or otherwise used or disclosed trade secrets or other proprietary information of their former or concurrent employers, or that patents and applications we have filed to protect inventions of these employees, consultants or advisors, even those related to one or more of our product candidates or technologies, are rightfully owned by their former or concurrent employer.
Future growth would impose significant added responsibilities on members of management, including: • identifying, recruiting, integrating, maintaining and motivating additional employees; • managing our internal development efforts effectively, including the clinical, FDA and other comparable foreign regulatory agencies’ or notified bodies’ review process of our current product candidates and any other product candidate we develop, while complying with any contractual obligations to contractors and other third parties we may have; and • improving our operational, financial and management controls, reporting systems and procedures.
Future growth would impose significant added responsibilities on members of management, including: • identifying, recruiting, integrating, retaining and motivating additional employees; • managing our internal development efforts effectively, including the clinical, FDA and other comparable foreign regulatory agencies’ or notified bodies’ review process of our current product candidates and any other product candidate we develop, while complying with any contractual obligations to contractors and other third parties we may have; and • improving our operational, financial and management controls, reporting systems and procedures.
Adequate additional financing may not be available to us on acceptable terms, or at all. Additionally, the impact of global macroeconomic events on the capital markets may affect the availability, amount and type of financing available to us in the future.
Adequate additional financing may not be available to us on acceptable terms, or at all. Additionally, the impact of global macroeconomic and geopolitical events on the capital markets may affect the availability, amount and type of financing available to us in the future.
Our future funding requirements will depend on many factors, including, but not limited to: • the initiation, progress, timeline, cost and results of our clinical studies for our product candidates; • the initiation, progress, timeline, cost and results of additional research and preclinical studies related to pipeline development and other research programs we initiate in the future; • the cost and timing of manufacturing activities as we advance our product candidates through clinical development and commercialization; • the potential expansion of our current development programs to seek new indications; • the potential negative impact of future health crises, including epidemics and pandemics, on our business; • the outcome, timing and cost of meeting regulatory requirements established by the FDA and other comparable foreign regulatory authorities or notified bodies; • the ability of healthcare providers to obtain coverage and adequate reimbursement by third-party payors for procedures using our products, if approved (or certified), and any additional products we commercialize, as well as any future changes to coverage or reimbursement policies that may increase our competition or reduce reimbursement for procedures using our products, if approved (or certified); • the cost of filing, prosecuting, defending and enforcing patent claims and other intellectual property rights, in-licensed or otherwise; • the effect of competing technological and market developments; • the payment of licensing fees, potential royalty payments and potential milestone payments; • the cost of general operating expenses; • the cost and timing of completion of commercial-scale manufacturing and product development activities; • market acceptance of our product candidates, if cleared, approved or certified; 68 Table of Contents • the cost of establishing sales, marketing, and distribution capabilities for any product candidates for which we may receive regulatory approval or certification in regions where we choose to commercialize our products, if approved (or certified), on our own; and • the cost of operating as a public company.
Our future funding requirements will depend on many factors, including, but not limited to: • the initiation, progress, timeline, cost and results of our clinical studies for our product candidates; 69 Table of Contents • the initiation, progress, timeline, cost and results of additional research and preclinical studies related to pipeline development and other research programs we initiate in the future; • the cost and timing of manufacturing activities as we advance our product candidates through clinical development and commercialization; • the potential expansion of our current development programs to seek new indications; • our business strategy, including our Strategic Reprioritization; • the potential negative impact of future health crises, including epidemics and pandemics, on our business; • the outcome, timing and cost of meeting regulatory requirements established by the FDA and other comparable foreign regulatory authorities or notified bodies; • the ability of healthcare providers to obtain coverage and adequate reimbursement by third-party payors for procedures using our products, if approved (or certified), and any additional products we commercialize, as well as any future changes to coverage or reimbursement policies that may increase our competition or reduce reimbursement for procedures using our products, if approved (or certified); • the cost of filing, prosecuting, defending and enforcing patent claims and other intellectual property rights, in-licensed or otherwise; • the effect of competing technological and market developments; • the payment of licensing fees, potential royalty payments and potential milestone payments; • the cost of general operating expenses; • the cost and timing of completion of commercial-scale manufacturing and product development activities; • market acceptance of our product candidates, if cleared, approved or certified; • the cost of establishing sales, marketing, and distribution capabilities for any product candidates for which we may receive regulatory approval or certification in regions where we choose to commercialize our products, if approved (or certified), on our own; and • the cost of operating as a public company.
Any of these events could prevent us from achieving or maintaining market acceptance of the particular product candidate, if approved or certified, and could seriously harm our business. 78 Table of Contents In previous clinical studies conducted by third parties involving viral vectors for gene therapy, some patients experienced serious adverse events, including the development of leukemia due to vector-related insertional oncogenesis.
Any of these events could prevent us from achieving or maintaining market acceptance of the particular product candidate, if approved or certified, and could seriously harm our business. 80 Table of Contents In previous clinical studies conducted by third parties involving viral vectors for gene therapy, some patients experienced serious adverse events, including the development of leukemia due to vector-related insertional oncogenesis.
If we or our suppliers or manufacturers have significant non-compliance issues or if any corrective action plan that we or our suppliers propose in response to observed deficiencies is not sufficient, the FDA could take enforcement action, including any of the following sanctions: • untitled letters, warning letters, fines, injunctions, consent decrees and civil penalties; • customer notifications or repair, replacement, refunds, recall, detention or seizure of our products; • operating restrictions or partial suspension or total shutdown of production; • refusing or delaying approval of a PMA, BLA or supplements thereto for new products or modified products; • withdrawing approvals that have already been granted; • refusal to grant export approval for our products; or • criminal prosecution.
If we or our suppliers or manufacturers have significant non-compliance issues or if any 100 Table of Contents corrective action plan that we or our suppliers propose in response to observed deficiencies is not sufficient, the FDA could take enforcement action, including any of the following sanctions: • untitled letters, warning letters, fines, injunctions, consent decrees and civil penalties; • customer notifications or repair, replacement, refunds, recall, detention or seizure of our products; • operating restrictions or partial suspension or total shutdown of production; • refusing or delaying approval of a PMA, BLA or supplements thereto for new products or modified products; • withdrawing approvals that have already been granted; • refusal to grant export approval for our products; or • criminal prosecution.
While Congress has not passed comprehensive repeal legislation, bills affecting the implementation of certain taxes under the ACA have been signed into law, including the Tax Cuts and Jobs Act, enacted on December 22, 2017, or TCJA), which includes a provision repealing, effective January 1, 2019, the tax-based shared responsibility payment imposed by the ACA on certain individuals who fail to maintain qualifying health coverage for all or part of a year that is commonly referred to as the “individual mandate.” Since its enactment, there have been judicial, executive and Congressional challenges to certain aspects of the ACA.
While Congress has not passed comprehensive repeal legislation, bills affecting the implementation of certain taxes under the ACA have been signed into law, including the Tax Cuts and Jobs Act, enacted on December 22, 2017, or TCJA), which includes a provision repealing, effective January 1, 2019, the tax-based shared responsibility payment imposed by the ACA on certain 105 Table of Contents individuals who fail to maintain qualifying health coverage for all or part of a year that is commonly referred to as the “individual mandate.” Since its enactment, there have been judicial, executive and Congressional challenges to certain aspects of the ACA.
Disruptions at the FDA and other government agencies or notified bodies 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 or notified bodies caused by policy changes, new leadership, 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.
The success of the product candidates we have or may develop will depend on many factors, including the following: • the success of our research methodology in identifying potential indications or product candidates; • generating sufficient data to support the initiation or continuation of clinical studies; • obtaining regulatory permission to initiate clinical studies; • contracting with the necessary parties to conduct clinical studies; • successful enrollment of patients in, and the completion of, clinical studies on a timely basis; • the timely manufacture of sufficient quantities of the applicable product candidate for use in clinical studies; • the possible occurrence of adverse events in our clinical studies; and • any potential interruptions or delays resulting from factors related to the COVID-19 pandemic or any future public health crises, including epidemics and pandemics.
The success of the product candidates we have or may develop will depend on many factors, including the following: • the success of our research methodology in identifying potential indications or product candidates; • generating sufficient data to support the initiation or continuation of clinical studies; • obtaining regulatory permission to initiate clinical studies; • contracting with the necessary parties to conduct clinical studies; • successful enrollment of patients in, and the completion of, clinical studies on a timely basis; • the timely manufacture of sufficient quantities of the applicable product candidate for use in clinical studies; • the possible occurrence of adverse events in our clinical studies; and • any potential interruptions or delays resulting from factors related to any future public health crises, including epidemics and pandemics.
If we are unable to successfully commercialize our approved product candidates, either on our own or through collaborations with one or more third parties, our future product revenue will suffer and we may incur significant additional losses. 117 Table of Contents Our success is highly dependent on our ability to attract and retain highly skilled executive officers and employees.
If we are unable to successfully commercialize our approved product candidates, either on our own or through collaborations with one or more third parties, our future product revenue will suffer and we may incur significant additional losses. 121 Table of Contents Our success is highly dependent on our ability to attract and retain highly skilled executive officers and employees.
If any of the banks which hold our cash deposits were to be placed into receivership, we may be unable to access such funds. As of December 31, 2023, substantially all of our cash on deposit was maintained at two financial institutions in the United States, and our current deposits are in excess of federally insured limits.
If any of the banks which hold our cash deposits were to be placed into receivership, we may be unable to access such funds. As of December 31, 2024, substantially all of our cash on deposit was maintained at two financial institutions in the United States, and our current deposits are in excess of federally insured limits.
Events that may prevent successful or timely completion of clinical development include: • inability to generate sufficient data to support the initiation of clinical studies; • delays in sufficiently developing, characterizing or controlling a manufacturing process suitable for advanced clinical studies; • delays in reaching agreement with the FDA or other regulatory authorities as to the design or implementation of our clinical studies; • delays in or failure to obtain regulatory clearance to commence a clinical study; • delays in or failure to reach an agreement on acceptable terms with clinical study sites or prospective CROs, the terms of which can be subject to extensive negotiation and may vary significantly among different clinical study sites; • delays in or failure to obtain IRB or ethics committee approval at each site; • delays in or failure to recruit suitable patients to participate in a clinical study; • delays in or failure to have patients complete a clinical study or return for post-treatment follow-up; • clinical sites, CROs or other third parties deviating from study protocol or dropping out of a study; • failure to perform in accordance with the FDA’s good clinical practice, or GCP, requirements, or applicable regulatory guidelines in other countries; 74 Table of Contents • failure in addressing patient safety concerns that arise during the course of a study, including occurrence of adverse events associated with the product candidate; • failure to add a sufficient number of clinical study sites; or • failure to manufacture sufficient quantities of product candidates for use in clinical studies.
Events that may prevent successful or timely completion of clinical development include: • inability to generate sufficient data to support the initiation of clinical studies; • delays in sufficiently developing, characterizing or controlling a manufacturing process suitable for advanced clinical studies; • delays in reaching alignment with the FDA or other regulatory authorities as to the design or implementation of our clinical studies; • delays in or failure to obtain regulatory allowance or approval to commence a clinical study; • delays in or failure to reach an agreement on acceptable terms with clinical study sites or prospective CROs, the terms of which can be subject to extensive negotiation and may vary significantly among different clinical study sites; • delays in or failure to obtain IRB or ethics committee approval at each site; • delays in or failure to recruit suitable patients to participate in a clinical study; • delays in or failure to have patients complete a clinical study or return for post-treatment follow-up; • clinical sites, CROs or other third parties deviating from study protocol or dropping out of a study; • failure to perform clinical trials in accordance with the FDA’s good clinical practice, or GCP, requirements, or applicable regulatory guidelines in other countries; • failure in addressing patient safety concerns that arise during the course of a study, including occurrence of adverse events associated with the product candidate; • failure to add a sufficient number of clinical study sites; or 76 Table of Contents • failure to manufacture sufficient quantities of product candidates for use in clinical studies.
Although we would expect to submit a compliant, truthful and complete application, we cannot guarantee that the FDA would approve it. If the FDA were to disapprove our IDE application or propose to withdraw prior approval, we would have the right to request a regulatory hearing. However, we cannot guarantee what the outcome of such a hearing would be.
Although we would expect to submit a compliant, truthful and complete application, we cannot guarantee that the FDA would approve it. If the FDA were to disapprove an IDE application or propose to withdraw prior approval, we would have the right to request a regulatory hearing. However, we cannot guarantee what the outcome of such a hearing would be.
Undesirable side effects or deaths in clinical studies with our product candidates may cause the FDA or comparable foreign regulatory authorities to place a clinical hold on the associated clinical studies, to require additional studies, or otherwise to delay or deny approval or certification of our product candidates for any or all targeted indications.
Undesirable side effects, adverse events or deaths in clinical studies with our product candidates may cause the FDA or comparable foreign regulatory authorities to place a clinical hold on the associated clinical studies, to require additional studies, or otherwise to delay or deny approval or certification of our product candidates for any or all targeted indications.
Later discovery of previously unknown problems with our product candidates, including adverse events of unanticipated severity or frequency, or with our third-party suppliers or manufacturing processes, or failure to comply with regulatory requirements, may result in revisions to the approved labeling to add new safety information; imposition of post-market studies or clinical studies to assess new safety risks; or imposition of distribution restrictions or other restrictions under a REMS or similar program for our gene therapy candidates, if approved.
Later discovery of previously unknown problems with our product candidates, including adverse events of unanticipated severity or frequency, 83 Table of Contents or with our third-party suppliers or manufacturing processes, or failure to comply with regulatory requirements, may result in revisions to the approved labeling to add new safety information; imposition of post-market studies or clinical studies to assess new safety risks; or imposition of distribution restrictions or other restrictions under a REMS or similar program for our gene therapy candidates, if approved.
However, the initial point of contact for many patients suffering from T2D may be primary care physicians, or PCPs, or other referring medical professionals, such as nurse practitioners or physician assistants, who commonly see patients who have, or who are at risk of developing, T2D.
However, the initial point of contact for many patients suffering from obesity and/or T2D may be primary care physicians, or PCPs, or other referring medical professionals, such as nurse practitioners or physician assistants, who commonly see patients who have, or who are at risk of developing, obesity and/or T2D.
Even if we are able to establish agreements with third-party manufacturers, reliance on third-party manufacturers entails additional risks, including: • the failure of the third party to manufacture our product candidates according to our schedule, or at all, including if our third-party contractors give greater priority to the supply of other products over our product candidates or otherwise do not satisfactorily perform according to the terms of the agreements between us and them; • the reduction or termination of production or deliveries by suppliers, or the raising of prices or renegotiation of terms; • the termination or nonrenewal of arrangements or agreements by our third-party contractors at a time that is costly or inconvenient for us; • the breach by the third-party contractors of our agreements with them; • the failure of third-party contractors to comply with applicable regulatory requirements; • the failure of the third party to manufacture our product candidates according to our specifications; • the mislabeling of clinical supplies, potentially resulting in the wrong dose amounts being supplied or study drug or placebo not being properly identified; • clinical supplies not being delivered to clinical sites on time, leading to clinical study interruptions, or of drug supplies not being distributed to commercial vendors in a timely manner, resulting in lost sales; and • the misappropriation of our proprietary information, including our trade secrets and know-how.
Even if we are able to establish agreements with third-party manufacturers, reliance on third-party manufacturers entails additional risks, including: • the failure of the third party to manufacture our product candidates according to our schedule, or at all, including if our third-party contractors give greater priority to the supply of other products over our product candidates or otherwise do not satisfactorily perform according to the terms of the agreements between us and them; • the reduction or termination of production or deliveries by suppliers, or the raising of prices or renegotiation of terms; • the termination or nonrenewal of arrangements or agreements by our third-party contractors at a time that is costly or inconvenient for us; • the breach by the third-party contractors of our agreements with them; • the failure of third-party contractors to comply with applicable regulatory requirements; • the failure of the third party to manufacture our product candidates according to our specifications; • the mislabeling of clinical supplies, potentially resulting in the wrong dose amounts being supplied or study drug or placebo not being properly identified; 99 Table of Contents • clinical supplies not being delivered to clinical sites on time, leading to clinical study interruptions, or of drug supplies not being distributed to commercial vendors in a timely manner, resulting in lost sales; • the misappropriation of our proprietary information, including our trade secrets and know-how; and • geopolitical or macroeconomic factors.
Acceptance of our Rejuva gene therapy candidates and the Revita DMR Procedure depends on establishing their safety and effectiveness, including the Revita DMR Procedure’s durability in treating T2D, and educating our target audience about their distinct characteristics, potential benefits, safety and ease-of-use.
Acceptance of our Rejuva gene therapy candidates and the Revita DMR procedure depends on establishing their safety and effectiveness, including the Revita DMR procedure’s durability in treating obesity or T2D, and educating our target audience about their distinct characteristics, potential benefits, safety and ease-of-use.
We may not be able to file IDEs or IDE supplements or comparable documents in foreign jurisdictions to commence additional clinical studies on the timelines we expect, and even if we are able to, the FDA or comparable foreign regulatory authorities may not permit us to proceed.
We may not be able to submit IDEs or IDE supplements or comparable documents in foreign jurisdictions to commence additional clinical studies on the timelines we expect, and even if we are able to, the FDA or comparable foreign regulatory authorities may not permit us to proceed.
Under the legislation enacted in 2017, commonly referred to as the Tax Cuts and Jobs Act, or the Tax Act, as modified by the Coronavirus Aid, Relief, and Economic Security, or the CARES Act, U.S. federal net operating losses incurred in taxable years beginning after December 31, 2017, may be carried forward indefinitely, but the deductibility of such federal net 70 Table of Contents operating losses in taxable years beginning after December 31, 2020, is limited.
Under the legislation enacted in 2017, commonly referred to as the Tax Cuts and Jobs Act, or the Tax Act, as modified by the Coronavirus Aid, Relief, and Economic Security, or the CARES Act, U.S. federal net operating losses incurred in taxable years beginning after December 31, 2017, may be carried forward indefinitely, but the deductibility of such federal net operating losses in taxable years beginning after December 31, 2020, is limited.
In addition, if we are unable to effectively manage our outsourced activities or if the quality or accuracy of the services provided by third party service providers is compromised for any reason, our clinical studies may be extended, delayed or terminated, and we may not be able to obtain marketing approval of any current or future product candidates or otherwise advance our business.
In addition, if we are unable to effectively manage our outsourced activities or if the quality or accuracy of the services provided by third party service providers is compromised for any reason, our clinical studies may be extended, delayed or terminated, and we may not be 122 Table of Contents able to obtain marketing approval of any current or future product candidates or otherwise advance our business.
As a result of these factors, it is more difficult for us to predict the time and cost of our Rejuva gene therapy candidates’ development, and we cannot predict whether the application of our approach to gene therapy, or any similar or competitive programs, will result in the identification, development, and regulatory approval of Rejuva, or that other gene therapy programs will not be considered better or more attractive.
As a result of these factors, it is more difficult for us to predict the time and cost of our Rejuva gene therapy candidates’ development, and we cannot predict whether the application of our approach to gene therapy, or any similar or competitive programs, will result in the identification, development, and regulatory approval of Rejuva, or that other gene therapy programs will not be considered 88 Table of Contents better or more attractive.
Coverage and reimbursement by a governmental and other third-party payors may depend upon a number of factors, including the third-party payor’s determination that use of a product or service and its use for a particular patient is: • a covered benefit under its health plan; • safe, effective and medically necessary; • appropriate for the specific patient; 104 Table of Contents • cost-effective; and • neither experimental nor investigational.
Coverage and reimbursement by a governmental and other third-party payors may depend upon a number of factors, including the third-party payor’s determination that use of a product or service and its use for a particular patient is: • a covered benefit under its health plan; • safe, effective and medically necessary; • appropriate for the specific patient; • cost-effective; and • neither experimental nor investigational.
Even if issued, patents may be challenged, including with respect to ownership, narrowed, invalidated, held unenforceable or circumvented, any of which could limit our ability to prevent competitors and other third parties from developing and marketing similar products or limit the duration of patent protection we may have for our product candidates and technologies.
Even if issued, patents may be challenged, including with respect to ownership, narrowed, invalidated, held unenforceable or 110 Table of Contents circumvented, any of which could limit our ability to prevent competitors and other third parties from developing and marketing similar products or limit the duration of patent protection we may have for our product candidates and technologies.
The opinion of the panel, although not binding, may have a significant impact on our ability to obtain approval of the product candidates based on the completed clinical studies, as the FDA often adheres to the panel’s recommendations.
The opinion of any such panel, although not binding, may have a significant impact on our ability to obtain approval of the product candidates based on the completed clinical studies, as the FDA often adheres to the panel’s recommendations.
In the United States, the commercial success of Revita and any future products will depend, in part, on the extent to which governmental payors at the federal and state levels, including Medicare and Medicaid, private health insurers and 79 Table of Contents other third-party payors provide coverage for and establish adequate reimbursement levels for procedures utilizing our products, if approved.
In the United States, the commercial success of Revita and any future products will depend, in part, on the extent to which governmental payors at the federal and state levels, including Medicare and Medicaid, private health insurers and other third-party payors provide coverage for and establish adequate reimbursement levels for procedures utilizing our products, if approved.
In addition to unauthorized access to or acquisition of personal data, confidential information, intellectual property or other sensitive information, such attacks 122 Table of Contents could include the deployment of harmful malware and ransomware, and may use a variety of methods, including denial-of-service attacks, social engineering and other means, to attain such unauthorized access or acquisition or otherwise affect service reliability and threaten the confidentiality, integrity and availability of information.
In addition to unauthorized access to or acquisition of personal data, confidential information, intellectual property or other sensitive information, such attacks could include the deployment of harmful malware and ransomware, and may use a variety of methods, including denial-of-service attacks, social engineering and other means, to attain such unauthorized access or acquisition or otherwise affect service reliability and threaten the confidentiality, integrity and availability of information.
In the United States, before we can market a new medical device, we must first receive either clearance under Section 510(k) of the Federal Food, Drug, and Cosmetic Act, or the FDCA, or approval of a PMA, from the FDA, unless an exemption applies. We expect Revita to be subject to the requirement for approval of a PMA.
In the United States, before we can market a new medical device, we must first receive either clearance under Section 510(k) of the Federal Food, Drug, and Cosmetic Act (“FDCA”), or approval of a PMA application, from the FDA, unless an exemption applies. We expect Revita to be subject to the requirement for approval of a PMA application.
All medical devices placed on the market in the EU must meet the general safety and performance requirements laid down in Annex I to the MDR, including the requirement that a medical device must be designed and manufactured in such a way that, during normal conditions of use, it is suitable for its intended purpose.
All medical devices placed on the market in the EU must meet the general safety and performance requirements laid down in Annex I to the MDR, including the requirement that a medical device must be 73 Table of Contents designed and manufactured in such a way that, during normal conditions of use, it is suitable for its intended purpose.
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 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 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.
If unacceptable side effects or deaths arise in the development of our product candidates, we, the FDA, the IRBs at the institutions in which our studies are conducted, DSMB or other regulatory authorities could suspend or terminate our clinical studies or the FDA or other regulatory authorities could order us to cease clinical studies or deny approval or certification of our product candidates for any or all targeted indications.
If unacceptable side effects, serious adverse events or deaths arise in the development of our product candidates, we, the FDA, the IRBs at the institutions in which our studies are conducted, DSMB or other regulatory authorities could suspend or terminate our clinical studies or the FDA or other regulatory authorities could order us to cease clinical studies or deny approval or certification of our product candidates for any or all targeted indications.
Although the FDA and similar foreign regulatory agencies and notified bodies have systems in place 80 Table of Contents for the review and approval or certification of combination products such as our Rejuva gene therapy candidates, we may experience delays in the development, approval or certification, and commercialization of our Rejuva gene therapy candidates due to regulatory timing constraints and uncertainties in the product development and approval or certification process.
Although the FDA and similar foreign regulatory agencies and notified bodies have systems in place for the review and approval or certification of combination products such as our Rejuva gene therapy candidates, we may experience delays in the development, approval or certification, and commercialization of our Rejuva gene therapy candidates due to regulatory timing constraints and uncertainties in the product development and approval or certification process.
If the FDA determines that our promotional materials or training constitutes promotion of an off-label use, it could request that we modify our training or promotional materials or subject us to regulatory or enforcement actions, including the issuance of an untitled letter, a warning letter, injunction, seizure, civil fine 84 Table of Contents and criminal penalties.
If the FDA determines that our promotional materials or training constitutes promotion of an off-label use, it could request that we modify our training or promotional materials or subject us to regulatory or enforcement actions, including the issuance of an untitled letter, a warning letter, injunction, seizure, civil fine and criminal penalties.
Such attacks are increasing in their frequency, levels of persistence, levels of sophistication and intensity, and are being conducted by sophisticated and organized groups and individuals with a wide range of motives and expertise, especially given increased vulnerability of corporate information technology systems as distributed work environments have become prevalent.
Such attacks are increasing in their frequency, levels of 126 Table of Contents persistence, levels of sophistication and intensity, and are being conducted by sophisticated and organized groups and individuals with a wide range of motives and expertise, especially given increased vulnerability of corporate information technology systems as distributed work environments have become prevalent.
Further, we will be required to comply with FDA and other regulatory authorities’ promotion and advertising rules, which include, among others, restrictions on promoting products for uses or in patient populations that are not described in the product’s approved uses (known as “off-label use”), limitations on industry-sponsored scientific and 81 Table of Contents educational activities and requirements for promotional activities involving the internet and social media.
Further, we will be required to comply with FDA and other regulatory authorities’ promotion and advertising rules, which include, among others, restrictions on promoting products for uses or in patient populations that are not described in the product’s approved uses (known as “off-label use”), limitations on industry-sponsored scientific and educational activities and requirements for promotional activities involving the internet and social media.
Violations of the federal Anti-Kickback Statute may result in significant civil monetary penalties, plus up to three times the remuneration involved. Civil penalties for such conduct can further be assessed under the federal False Claims Act. Violations can also result in criminal penalties, including significant criminal fines and imprisonment of up to 10 years.
Violations of the federal Anti-Kickback Statute may result in significant civil monetary penalties, plus up to three times the remuneration involved. Civil penalties for such conduct can further be assessed under the 103 Table of Contents federal False Claims Act. Violations can also result in criminal penalties, including significant criminal fines and imprisonment of up to 10 years.
Our product candidates could fail to receive regulatory approval or certification from the FDA, a comparable foreign regulatory authority or notified body for many reasons, including: • disagreement with the design or conduct of our clinical studies; • failure to demonstrate to the satisfaction of regulatory agencies or notified bodies that our product candidates are safe and effective, or have a positive benefit/risk profile for its proposed indication; • serious and unexpected adverse device effects experienced by participants in our clinical studies; • failure of clinical studies to meet the level of statistical significance required for approval or certification; • disagreement with our interpretation of data from preclinical or clinical studies; • the insufficiency of data collected from clinical studies of our product candidates to support the submission and filing of a IND, PMA or BLA or other submission or to obtain regulatory approval or certification; • failure to obtain approval of our manufacturing processes or facilities of third-party manufacturers with whom we contract for clinical and commercial supplies or our own manufacturing facility; or • changes in the approval or certification policies or regulations that render our preclinical and clinical data insufficient for approval or certification.
Our product candidates could fail to receive regulatory approval or certification from the FDA, a comparable foreign regulatory authority or notified body for many reasons, including: • disagreement with the design or conduct of our clinical studies; • failure to demonstrate to the satisfaction of regulatory agencies or notified bodies that our product candidates are safe, pure, potent and/or effective, or have a positive benefit/risk profile for its proposed indication; • serious and unexpected adverse device effects experienced by participants in our clinical studies; • failure of results from clinical studies to meet the level of statistical significance or otherwise demonstrate the evidence required for approval or certification; • disagreement with our interpretation of data from preclinical or clinical studies; • the insufficiency of data collected from clinical studies of our product candidates to support the submission and submission of a PMA or BLA or other submission or to obtain regulatory approval or certification; • failure to obtain approval of our manufacturing processes or facilities of third-party manufacturers with whom we contract for clinical and commercial supplies or our own manufacturing facility; or • changes in the approval or certification policies or regulations that render our preclinical and clinical data insufficient for approval or certification.
We have entered into consulting agreements with physicians, including some who have ownership interests in us, which could be viewed as influencing the purchase of or use of our products in procedures they perform. Compensation under some of these arrangements includes the provision of stock or stock options.
We have entered into consulting agreements 104 Table of Contents with physicians, including some who have ownership interests in us, which could be viewed as influencing the purchase of or use of our products in procedures they perform. Compensation under some of these arrangements includes the provision of stock or stock options.
This could make it 108 Table of Contents difficult for us to stop the infringement of our patents or the misappropriation or other violation of our other intellectual property rights. For example, many foreign countries have compulsory licensing laws under which a patent owner must grant licenses to third parties.
This could make it difficult for us to stop the infringement of our patents or the misappropriation or other violation of our other intellectual property rights. For example, many foreign countries have compulsory licensing laws under which a patent owner must grant licenses to third parties.
Moreover, the extent to which a biosimilar, once approved, will be substituted for any one of the reference products in a way that is similar to traditional generic substitution for non-biological products is not yet clear, and will depend on a number of marketplace and regulatory factors that are still developing.
Moreover, the extent to which a biosimilar, once approved, will be substituted for any one of the reference products in a way that is similar to traditional generic substitution for non-biological products is not yet clear, and will depend on a number of marketplace and regulatory factors.
We rely, and expect to continue to rely, on third-party manufacturers for the production of sub-assembly components for Revita and for the materials for our Rejuva gene therapy platform for preclinical and clinical studies under the guidance of members of our organization. We do not have long-term supply agreements.
We rely, and expect to continue to rely, on third-party manufacturers for the production of sub-assembly components for Revita, for the device component of the Rejuva product and for the materials for our Rejuva gene therapy platform for preclinical and clinical studies under the guidance of members of our organization. We do not have long-term supply agreements.
If our licensors fail to prosecute, maintain, enforce and defend such patents, or lose rights to those patents or patent applications, the rights we have licensed may be reduced or eliminated, and our right to develop and commercialize any of our drugs that are subject of such licensed rights could be adversely affected.
If our licensors fail to prosecute, maintain, enforce 119 Table of Contents and defend such patents, or lose rights to those patents or patent applications, the rights we have licensed may be reduced or eliminated, and our right to develop and commercialize any of our drugs that are subject of such licensed rights could be adversely affected.
We will have to develop our own sales, marketing and supply organization or outsource these 89 Table of Contents activities to a third party to commercialize our products. If we decide to license our product candidate to others, we may need to rely on the marketing assistance and guidance of those collaborators.
We will have to develop our own sales, marketing and supply organization or outsource these activities to a third party to commercialize our products. If we decide to license our product candidate to others, we may need to rely on the marketing assistance and guidance of those collaborators.
New technologies, techniques or products could emerge that might offer better combinations of price and performance than the products and systems that we plan to sell. Existing markets for our intended product candidates are characterized by rapid technological change and innovation.
New technologies, techniques or 93 Table of Contents products could emerge that might offer better combinations of price and performance than the products and systems that we plan to sell. Existing markets for our intended product candidates are characterized by rapid technological change and innovation.
Such recalls and 100 Table of Contents withdrawals may also be used by our competitors to harm our reputation for safety or be perceived by patients as a safety risk when considering the use of our products, either of which could have an adverse impact on our business.
Such recalls and withdrawals may also be used by our competitors to harm our reputation for safety or be perceived by patients as a safety risk when considering the use of our products, either of which could have an adverse impact on our business.
We cannot predict future changes in the interpretation of patent laws or changes to patent laws that might be enacted into law by United States and foreign legislative bodies. Those changes may materially affect our patents or patent applications and our ability to obtain additional patent protection in the future.
We cannot predict future changes in the interpretation of patent laws or changes to patent laws that might be enacted into law by United States and 116 Table of Contents foreign legislative bodies. Those changes may materially affect our patents or patent applications and our ability to obtain additional patent protection in the future.
We may also need to hire additional employees or engage outside consultants to comply with these requirements, which will increase our costs and expenses. In addition, changing laws, regulations and standards relating to corporate governance and public disclosure are creating uncertainty for public companies, increasing legal and financial compliance costs and making some activities more time consuming.
We may also need to hire additional employees or engage outside consultants to comply with these requirements, which will increase our costs and expenses. 128 Table of Contents In addition, changing laws, regulations and standards relating to corporate governance and public disclosure are creating uncertainty for public companies, increasing legal and financial compliance costs and making some activities more time consuming.
In addition, we may be unaware of one or more issued patents that would be infringed by the manufacture, sale or use of a current or future product candidate, or we may incorrectly conclude that a third-party patent is invalid, unenforceable or not-infringed by our activities.
In addition, we 113 Table of Contents may be unaware of one or more issued patents that would be infringed by the manufacture, sale or use of a current or future product candidate, or we may incorrectly conclude that a third-party patent is invalid, unenforceable or not-infringed by our activities.
Risk Factors and elsewhere in this Annual Report on Form 10-K, these factors include: • the timing and results of preclinical and clinical studies of our product candidates or those of our competitors; • the success of competitive products or announcements by potential competitors of their product development efforts; • regulatory actions with respect to our product candidates or our competitors’ products; • actual or anticipated changes in our growth rate relative to our competitors; • regulatory or legal developments in the United States and other countries; • developments or disputes concerning patent applications, issued patents or other proprietary rights; • the recruitment or departure of key personnel; • announcements by us or our competitors of significant acquisitions, strategic collaborations, joint ventures, collaborations or capital commitments; • actual or anticipated changes in estimates as to financial results, development timelines or recommendations by securities analysts; • fluctuations in the valuation of companies perceived by investors to be comparable to us; • market conditions in the pharmaceutical and biotechnology sector; • changes in the structure of healthcare payment systems; • share price and volume fluctuations attributable to inconsistent trading volume levels of our shares; • announcement or expectation of additional financing efforts; • sales of our common stock by us, our insiders or our other stockholders; • expiration of market stand-off or lock-up agreements; • the impact of the COVID-19 pandemic, or any future public health crises, including epidemics and pandemics, and actions taken to slow their spread; and • general economic, industry and market conditions. 119 Table of Contents The realization of any of the above risks or any of a broad range of other risks, including those described in this Part I.
Risk Factors and elsewhere in this Annual Report on Form 10-K, these factors include: • the timing and results of preclinical and clinical studies of our product candidates or those of our competitors; • the success of competitive products or announcements by potential competitors of their product development efforts; • regulatory actions with respect to our product candidates or our competitors’ products; • actual or anticipated changes in our growth rate relative to our competitors; • regulatory or legal developments in the United States and other countries; • developments or disputes concerning patent applications, issued patents or other proprietary rights; • the recruitment or departure of key personnel; • announcements by us or our competitors of significant acquisitions, strategic collaborations, joint ventures, collaborations or capital commitments; • actual or anticipated changes in estimates as to financial results, development timelines or recommendations by securities analysts; • fluctuations in the valuation of companies perceived by investors to be comparable to us; • market conditions in the pharmaceutical and biotechnology sector; • changes in the structure of healthcare payment systems; • share price and volume fluctuations attributable to inconsistent trading volume levels of our shares; • announcement or expectation of additional financing efforts; • sales of our common stock by us, our insiders or our other stockholders; 123 Table of Contents • expiration of market stand-off or lock-up agreements; • the impact of the COVID-19 pandemic, or any future public health crises, including epidemics and pandemics, and actions taken to slow their spread; and • general economic, geopolitical, industry and market conditions.
These laws, regulations and standards are subject to varying interpretations, in many cases due to their lack of specificity and, as a result, their application in practice may evolve over time as new guidance is provided by 124 Table of Contents regulatory and governing bodies.
These laws, regulations and standards are subject to varying interpretations, in many cases due to their lack of specificity and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies.
The CE mark for Revita was issued under the MDD, which has now been superseded by the MDR and we are currently working on obtaining MDR certification.
The CE mark for Revita was applied under the MDD, which has now been superseded by the MDR and we are currently working on obtaining MDR certification.
We could also in the future plan to conduct one or more future clinical studies of our product candidates outside the United States, including in Europe.
We could also in the future plan to conduct one or more future clinical studies of our product candidates outside the United States, including in Europe and Australia.
Neither hospitals nor physicians are likely to use our product, if approved, and any future products if they do not receive adequate reimbursement for the procedures utilizing such products. Many private payors currently base their reimbursement policies on the coverage decisions and payment amounts determined by the Centers for Medicare & Medicaid Services, or CMS, which administers the Medicare program.
Neither hospitals nor physicians are likely to use our product, if approved, and any future products if they do not receive adequate reimbursement for the procedures utilizing such products. Many private payors currently base their reimbursement policies on the coverage decisions and payment amounts determined by CMS, which administers the Medicare program.
We do not have complete control over all aspects of the manufacturing process of, and are dependent on, our contract manufacturing partners for compliance with cGMP or similar foreign regulations for manufacturing both active 97 Table of Contents drug substances and finished drug products.
We do not have complete control over all aspects of the manufacturing process of, and are dependent on, our contract manufacturing partners for compliance with cGMP or similar foreign regulations for manufacturing both active drug substances and finished drug products.
If we are not able to effectively expand our organization by hiring new employees and/or engaging additional third party service providers, we may not be able to successfully implement the tasks necessary to further develop and 118 Table of Contents commercialize Revita and any other current or future product candidates and, accordingly, may not achieve our research, development and commercialization goals.
If we are not able to effectively expand our organization by hiring new employees and/or engaging additional third party service providers, we may not be able to successfully implement the tasks necessary to further develop and commercialize Revita and any other current or future product candidates and, accordingly, may not achieve our research, development and commercialization goals.
In addition, the laws of some foreign countries do not protect intellectual property rights to the same extent as federal and state laws in the United States, and the laws of some foreign countries do not provide patent protection for certain types of inventions that are patentable in the United States.
In addition, the laws of some foreign countries do not protect intellectual property rights to the same extent as federal and state laws in the United States, and the laws of some foreign countries do not provide patent protection for certain types of inventions 111 Table of Contents that are patentable in the United States.
Our effective tax rate could be adversely affected due to several factors, including: • changes in the relative amounts of income before taxes in the various jurisdictions in which we operate that have differing statutory tax rates; • changes in the United States tax laws and regulations or the interpretation of them, including the Tax Act, as modified by the CARES Act; • changes to our assessment about our ability to realize our deferred tax assets that are based on estimates of our future results, the prudence and feasibility of possible tax planning strategies, and the economic and political environments in which we do business; • the outcome of current and future tax audits, examinations, or administrative appeals; and 125 Table of Contents • limitations or adverse findings regarding our ability to do business in some jurisdictions.
Our effective tax rate could be adversely affected due to several factors, including: • changes in the relative amounts of income before taxes in the various jurisdictions in which we operate that have differing statutory tax rates; • changes in the United States tax laws and regulations or the interpretation of them; • changes to our assessment about our ability to realize our deferred tax assets that are based on estimates of our future results, the prudence and feasibility of possible tax planning strategies, and the economic and political environments in which we do business; 129 Table of Contents • the outcome of current and future tax audits, examinations, or administrative appeals; and • limitations or adverse findings regarding our ability to do business in some jurisdictions.
If the FDA does not accept or approve our PMAs or BLAs for our product candidates, it may require that we conduct additional clinical, preclinical, or manufacturing validation studies and submit that data before it will reconsider our applications.
If the FDA does not accept or approve any PMA applications or BLAs we may submit for our product candidates, the FDA may require that we conduct additional clinical, preclinical, or manufacturing validation studies and submit that data before it will reconsider our applications.
Though these license agreements may provide guidelines 113 Table of Contents for how our trademarks and trade names may be used, a breach of these agreements or misuse of our trademarks and tradenames by our licensees may jeopardize our rights in or diminish the goodwill associated with our trademarks and trade names.
Though these license agreements may provide guidelines for how our trademarks and trade names may be used, a breach of these agreements or misuse of our trademarks and tradenames by our licensees may jeopardize our rights in or diminish the goodwill associated with our trademarks and trade names.
The European Commission’s proposal for revision of several legislative instruments related to medicinal products (potentially reducing the duration of regulatory data protection, revising eligibility for expedited pathways, etc.) was published on April 26, 2023.
The European Commission’s proposal for revision of several legislative instruments related to medicinal 75 Table of Contents products (potentially reducing the duration of regulatory data protection, revising eligibility for expedited pathways, etc.) was published on April 26, 2023.
In cases where data from clinical studies conducted outside the United States are intended to 75 Table of Contents serve as the sole basis for marketing approval in the United States, the FDA will generally not approve the application on the basis of foreign data alone unless (i) the data are applicable to the United States population and United States medical practice; (ii) the studies were performed by clinical investigators of recognized competence and (iii) the data may be considered valid without the need for an on-site inspection by the FDA or, if the FDA considers such an inspection to be necessary, the FDA is able to validate the data through an on-site inspection or other appropriate means.
In cases where data from clinical studies conducted outside the United States are intended to serve as the sole basis for marketing approval in the United States, regardless of whether such clinical studies were conducted pursuant to an IND or IDE, the FDA will generally not approve the application on the basis of foreign data alone unless (i) the data are applicable to the United States population and United States medical practice; (ii) the studies were performed by clinical investigators of recognized competence and (iii) the data may be considered valid without the need for an on-site inspection by the FDA or, if the FDA considers such an inspection to be necessary, the FDA is able to 77 Table of Contents validate the data through an on-site inspection or other appropriate means.
Inferior internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our stock. We will be required to disclose changes made in our internal controls and procedures on a quarterly basis and our management will be required to assess the effectiveness of these controls annually.
Inferior internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our stock. We are required to disclose changes made in our internal controls and procedures on a quarterly basis and our management is required to assess the effectiveness of these controls annually.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeCybersecurity Governance Our Board considers cybersecurity risk as part of its risk oversight function and has delegated to the audit committee oversight of cybersecurity and other information technology risks. The audit committee oversees management’s implementation of our cybersecurity risk management program.
Biggest change“Risk Factors—General Risks—Our information technology systems, or those of any of our CROs, manufacturers, other contractors, consultants, collaborators or potential future collaborators, may fail or suffer security or data privacy breaches or other unauthorized or improper access to, use of, or destruction of our proprietary or confidential data, employee data, or personal data, which could result in additional costs, loss of revenue, significant liabilities, harm to our brand and material disruption of our operations.” Cybersecurity Governance Our Board considers cybersecurity risk as part of its risk oversight function and has delegated to the audit committee oversight of cybersecurity risks including oversight of management’s implementation of our cybersecurity risk management program.
Our cybersecurity risk management program is integrated into our overall enterprise risk management program, and shares common methodologies, reporting channels and governance processes that apply across the enterprise risk management program to other legal, compliance, strategic, operational, and financial risk areas.
Our cybersecurity risk management program is integrated into our overall risk management program, and shares common methodologies, reporting channels and governance processes that apply across the risk management program to other legal, compliance, strategic, operational, and financial risk areas.
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 IT environment.
Our management team takes 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 IT environment.
In addition, management may from time to time directly provide the full Board with briefings on our cyber risk management 128 Table of Contents program, including presentations on cybersecurity topics from our Security Officer, internal security staff or external experts as part of the Board’s continuing education on topics that impact public companies.
In addition, management may from time to time directly provide the full Board with briefings on our cyber risk management program, including presentations on cybersecurity topics from our Security Officer, internal security staff or external experts as part of the Board’s continuing education on topics that impact public companies .
We have not identified risks from known cybersecurity threats, including as a result of any prior cybersecurity incidents, that have materially affected or are reasonably likely to materially affect us, including our 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, that have materially affected us, including our operations, business strategy, results of operations, or financial condition.
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 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.
Our cybersecurity risk management program includes: • risk assessments designed to help identify material cybersecurity risks to our critical systems, information, products, services, and our broader enterprise IT environment; • a security team principally responsible for managing (1) our cybersecurity risk assessment processes, (2) our security controls, and (3) our response to cybersecurity incidents; • the use of external service providers, where appropriate, to assess, test or otherwise assist with aspects of our security controls; • cybersecurity awareness training of our employees, incident response personnel, and senior management; • a cybersecurity incident response plan that includes procedures for responding to cybersecurity incidents; and • a third-party risk management process for service providers, suppliers, and vendors.
Key elements of our cybersecurity risk management program include but are not limited to the following: • risk assessments designed to help identify material risks from cybersecurity threats to our critical systems and information; • a security team principally responsible for managing (1) our cybersecurity risk assessment processes, (2) our security controls, and (3) our response to cybersecurity incidents; • the use of external service providers, where appropriate, to assess, test or otherwise assist with aspects of our security processes; • cybersecurity awareness training of our employees, including incident response personnel, and senior management; • a cybersecurity incident response plan that 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 .
Pursuant to its charter, the audit committee’s oversight of the integrity of our information technology systems and cybersecurity risks includes the review and assessment with management of the adequacy of controls and security for our information technology systems, processes and data, as well as our contingency plans in the event of a breakdown or security breach affecting our information technology systems.
Pursuant to its charter, the audit committee’s oversight of the integrity of our information technology systems and cybersecurity risks includes the review and assessment with management of the adequacy of controls and security for our information technology systems, processes and data, as well as our contingency plans in the event of a breakdown or security breach affecting our information technology systems. 132 Table of Contents As part of its oversight, the audit committee will receive reports from management on our cybersecurity risks including any material cybersecurity incidents, as well as any incidents with lesser impact potential.
Item 1C. Cyb ersecurity. Cybersecurity Risk Management and Strategy We have developed and implemented a cybersecurity risk management program intended to protect the confidentiality, integrity, and availability of our critical systems and information. Our cybersecurity risk management program includes a cybersecurity incident response plan.
Item 1C. Cyb ersecurity. Cybersecurity Risk Management and Strategy We have developed and implemented a cybersecurity risk management program intended to protect the confidentiality, integrity, and availability of our critical systems and information. We designed and assessed our program based on the National Institute of Standards and Technology Cybersecurity Framework (NIST CSF).
Our management team, including our Director of Information Technology and our Security Officer, is responsible for assessing and managing our material risks from cybersecurity threats. The team has primary responsibility for our overall cybersecurity risk management program and supervises both our internal cybersecurity personnel and our retained external cybersecurity consultants.
Our Vice President of Information Technology and Security Officer has primary responsibility for our overall cybersecurity risk management program and supervises both our internal cybersecurity personnel and our retained external cybersecurity consultants.
As part of its oversight, the audit committee will receive reports from management on our cybersecurity risks including any material cybersecurity incidents, as well as any incidents with lesser impact potential. The audit committee reports to the full Board regarding its activities, including those related to cybersecurity.
The audit committee reports to the full Board regarding its activities, including those related to cybersecurity.
Removed
Our management team’s experience includes 30 years of professional experience in all aspects of IT including enterprise software development, enterprise infrastructure design and configuration, development of integration infrastructure for health care systems and financial trading systems and technical support.
Added
We face risks from cybersecurity threats that, if realized, are reasonably likely to materially affect us, including our operations, business strategy, results of operations, or financial condition. See Part I. Item 1A.
Added
Our Vice President of Information Technology and Security Officer, who reports to the Chief Financial Officer is primarily responsible for assessing and managing our material risks from cybersecurity threats.
Added
Our Vice President of Information Technology and Security Officer’s experience includes 15 years of experience across digital and cyber defense, and has most recently led the cyber function for the last six years at two emerging biotechnology companies.

Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−0 removed1 unchanged
Biggest changeWe believe that our facilities are sufficient to meet our current needs and that suitable additional space will be available as and when needed. As of March 15, 2024, 73 of our employees are located at our corporate headquarters. Item 3. Lega l Proceedings. We are not subject to any material legal proceedings. Item 4. Mine Saf ety Disclosures.
Biggest changeWe believe that our facilities are sufficient to meet our current needs and that suitable additional space will be available as and when needed. As of February 15, 2025, 86 of our employees are located at our corporate headquarters. Item 3. Lega l Proceedings. We are not subject to any material legal proceedings. Item 4. Mine Saf ety Disclosures.
Not Applicable. 129 Table of Contents PAR T II
Not Applicable. 133 Table of Contents PAR T II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeUse of Proceeds From Registered Securities On February 6, 2024, in connection with our IPO, we issued and sold 7,333,333 shares of our common stock at a price to the public of $15.00 per share, resulting in gross proceeds to us of approximately $110.0 million and net proceeds to us of approximately $98.9 million, after deducting the underwriting discount of approximately $7.7 million and offering expenses of approximately $3.4 million.
Biggest changeUse of Proceeds From Registered Securities On February 6, 2024, in connection with our IPO, we issued and sold 7,333,333 shares of our common stock at a price to the public of $15.00 per share.
Any such determination will also depend upon our business prospects, results of operations, financial condition, cash requirements and availability and other factors that our board of directors may deem relevant.
Any such determination will also depend upon our business prospects, results of operations, financial condition, cash requirements and availability and other factors that our board of directors may deem relevant. Recent Sales of Unregistered Securities None.
All shares issued and sold were registered pursuant to a registration statement on Form S‑1 (File No. 333-276046), as amended (the “Registration Statement”), which was declared effective by the SEC on February 1, 2024. BofA Securities, Inc., Morgan Stanley & Co. LLC and Evercore Group L.L.C. acted as representatives of the underwriters for the IPO.
All shares issued and sold were registered pursuant to a registration statement on Form S‑1 (File No. 333-276046), as amended (the “Registration Statement”), which was declared effective by the SEC on February 1, 2024.
Purchases of equity securities by the issuer and affiliated purchasers None. Item 6. [Reserved]. 131 Table of Contents
Purchases of equity securities by the issuer and affiliated purchasers None.
Holders As of March 15, 2024, there were approximately 101 holders of record of our common stock. Dividends We have never declared or paid cash dividends on our capital stock.
Holders As of February 15, 2025, we had approximately 53 holders of record of our common shares. This number does not include beneficial owners whose shares were held in street name. Dividends We have never declared or paid cash dividends on our capital stock.
Removed
Recent Sales of Unregistered Securities (a) Issuance of Capital Stock In July 2023, in connection with amendments to our 2022 Convertible Notes, we issued warrants to purchase common stock to lenders thereof for a variable number of shares based on the principal amount of $20.9 million.
Removed
The July 2023 warrants have an exercise price, at the holders’ choice, of (a) $17.9927 per share, (b) the lowest original issue price of shares of preferred stock we issue in our next bona fide private preferred equity financing round, (c) in the event of any convertible note, or similar convertible security financing, the conversion price contemplated by such convertible security, or (d) in the event of an IPO, the per share offering price to the public in such IPO.
Removed
The July 2023 warrants have a contractual term of ten years from issuance.
Removed
In September 2023, in connection with entering into the 2023 Notes, we issued to the lenders thereof warrants to purchase, at the holders’ choice, shares of (i) our Series F Preferred Stock, (ii) the most senior series of our preferred stock that is then authorized, or (iii) our common stock.
Removed
The September 2023 warrants are immediately exercisable for a variable number of shares based on a total fixed dollar value, of $4.2 million, and an exercise price, at the holders’ choice, of (a) $17.9927 per share of common stock or $8.3843 per share of Series F Preferred Stock, (b) the lowest original issue price of any series of preferred stock we issue after the issuance date of the September 2023 warrants, (c) the conversion or exercise price of any convertible debt security, option, or warrant we issue after the issuance date of the September 2023 warrants, or (d) the price at which our common equity was first sold to the public in a firm-commitment underwritten offering or otherwise.
Removed
The September 2023 warrants have a contractual term of ten years from issuance. No underwriters were involved in the foregoing issuances of securities.
Removed
The securities described above were issued to investors in reliance upon the exemption from the registration requirements of the Securities Act, as set forth in Section 4(a)(2) under the Securities Act and Regulation D promulgated thereunder relative to transactions by an issuer not involving any public offering, to the extent an exemption from such registration was required.
Removed
The recipients of securities in the transactions described above represented that they were accredited investors and were acquiring the securities for their own account for investment purposes only and not with a view to, or for sale in connection with, any distribution thereof and that they could bear the risks of the investment and could hold the securities for an indefinite period of time and appropriate legends were affixed to the instruments representing such securities issued in such transactions. 130 Table of Contents (b) Stock Option Grants, Restricted Stock Unit Grants and Option Exercises During the year ended December 31, 2023, we granted under the Fractyl Health, Inc.
Removed
Amended and Restated 2011 Incentive Stock Plan, or the 2011 Plan (the “2011 Plan”) (i) options to purchase up to 1,833,574 shares, at a weighted average exercise price of $9.35 per share, to certain of our employees, officers, directors, consultants and advisors, 101,144 of which were cancelled, expired without being exercised or were otherwise forfeited, and (ii) 604,509 RSUs to certain of our officers and directors, none of which were cancelled or expired, or otherwise forfeited.
Removed
No underwriters were involved in the foregoing issuances of securities.
Removed
The issuances of stock options described in the above paragraph were issued pursuant to written compensatory plans or arrangements with our employees, directors, consultants and advisors, in reliance on the exemption provided by Rule 701 promulgated under the Securities Act, or pursuant to Section 4(a)(2) under the Securities Act, relative to transactions by an issuer not involving any public offering, to the extent an exemption from such registration was required.
Removed
All recipients either received adequate information about us or had access, through employment or other relationships, to such information.
Removed
The IPO commenced on February 1, 2024 and terminated after the sale of all securities registered pursuant to the Registration Statement.
Removed
No offering expenses were paid or are payable, directly or indirectly, to (i) any of our officers or directors or their associates, (ii) any persons owning 10% or more of any class of our equity securities or (iii) any of our affiliates. On March 5, 2024, in connection with the partial exercise by BofA Securities, Inc., Morgan Stanley & Co.
Removed
LLC and Evercore Group L.L.C., representatives of the underwriters for the IPO, of their option to purchase additional shares from us at the IPO price to the public of $15.00 per share, we issued and sold an additional 99,999 shares of our common stock, resulting in additional gross proceeds to us of approximately $1.5 million and additional net proceeds to us of approximately $1.4 million, after deducting the underwriting discount of approximately $0.1 million.
Removed
The aggregate net proceeds from our IPO have been invested in a variety of capital preservation investments, including short-term, investment-grade, interest-bearing instruments and U.S. government securities.

Item 7. Management's Discussion & Analysis

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

58 edited+36 added−64 removed59 unchanged
Biggest changeThe credit agreement, as amended, contains the following financial covenants: (i) a minimum liquidity covenant requiring us to maintain a minimum $10.0 million balance in cash and cash equivalents on deposit in accounts, subject to certain exceptions, and (ii) a financing milestone covenant requiring that (a) we have received proceeds from an equity financing or series of financings (including the net proceeds from the IPO) of at least $40.0 million during the period commencing on September 7, 2023 and ending on or prior to February 15, 2024, and (b) we have received equity financing or series of financings of at least $100.0 million (inclusive of such equity financing or series of financings in the preceding clause (a)) during the period commencing as of September 7, 2023 and prior to June 30, 2024.
Biggest changeThe credit agreement, as amended, contains financial covenants including a minimum liquidity covenant requiring us to maintain a minimum $10.0 million balance in cash and cash equivalents on deposit in accounts, subject to certain exceptions. As of December 31, 2024, we were in compliance with the financial covenants and other terms of the arrangement.
We expect to continue to incur significant losses for the foreseeable future and we expect these losses to increase substantially if and as we: • advance the development of Revita and Rejuva through preclinical and clinical development, and, if approved by the FDA or other comparable foreign regulatory authorities, commercialization; • incur manufacturing costs for our product candidates; • increase our manufacturing capacity; • seek regulatory approvals for any of our product candidates that successfully complete clinical studies; • increase our research and development activities to identify and develop new product candidates; • hire additional personnel; • expand our operational, financial and management systems; • invest in measures to protect and expand our intellectual property; • establish a sales, marketing, medical affairs and distribution infrastructure to commercialize any product candidates for which we may obtain marketing approval and intend to commercialize; 132 Table of Contents • expand our manufacturing and develop our commercialization efforts; and • operate as a public company.
We expect to continue to incur significant losses for the foreseeable future and we expect these losses to increase substantially if and as we: • advance the development of Revita and Rejuva through preclinical and clinical development, and, if approved by the FDA or other comparable foreign regulatory authorities, commercialization; • incur manufacturing costs for our product candidates; • increase our manufacturing capacity; • seek regulatory approvals for any of our product candidates that successfully complete clinical studies; • increase our research and development activities to identify and develop new product candidates; 135 Table of Contents • hire additional personnel; • expand our operational, financial and management systems; • invest in measures to protect and expand our intellectual property; • establish a sales, marketing, medical affairs and distribution infrastructure to commercialize any product candidates for which we may obtain marketing approval and intend to commercialize; • expand our manufacturing and develop our commercialization efforts; and • operate as a public company.
Our funding requirements and timing and amount of our operating expenditures will depend on many factors, including, but not limited to: • the scope, progress, results and costs of research and development for our current and future product candidates, including our current and planned Revita clinical studies, and ongoing preclinical development for our current and future product candidates; • the scope, prioritization and number of our research and development programs; • the scope, costs, timing and outcome of regulatory review of our product candidates; • the costs of securing manufacturing materials for use in preclinical and clinical studies and, for any product candidates for which we receive regulatory approval, use as commercial supply; • our ability to seek, establish and maintain a collaboration to develop our product candidate with a collaborator, including the financial terms and any cost-sharing arrangements of any such collaboration; • the costs and timing of future commercialization activities for any of our product candidates for which we receive regulatory approval; • the amount and timing of revenue, if any, received from commercial sales of any product candidates for which we receive regulatory approvals; • the costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property and proprietary rights and defending any intellectual property-related claims; • the extent to which we may acquire or in-license other products, product candidates, technologies or intellectual property, as well as the terms of any such arrangements; and • the costs of continuing to expand our operations and operating as a public company.
Our funding requirements and timing and amount of our operating expenditures will depend on many factors, including, but not limited to: • the scope, progress, results and costs of research and development for our current and future product candidates, including our current and planned Revita clinical studies, and ongoing preclinical development for our current and future product candidates; • the scope, prioritization and number of our research and development programs; • the scope, costs, timing and outcome of regulatory review of our product candidates; • the costs of securing manufacturing materials for use in preclinical and clinical studies and, for any product candidates for which we receive regulatory approval, use as commercial supply; • our ability to seek, establish and maintain a collaboration to develop our product candidate with a collaborator, including the financial terms and any cost-sharing arrangements of any such collaboration; 143 Table of Contents • the costs and timing of future commercialization activities for any of our product candidates for which we receive regulatory approval; • the amount and timing of revenue, if any, received from commercial sales of any product candidates for which we receive regulatory approvals; • the costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property and proprietary rights and defending any intellectual property-related claims; • the extent to which we may acquire or in-license other products, product candidates, technologies or intellectual property, as well as the terms of any such arrangements; and • the costs of continuing to expand our operations and operating as a public company.
Pursuant to the terms of the Convertible Notes, effective upon the closing of our IPO, all of the outstanding principal plus accrued interest under the 2022 Convertible Notes of $22.1 million automatically converted into 1,841,321 shares of our common stock at a conversion price equal to 80% of the public offering price per share of $15.00, or $12.00. 2023 Notes On September 7, 2023, we entered into a credit agreement, as amended from time to time, with Symbiotic Capital Opportunities Holding, L.P. and Catalio Structured Opportunities AIV I LP, or the Lenders, that provides for term loans in an aggregate principal amount of $45.0 million, or the 2023 Notes, payable in two tranches.
Pursuant to the terms of the Convertible Notes, effective upon the closing of our IPO on February 6, 2024, all of the outstanding principal plus accrued interest under the 2022 Convertible Notes of $22.1 million automatically converted into 1,841,321 shares of our common stock at a conversion price equal to 80% of the public offering price per share of $15.00, or $12.00. 2023 Notes On September 7, 2023, we entered into a credit agreement, as amended from time to time, with Symbiotic Capital Opportunities Holding, L.P. and Catalio Structured Opportunities AIV I LP, or the Lenders, that provides for term loans in an aggregate principal amount of $45.0 million, or the 2023 Notes, payable in two tranches.
We make estimates of our 138 Table of Contents accrued expenses as of each balance sheet date in the consolidated financial statements based on facts and circumstances known to us at that time. We periodically confirm the accuracy of these estimates with the service providers and make adjustments if necessary.
We make estimates of our accrued expenses as of each balance sheet date in the consolidated financial statements based on facts and circumstances 139 Table of Contents known to us at that time. We periodically confirm the accuracy of these estimates with the service providers and make adjustments if necessary.
Research and development expenses also include costs of conducting our ongoing clinical studies, such as expenses associated with our clinical research organization, or CRO, who provides project management and other services related to our Revitalize-1 study, outside service fees paid to third party consultants and contractors related to our product candidate engineering, quality assurance and regulatory approval, contract manufacturing of our product candidate used in clinical studies as well as research expenses related to our Rejuva gene therapy platform.
Research and development expenses also include costs of conducting our ongoing 136 Table of Contents clinical studies, such as expenses associated with our clinical research organization, or CRO, who provides project management and other services related to our REVITALIZE-1 study, outside service fees paid to third party consultants and contractors related to our product candidate engineering, quality assurance and regulatory approval, contract manufacturing of our product candidate used in clinical studies as well as research expenses related to our Rejuva gene therapy platform.
To date, there have not been any material adjustments to our prior estimates of accrued research and development expenses. Results of Operations Years Ended December 31, 2023 and 2022 The following table summarizes our consolidated results of operations for the years ended December 31, 2023 and 2022.
To date, there have not been any material adjustments to our prior estimates of accrued research and development expenses. Results of Operations Years Ended December 31, 2024 and 2023 The following table summarizes our consolidated results of operations for the years ended December 31, 2024 and 2023.
In addition to historical data, this discussion contains forward-looking statements about our business, results of operations, cash flows, financial condition and prospects based on current expectations that involve risks, uncertainties and assumptions. Our actual results could differ materially from such forward-looking statements.
In addition to historical data, this discussion contains forward-looking statements about our business, results of operations, cash flows, financial condition and prospects based on current expectations that involve risks, uncertainties, assumptions, and other important factors. Our actual results could differ materially from such forward-looking statements.
In addition, our product candidates, if approved, may 143 Table of Contents not achieve commercial success. Accordingly, we will need to obtain substantial additional funds to achieve our business objectives. Our expectation with respect to our ability to fund current planned operations is based on estimates that are subject to risks and uncertainties.
In addition, our product candidates, if approved, may not achieve commercial success. Accordingly, we will need to obtain substantial additional funds to achieve our business objectives. Our expectation with respect to our ability to fund current planned operations is based on estimates that are subject to risks and uncertainties.
Other Income (Expenses), Net Other income (expense), net is primarily comprised of interest income, change in fair value of notes payable, change in fair value of warrant liabilities and loss from debt extinguishment. Interest Income Interest income is primarily generated from cash interest earned on our cash, cash equivalents and restricted cash balances.
Other Income (Expenses), Net Other income (expense), net is primarily comprised of interest income, change in fair value of notes payable and change in fair value of warrant liabilities. Interest Income Interest income is primarily generated from cash interest earned on our cash, cash equivalents and restricted cash balances.
The first tranche, with a principal amount of $30.0 million, was extended on September 7, 2023, resulting in net proceeds of approximately $28.4 million. The second tranche, with a principal amount of $15.0 million, may be extended upon our achievement of certain operating and funding milestones as defined in the 2023 Notes, by July 31, 2024.
The first tranche, with a principal amount of $30.0 million, was extended on September 7, 2023, resulting in net proceeds of approximately $28.4 million. The second tranche, with a principal amount of $15.0 million, would have been extended upon our achievement of certain operating and funding milestones as defined in the 2023 Notes, by July 31, 2024.
Our ability to generate product revenue sufficient to achieve profitability will depend heavily on the successful development and commercialization of one or more of our current or future product candidates in the United States. For the years ended December 31, 2023 and 2022, we incurred net losses of $77.1 million and $46.5 million respectively.
Our ability to generate product revenue sufficient to achieve profitability will depend heavily on the successful development and commercialization of one or more of our current or future product candidates in the United States. For the years ended December 31, 2024 and 2023, we incurred net losses of $68.7 million and $77.1 million respectively.
The fair value of the 2023 Notes at December 31, 2023 was estimated using a discounted cash flow model by discounting projected future cash flows associated with the 2023 Notes to their present value.
The fair value of the 2023 Notes as of December 31, 2024 and 2023 was estimated using a discounted cash flow model by discounting projected future cash flows associated with the 2023 Notes to their present value.
The first principal payment date can be extended to September 30, 2027, at our election, if certain financing milestones as defined in the 2023 Notes are achieved on or prior to September 30, 2026.
Under the terms of the credit agreement, the first principal payment date can be extended to September 30, 2027, at our election, if certain financing milestones as defined in the 2023 Notes are achieved on or prior to September 30, 2026.
Business Overview We are a metabolic therapeutics company focused on pioneering new approaches to the treatment of metabolic diseases, including type 2 diabetes and obesity. We aim to develop durable disease-modifying therapies that are designed to provide long-term maintenance of metabolic health without requiring lifetime treatment by targeting the organ-level root causes of T2D and obesity.
Business Overview We are a metabolic therapeutics company focused on breaking the pattern of treatment of metabolic diseases, including obesity and T2D. We aim to develop durable disease-modifying therapies that are designed to provide long-term maintenance of metabolic health without requiring lifetime treatment by targeting the organ-level root causes of obesity and T2D.
As of December 31, 2023, the balance of the 2023 Notes was carried at its fair value of $28.0 million. 142 Table of Contents Funding Requirements We expect our expenses to increase substantially in connection with our ongoing research and development activities, particularly as we advance our product candidates.
As of December 31, 2024, the balance of the 2023 Notes was carried at its fair value of $30.2 million. 142 Table of Contents Funding Requirements and Going Concern We expect our expenses to increase in connection with our ongoing research and development activities, particularly as we advance our product candidates.
We continuously assess our working capital needs, debt and leverage levels, debt maturity schedule, capital expenditure requirements and future investments. As of December 31, 2023, we had approximately $33.2 million of cash and cash equivalents.
We continuously assess our working capital needs, debt and leverage levels, debt maturity schedule, capital expenditure requirements and future investments. As of December 31, 2024, we had approximately $67.5 million in cash and cash equivalents.
The following table reflects our research and development expense, including direct program-specific expense summarized by program, indirect expenses, and personnel-related expenses recognized during each period presented: Year Ended December 31, (in thousands) 2023 2022 Direct program-specific expenses: Revita $ 12,110 $ 12,527 Rejuva 2,289 2,685 Total direct program-specific expenses 14,399 15,212 Indirect expenses 4,654 3,049 Personnel-related expenses (including stock-based compensation) 18,985 16,093 Total research and development expenses $ 38,038 $ 34,354 We expect our research and development expenses will increase significantly in the future as we: • hire and retain additional personnel, including research, clinical, development, manufacturing, quality control, quality assurance, regulatory and scientific personnel; • continue to conduct our ongoing Revitalize-1 pivotal study, including additional clinical studies under our Revita clinical program; • continue to advance the research and development of our discovery and preclinical programs, such as Rejuva; • seek regulatory approval for any product candidates that successfully complete clinical studies; and • develop, establish and validate our commercial-scale current good manufacturing practices and manufacturing process.
The following table reflects our research and development expense, including direct program-specific expense summarized by program, indirect expenses, and personnel-related expenses recognized during each period presented: Year Ended December 31, (in thousands) 2024 2023 Direct program-specific expenses: Revita $ 25,873 $ 12,110 Rejuva 7,220 2,289 Total direct program-specific expenses 33,093 14,399 Indirect expenses 9,038 4,654 Personnel-related expenses (including stock-based compensation) 28,340 18,985 Total research and development expenses $ 70,471 $ 38,038 We expect our research and development expenses will increase in the future as we: • hire and retain additional personnel, including research, clinical, development, manufacturing, quality control, quality assurance, regulatory and scientific personnel; • continue to conduct our ongoing REMAIN-1 pivotal study, follow existing patients under our REVITALIZE-1 study, and initiate a clinical study for Rejuva; • continue to advance the research and development of our discovery preclinical programs; • seek regulatory approval for any product candidates that successfully complete clinical studies; and • develop, establish and validate our commercial-scale current good manufacturing practices and manufacturing process.
Our net loss of $77.1 million was partially offset by non-cash expenses of $31.3 million, including $19.9 million loss from change in fair value of notes payable, $6.8 million loss from change in fair value of warrant liabilities, $4.3 million of stock-based compensation, and $0.3 million of depreciation expense.
Our net loss of $77.1 million was partially offset by non-cash items totaling $31.3 million, primarily consisting of a $19.9 million loss from change in fair value of the 2022 Convertible Notes payable, $4.3 million in stock-based compensation, a $6.8 million loss from change in fair value of warrant liabilities and $0.3 million of depreciation.
To date, we have generated insignificant revenue in Germany since the limited pilot commercial launch of Revita in the first quarter of 2023.
Components of our Consolidated Results of Operations Revenue To date, we have generated revenue in Germany since the limited pilot commercial launch of Revita in the first quarter of 2023.
Cash used in operating activities of $46.2 million for the year ended December 31, 2022 was primarily driven by personnel related expenses, including salaries, bonuses, and other compensatory benefits, spending on our ongoing clinical 144 Table of Contents studies and product engineering as well as professional services related to our corporate and general administrative activities.
Cash used in operating activities of $42.8 million for the year ended December 31, 2023 was primarily driven by spending on our ongoing clinical study, Rejuva-related research activities, professional services related to our corporate and general administrative activities, as well as personnel-related expenses, including salaries, bonuses, and other compensatory benefits.
Section 107(b) of the JOBS Act provides that an emerging growth company can leverage the extended transition period, provided in Section 102(b) of the JOBS Act, for complying with new or revised accounting standards.
JOBS Act Accounting Election We are an “emerging growth company” within the meaning of the Jumpstart Our Business Act of 2012, or JOBS Act. Section 107(b) of the JOBS Act provides that an emerging growth company can leverage the extended transition period, provided in Section 102(b) of the JOBS Act, for complying with new or revised accounting standards.
We anticipate that our selling, general and administrative expenses will increase significantly in the future as we: • hire and retain additional selling, general and administrative personnel to support the expected growth in our research and development activities and the preclinical and clinical development of our product candidates; • continue to expand our commercial and administrative function to support the growth of our Revita commercialization in Germany as well as potential future launches in other geographic locations; • incur additional commercialization expenses prior to any regulatory approval of our product candidates; • pursue payor coverage and reimbursement for our current and future product candidates; • maintain, expand and protect our intellectual property portfolio; and • incur increased expenses associated with operating as a public company, including increased costs of accounting, audit, legal, regulatory and tax-related services, director and officer insurance premiums, and investor and public relations costs.
Selling, general and administrative expenses also include costs incurred for outside services associated with such functions, including costs associated with obtaining and maintaining our patent portfolio and professional fees for accounting, auditing, tax, legal services and other consulting expenses. 137 Table of Contents We anticipate that our selling, general and administrative expenses will increase in the future as we: • hire and retain additional selling, general and administrative personnel to support the expected growth in our research and development activities and the preclinical and clinical development of our product candidates; • expand our commercial and administrative function to support future product launches and company growth; • pursue payor coverage and reimbursement for our current and future product candidates; • maintain, expand and protect our intellectual property portfolio; and • incur increased expenses associated with operating as a public company, including increased costs of accounting, audit, legal, regulatory and tax-related services, director and officer insurance premiums, and investor and public relations costs.
Cost of goods sold primarily consist of material costs, direct labor and manufacturing overhead costs. 133 Table of Contents Operating Expenses Research and Development Expenses Research and development expenses primarily consist of personnel-related expenses, including salaries, bonuses, fringe benefits and other compensation-related costs, including stock-based compensation expense, for employees engaged in research and development functions.
Operating Expenses Research and Development Expenses Research and development expenses primarily consist of personnel-related expenses, including salaries, bonuses, fringe benefits and other compensation-related costs, including stock-based compensation expense, for employees engaged in research and development functions.
Personnel-related expenses, including salaries, bonuses and other compensatory benefits, increased by $1.7 million as a result of the expansion of our workforce and our effort to bring 139 Table of Contents certain clinical and scientific resources in house. In addition, stock-based compensation increased by $1.2 million due to new option grants issued to new hires and existing employees.
Personnel-related expenses, including salaries, bonuses and other compensatory benefits, increased by $5.4 million as a result of the expansion of our workforce and our effort to bring certain preclinical, clinical and scientific research resources in house. In addition, stock-based compensation increased by $4.0 million primarily due to new option and RSUs issued.
We do not have any products approved for sale in the United States. To date, we have financed our operations primarily through the proceeds from sales of our convertible preferred stock, sales of our common stock in our initial public offering and debt financing. We have incurred significant operating losses since our inception.
To date, we have financed our operations primarily through the proceeds from sales of our convertible preferred stock, sales of our common stock in our IPO and debt financing. We have incurred significant operating losses since our inception.
We have also elected to rely on other exemptions provided by the JOBS Act, including without limitation, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002. 145 Table of Contents We would cease to be an emerging growth company on the date that is the earliest of (1) the last day of the fiscal year in which we have total annual gross revenues of $1.235 billion or more; (2) the last day of our fiscal year following the fifth anniversary of the date of the completion of our IPO; (3) the date on which we have issued more than $1.0 billion in non-convertible debt during the previous three years or (4) the date on which we are deemed to be a large accelerated filer under the rules of the SEC.
We would cease to be an emerging growth company on the date that is the earliest of (1) the last day of the fiscal year in which we have total annual gross revenues of $1.235 billion or more; (2) the last day of our fiscal year following the fifth anniversary of the date of the completion of our IPO; (3) the date on which we have issued more than $1.0 billion in non-convertible debt during the previous three years or (4) the date on which we are deemed to be a large accelerated filer under the rules of the SEC.
All remaining outstanding principal balance, accrued interest and Exit Fee on the 2023 Notes shall be due and payable on the maturity date of September 7, 2028.
The aggregate Exit Fee of the 2023 Notes should equal to 6.0% of the total commitment of $45.0 million plus all accrued PIK interest. All remaining outstanding principal balance, accrued interest and Exit Fee on the 2023 Notes shall be due and payable on the maturity date of September 7, 2028.
We cannot predict if, when or to what extent we will generate revenue from our product candidates. We may never succeed in obtaining regulatory approval for any of our product candidates in the United States. Cost of Goods Sold We currently manage the final assembly and testing of Revita in the manufacturing space at our headquarter in Burlington, Massachusetts.
We cannot predict if, when or to what extent we will generate revenue from our product candidates. We may never succeed in obtaining regulatory approval for any of our product candidates in the United States.
As of December 31, 2023, we had an accumulated deficit of $346.6 million.
As of December 31, 2024, we had an accumulated deficit of $415.3 million.
We contract with third-party manufacturers to produce certain key parts of our single-use devices and consoles.
We contract with third-party manufacturers to produce certain key parts of our single-use devices and consoles. Cost of goods sold primarily consist of material costs, direct labor and manufacturing overhead costs.
Determination of the Fair Value of Notes Payable We elected the fair value option to account for our 2022 Convertible Notes and 2023 Notes, and remeasure the fair value at each reporting date. The fair value of the 2022 Convertible Notes was estimated using a Monte Carlo simulation model, which incorporates significant assumptions and estimates.
Prior to our IPO, the fair value of the 2022 Convertible Notes was estimated using a Monte Carlo simulation model, which incorporates significant assumptions and estimates.
Critical Accounting Policies and Significant Estimates Our management’s discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States, or GAAP.
In connection with our IPO in February 2024, warrants to purchase our convertible preferred stock converted into warrants to purchase our common stock and related liabilities were reclassified to additional paid-in capital. 138 Table of Contents Critical Accounting Policies and Significant Estimates Our management’s discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States, or GAAP.
The loss from increase in fair value of the 2022 Convertible Notes during the year ended December 31, 2023 was primarily driven by a reduction in the remaining estimated time to assumed conversion events and the new debt terms associated with the reissuance of the 2022 Convertible Notes along with the concurrent issuance of warrants to purchase common stock.
We recognized a loss of $19.4 million from the increase in fair value of the 2022 Convertible Notes during the year ended December 31, 2023, which was primarily driven by the consideration of known and knowable terms of the subsequent amendments to the convertible notes along with the concurrent issuance of warrants to purchase common stock to the lenders.
Financing Activities Cash provided by financing activities of $27.4 million for the year ended December 31, 2023 was primarily driven by the $28.4 million capital raised from the issuance of the 2023 Notes, net of issuance costs, partially offset by an additional issuance costs of $0.4 million paid to third-party service providers. including legal fees, offering costs of $0.6 million related to the IPO effort in 2023 and a $0.1 million partial repayment of the 2022 Convertible Notes.
Cash provided by financing activities of $27.4 million for the year ended December 31, 2023 was primarily driven by the $28.4 million capital raised from the issuance of the 2023 Notes, net of issuance costs, partially offset by additional issuance costs of $0.4 million paid to third party service providers such as legal fees, offering costs of $0.6 million related to the IPO effort in 2023. 145 Table of Contents Contractual Obligations and Commitments We have entered into arrangements that contractually obligate us to make payments that will affect our liquidity and cash flows in future periods.
We recognized a loss of $6.8 million from the increase in fair value of warrant liabilities during the year ended December 31, 2023, mainly related to the warrants issued in connection with the reissuance of the 2022 Convertible Notes in July 2023.
We recognized a loss of $6.8 million from the change in fair value of warrant liabilities during the year ended December 31, 2023 mainly related to the July 2023 Warrants, which was due to an increase in estimated underlying equity value due to reduced remaining estimated time to assumed conversion events.
Our lease commitments reflect payments due for two operating leases, including corporate office space in Lexington, MA that will expire in April 2024, and new corporate office and laboratory space in Burlington, MA that will expire in June 2034.
As of December 31, 2024, our lease commitments reflect payments due for our operating and finance leases. The operating leases include our corporate office and laboratory space in Burlington, MA that will expire in June 2034. The finance leases represent laboratory equipment used in our Rejuva preclinical activities.
In addition, upon any principal payment, we are required to make an additional payment to the Lenders a 6.0% fee, or the Exit Fee, over the principal and accrued PIK interest paid. The aggregate Exit Fee of the 2023 Notes should equal to 6.0% of the total commitment of $45.0 million plus all accrued PIK interest.
During 2024, we achieved the defined milestones and elected to extend the first principal payment date to September 30, 2027. In addition, upon any principal payment, we are required to make an additional payment to the Lenders of a 6.0% fee, or the Exit Fee, over the principal and accrued PIK interest paid.
Cash Flows Years Ended December 31, 2023 and 2022 The net change in cash, cash equivalents and restricted cash for the years ended December 31, 2023 and 2022 was as follows: Year Ended December 31, (in thousands) 2023 2022 Net cash used in operating activities $ (42,823 ) $ (46,243 ) Net cash used in investing activities (359 ) (56 ) Net cash provided by financing activities 27,437 4,350 Net decrease in cash, cash equivalents and restricted cash $ (15,745 ) $ (41,949 ) Operating Activities Cash used in operating activities of $42.8 million for the year ended December 31, 2023 was primarily driven by personnel-related expenses, including salaries, bonuses, and other compensatory benefits, and spending on our ongoing Revitalize-1 study, Rejuva-related research activities, as well as professional services related to our corporate and general administrative activities.
If we are unable to raise such capital when needed, or on acceptable terms, we may be forced to delay, reduce and/or eliminate one or more of our research and development programs or future commercialization efforts. 144 Table of Contents Cash Flows Years Ended December 31, 2024 and 2023 The net change in cash, cash equivalents and restricted cash for the years ended December 31, 2024 and 2023 was as follows: Year Ended December 31, (in thousands) 2024 2023 Net cash used in operating activities $ (65,521 ) $ (42,823 ) Net cash used in investing activities (1,765 ) (359 ) Net cash provided by financing activities 101,226 27,437 Net increase (decrease) in cash, cash equivalents and restricted cash $ 33,940 $ (15,745 ) Operating Activities Cash used in operating activities of $65.5 million for the year ended December 31, 2024 was primarily driven by spending on our ongoing Revita and Rejuva clinical and preclinical activities, professional services related to our corporate and general administrative activities, as well as personnel-related expenses, including salaries, bonuses, and other compensatory benefits.
On January 3, 2022, we repaid in full the Term Loans under the Loan and Security Agreement by making a lump-sum payment to SVB for a total amount of $16.1 million, which consisted of the outstanding principal balance of the Term Loans of $15.0 million, the Final Payment of $0.9 million, the prepayment premium of $0.1 million and accrued interest of $0.1 million. 2022 Convertible Notes On January 11, 2022, we entered into a financing arrangement with certain lenders in which we issued the 2022 Convertible Notes in exchange for an aggregate principal amount of $20.1 million.
Loan and Security Agreements 2022 Convertible Notes On January 11, 2022, we entered into a financing arrangement with certain lenders in which we issued the 2022 Convertible Notes in exchange for an aggregate principal amount of $20.1 million.
Accordingly, these are the policies we believe are the most critical to aid in fully understanding and evaluating our audited consolidated financial condition and results of operations. Stock-Based Compensation We measure all stock options and other stock-based awards based on their fair value on the date of the grant.
Accordingly, these are the policies we believe are the most critical to aid in fully understanding and evaluating our audited consolidated financial condition and results of operations. Determination of the Fair Value of Notes Payable We elected the fair value option to account for our 2022 Convertible Notes and 2023 Notes, and remeasure the fair value at each reporting date.
Cash used in operating activities was also impacted by changes in working capital and other assets and liabilities of $1.2 million. Investing Activities Cash used in investing activities remained relatively flat for the years ended December 31, 2023 and 2022 and were related to the purchase of property and equipment.
Investing Activities Cash used in investing activities for the years ended December 31, 2024 and 2023 were related to the purchase of property and equipment.
We will continue to recognize changes in fair value of the warrant liabilities until the warrants are exercised, expire or qualify for equity 135 Table of Contents classification. In connection with our IPO in February 2024, warrants to purchase our convertible preferred stock converted into warrants to purchase our common stock and related liabilities were reclassified to additional paid-in capital.
We will continue to recognize changes in fair value of the warrant liabilities until the warrants are exercised, expire or qualify for equity classification.
Prior to 2023, we had no revenue or costs of goods sold. Research and Development Expenses Research and development expenses increased by $3.7 million, or 10.7%, during the year ended December 31, 2023 as compared to the year ended December 31, 2022, primarily due to increased personnel-related expenses as well as clinical, medical affairs and facilities expenditures.
Research and Development Expenses Research and development expenses increased by $32.4 million, or 85.3%, during the year ended December 31, 2024 as compared to the year ended December 31, 2023, primarily due to the advancements made in our Revita and Rejuva programs, increased facilities expenditures, as well as personnel-related expenses.
The discount rate used in the model is based on observable market yields for similarly rated instruments, adjusted for any specific risks inherent in the 2023 Notes. Determination of the Fair Value of Warrant Liabilities We remeasure the fair value of our warrant liabilities at the end of each reporting period.
The discount rate used in the model is based on observable market yields for similarly rated instruments, adjusted for any specific risks inherent in the 2023 Notes. Accrued Research and Development Expenses As part of the process of preparing our consolidated financial statements, we are required to estimate our accrued research and development expenses.
We recognized a loss of $19.4 million from the increase in fair value of the 2022 Convertible Notes during the year ended December 31, 2023 compared to a gain of $2.3 million from the decrease in fair value of the 2022 Convertible Notes during the year ended December 31, 2022, resulting in a total fluctuation of $21.7 million between the two comparative periods.
The gain from the decrease in fair value of the 2022 Convertible Notes was offset by a loss of $5.2 million from the increase in fair value of the 2023 Notes during the year ended December 31, 2024 due to a combination of the fluctuation of market interest rate and the accrual of the interest.
For additional information on our leases and timing of future payments, please see Note 7, Leases, to the consolidated financial statements included in this Form 10-K. We have also entered into contracts in the normal course of business with various third parties for clinical trials, preclinical research studies, manufacturing, and other services and products for operating purposes.
We have also entered into contracts in the normal course of business with various third parties for clinical trials, preclinical research studies, manufacturing, and other services and products for operating purposes. These contracts do not contain any minimum purchase commitments and provide for termination upon notice.
These contracts do not contain any minimum purchase commitments and provide for termination upon notice. Payments due upon cancellation generally consist only of payments for services provided or expenses incurred, including non-cancellable obligations of our service providers, up to the date of cancellation.
Payments due upon cancellation generally consist only of payments for services provided or expenses incurred, including non-cancellable obligations of our service providers, up to the date of cancellation. For example, on April 3, 2024, we entered into a Master Services Agreement and two Scopes of Work with Forge Biologics, Inc.
Year Ended December 31, Change (in thousands) 2023 2022 Amount % Revenue $ 120 $ — $ 120 100.0 % Cost of goods sold 77 — 77 100.0 % Gross profit 43 — 43 100.0 % Operating expenses: Research and development 38,038 34,354 3,684 10.7 % Selling, general and administrative 12,841 15,031 (2,190 ) (14.6 %) Total operating expenses 50,879 49,385 1,494 3.0 % Loss from operations (50,836 ) (49,385 ) (1,451 ) 2.9 % Other income (expense), net (26,255 ) 2,932 (29,187 ) (995.5 %) Net loss and comprehensive loss $ (77,091 ) $ (46,453 ) $ (30,638 ) 66.0 % Revenue and Cost of Goods Sold We commenced commercial activities in Germany in the first quarter of 2023.
Year Ended December 31, Change (in thousands) 2024 2023 Amount % Revenue $ 93 $ 120 $ (27 ) (22.5 %) Cost of goods sold 50 77 (27 ) (35.1 %) Gross profit 43 43 — 0.0 % Operating expenses: Research and development 70,471 38,038 32,433 85.3 % Selling, general and administrative 23,103 12,841 10,262 79.9 % Total operating expenses 93,574 50,879 42,695 83.9 % Loss from operations (93,531 ) (50,836 ) (42,695 ) 84.0 % Other income (expense), net 24,837 (26,255 ) 51,092 (194.6 %) Net loss and comprehensive loss $ (68,694 ) $ (77,091 ) $ 8,397 (10.9 %) Revenue and Cost of Goods Sold Revenue and cost of goods sold during the years ended December 31, 2024 and 2023 was related to our pilot commercial launch in Germany.
Recent Accounting Pronouncements See Note 2 to our audited consolidated financial statements for the years ended December 31, 2023 and 2022 included elsewhere in this Annual Report on Form 10-K for more information. JOBS Act Accounting Election We are an “emerging growth company” within the meaning of the Jumpstart Our Business Act of 2012, or JOBS Act.
The Master Services Agreement includes customary terms relating to, among others, indemnification, intellectual property protection, confidentiality, payments, remedies, terminations and warranties. Recent Accounting Pronouncements See Note 2— “Significant Accounting Policies” to our audited consolidated financial statements for the years ended December 31, 2024 and 2023 included elsewhere in this Annual Report on Form 10-K for more information.
Our net loss of $46.5 million was partially offset by non-cash items totaling $1.5 million, including $0.5 million of depreciation expense, $0.3 million loss on debt extinguishment, $3.1 million of stock-based compensation, net by $0.1 million gain from change in fair value of convertible preferred stock warrant liability, and $2.3 million gain from change in fair value of convertible notes payable.
Cash used in operating activities resulted primarily from our net loss of $68.7 million adjusted for net non-cash income of $6.4 million, primarily consisting of a $17.9 million gain from change in fair value of warrant liabilities and $5.8 million gain from change in fair value of notes payable (non-cash portion), offset by $14.4 million in stock-based compensation, a $1.9 million non-cash operating lease expense, a $0.7 million depreciation and a $0.3 million non-cash interest expense.
Cash provided by financing activities of $4.4 million for the year ended December 31, 2022 was primarily driven by $20.1 million capital raised from the issuance of the 2022 Convertible Notes, offset by $16.0 million repayment of the Term Loans. We also received proceeds of $0.3 million from stock option exercises.
Financing Activities Cash provided by financing activities of $101.2 million for the year ended December 31, 2024 was primarily driven by the $103.7 million capital raised from the IPO, net of discounts and commissions, partially offset by $2.9 million payments of public offering costs made to third-party service providers. We also received proceeds of $0.6 million from stock option exercises.
The gain from decrease in fair value of the 2022 Convertible Notes during the year ended December 31, 2022 was primarily driven by adverse external market conditions which resulted in declining estimated equity value, reduced probability-weighting of the IPO scenario and an increase in the estimated time to an IPO event.
We recognized a gain of $8.0 million from the decrease in fair value of 2022 Convertible Notes during the year ended December 31, 2024, which was primarily driven by the change in our common stock value after the IPO.
Based on our current business plans, we believe that the aggregate net proceeds from our IPO, together with our existing cash and cash equivalents, will be sufficient to fund our operating expenses and capital expenditures requirements through 2025.
We have a history of operating losses and negative operating cash flows. As of December 31, 2024, we had an accumulated deficit of $415.3 million. Based on our current business plans, we believe that our existing cash and cash equivalents, will be sufficient to fund our operating expenses and capital expenditures requirements into 2026, through multiple key clinical milestones.
Liquidity and Capital Resources We believe that we maintain a level of liquidity sufficient to allow us to meet our cash needs in the short-term. Over the long-term, we manage our cash and capital structure to maximize shareholder return, maintain its financial condition and maintain flexibility for future strategic initiatives.
In addition, interest income earned from our cash deposits increased by $2.9 million mainly due to higher deposit balances upon the completion of our IPO. 141 Table of Contents Liquidity and Capital Resources We manage our cash and capital structure to maximize shareholder return, maintain its financial condition and maintain flexibility for future strategic initiatives.
In the United States, we do not have any products approved for sale and have not generated any revenue from any sources, including product sales. Revita is approved in Europe under a CE Mark and has received reimbursement authorization through NUB in Germany for the treatment of T2D.
In the United States, we do not have any products approved for sale and have not generated any revenue from any sources, including product sales. Our product candidates, if approved, may not achieve commercial success. In addition, we expect to incur additional costs associated with operating as a public company.
These decreases were partially offset by an increase of $2.0 million in debt issuance costs. Other Income (Expense), Net Other income (expense), net changed by $29.2 million from net other income of $2.9 million during the year ended December 31, 2022 to net other expenses of $26.3 million during the year ended December 31, 2023.
These increases were partially offset by $1.9 million in debt issuance costs associated with the re-issuance of the 2022 Convertible Notes and issuance of the 2023 Notes that occurred in the third quarter of 2023, while there were no debt issuance costs during the year ended December 31, 2024.
Medical affairs expenses increased by $1.2 million, primarily driven by activities in connection with collaborative medical research. Clinical study expenses increased by $1.0 million due to the progress made in Revitalize-1 upon the approval of a new study protocol.
Revita-related expenses increased by $13.8 million, primarily due to a $12.5 million increase in clinical expenses due to progress made in our REMAIN-1 and REVITALIZE-1 studies, a $0.8 million increase in device development effort and a $0.3 million increase in medical 140 Table of Contents research spending.
Removed
The Revita DMR System, or Revita, is approved in Europe under a Conformitè Europëenne, or CE, Mark and has received reimbursement authorization through NUB in Germany for the treatment of T2D. In the first half of 2023, we initiated a limited commercial pilot in a single center in Dusseldorf, Germany.
Added
We are evaluating Revita in a two-part, parallel cohort, randomized, open-label clinical study, the REMAIN-1 pivotal study, for weight maintenance in patients with obesity who have lost at least 15% of their total body weight on GLP-1 therapy and wish to discontinue their GLP-1 without weight regain. The open label cohort is called the REVEAL-1 cohort.
Removed
Recent Developments IPO We completed our IPO on February 6, 2024, in which we issued and sold 7,333,333 shares of our common stock at a price to the public of $15.00 per share, resulting in gross proceeds to us of approximately $110.0 million and net proceeds to us of approximately $98.9 million, after deducting the underwriting discounts and commissions of approximately $7.7 million and offering expenses of approximately $3.4 million.
Added
In addition, we had been enrolling our pivotal REVITALIZE-1 pivotal study in patients with inadequately controlled T2D despite being on at least one GLA. On January 31, 2025, we announced a Strategic Reprioritization pursuant to which we intend to prioritize our REMAIN-1 pivotal study and advance Rejuva.
Removed
On March 5, 2024, we issued an additional 99,999 shares of our common stock pursuant to the partial exercise of the underwriters’ option to purchase additional shares from us at the IPO price to the public of $15.00 per share, resulting in additional net proceeds of approximately $1.4 million, after deducting the underwriting discounts and commissions of approximately $0.1 million.
Added
We have paused investment in our Revita programs for T2D consisting of the REVITALIZE-1 pivotal study and the Germany Real-World Registry study. For the REVITALIZE-1 pivotal study, patients with inadequately controlled T2D, who are on at least one GLA and previously randomized, will continue to be followed per protocol to 48 weeks.
Removed
Components of our Consolidated Results of Operations Revenue We generate revenue from sales and leasing of Revita in Germany, which is approved in Europe under a CE Mark and has received reimbursement authorization through NUB in Germany for the treatment of T2D.
Added
Patients randomized to the sham arm will be offered an opportunity to receive the Revita DMR procedure (crossover) once unblinded. Patients who crossover and undergo the Revita DMR procedure will be followed per protocol.
Removed
Selling, general and administrative expenses 134 Table of Contents also include costs incurred for outside services associated with such functions, including costs associated with obtaining and maintaining our patent portfolio and professional fees for accounting, auditing, tax, legal services and other consulting expenses.
Added
We intend to follow the existing patients in the Germany Real-World Registry study per protocol and continue to report on clinical, health economic, and patient-relevant outcomes from this study on an ongoing basis. We do not have any products approved for sale in the United States.
Removed
In connection with our IPO in February 2024, the 2022 Convertible Notes converted into common stock and the liability was reclassified to common stock and additional paid-in capital.
Added
On January 31, 2025, we approved a Strategic Reprioritization, in which we have paused investment in our Revita programs for T2D, which consists of the REVITALIZE-1 study and the Germany Real World Registry study. Cost of Goods Sold We currently manage the final assembly and testing of Revita in the manufacturing space at our headquarters in Burlington, Massachusetts.
Removed
Loss From Debt Extinguishment Loss from extinguishment of debt represents loss from the early repayment of the Term Loans in January 2022.
Added
Upon the closing of the IPO on February 6, 2024, all of the outstanding principal plus accrued interest under the 2022 Convertible Notes were converted into our common stock. The 2022 Convertible Notes were marked to market to its fair value as of the time of the conversion before being reclassified to equity.
Removed
Those awards typically have a graded vesting schedule and compensation expense for awards with only service conditions are recognized on a straight-line basis over the requisite service period, which is generally the vesting period of the respective award.
Added
Upon the closing of the IPO on February 6, 2024, all of the outstanding principal plus accrued interest under the 2022 Convertible Notes were converted into our common stock. The 2022 Convertible Notes were marked to market to its fair value as of the time of the conversion before being reclassified to equity.
Removed
Compensation costs recognized for performance-based awards reflect the number of awards that are expected to vest during the requisite service period and are adjusted to reflect those awards that ultimately vest upon final determination of the performance conditions achieved.
Added
The fair value of the 2022 Convertible Notes at the time of the conversion was determined by the actual number of common stock being converted into and the trading price of our common stock on the Nasdaq Global Market as of the conversion date.
Removed
Historical performance patterns, to the extent that they are indicative to the performance conditions to be achieved, are used in developing estimates for the probability of attaining these performance conditions.
Added
Rejuva-related expenditures increased by $4.9 million due to continued development in our Rejuva program, primarily due to a $3.9 million increase in gene therapy research expenses and a $0.9 million increase in device development effort. In addition, allocated facilities expenses increased by $4.2 million as our new office and laboratory space lease in Burlington, MA, commenced on November 1, 2023.
Removed
We use the Black-Scholes option pricing model, which incorporates assumptions and estimates, to measure the fair value of its option awards on the date of grant of each stock option award. We determined the assumptions for the Black-Scholes option-pricing model as discussed below. Each of these inputs is subjective and generally requires significant judgment to determine.
Added
Selling, General and Administrative Expenses Selling, general and administrative expenses increased by $10.3 million, or 79.9%, during the year ended December 31, 2024 as compared to the year ended December 31, 2023, primarily due to increased professional services, insurance and facilities expenditures, as well as personnel-related expenses, partially offset by the absence of debt issuance costs in the current period.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

1 edited+0 added−1 removed5 unchanged
Biggest changeWe do not believe that an immediate 10% increase or decrease in the Wall Street Journal prime rate would have a material effect on our operating results.
Biggest changeWe do not believe that an immediate 10% increase or decrease in the Wall Street Journal prime rate would have a material effect on our operating results. 146 Table of Contents Credit Risk As of December 31, 2024, the majority of our cash and cash equivalents were maintained at various financial institutions in the United States, and our current deposits are in excess of insured limits.
Removed
Credit Risk As of December 31, 2023, the majority of our cash and cash equivalents were maintained at various financial institutions in the United States, and our current deposits are in excess of insured limits.