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

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Paragraph-level year-over-year comparison of Phathom Pharmaceuticals, 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.

+541 added−598 removedSource: 10-K (2024-12-31) vs 10-K (2024-03-07)

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

541 paragraphs added · 598 removed · 432 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

169 edited+36 added−68 removed366 unchanged
Biggest changeIn PHALCON-NERD-301, a Phase 3 study evaluating the efficacy and safety of vonoprazan for the daily treatment of adults with Non-Erosive GERD, both doses of vonoprazan (10 mg and 20 mg) met the primary endpoint evaluating the mean percentage of 24-hour heartburn-free days through week four by demonstrating statistical significance versus placebo (mean 45% vonoprazan 10 mg, 44% vonoprazan 20 mg, compared to 28% for placebo; p In PHALCON-NERD-201, a Phase 2 study evaluating three doses of vonoprazan (10 mg, 20 mg, and 40 mg) as an as needed therapy for relief of episodic heartburn in subjects with Non-Erosive GERD, all three vonoprazan doses successfully met the primary endpoint evaluating the percentage of heartburn episodes completely relieved within three hours with relief sustained for over 24 hours and were statistically significant (p 7 Based on the positive PHALCON-NERD-201 results, we expect to commence a Phase 3 trial in 2024, our fourth Phase 3 trial for vonoprazan, evaluating VOQUEZNA as an “as needed” treatment for episodic heartburn relief in patients with symptomatic Non-Erosive GERD, a dosing regimen not approved in the United States for PPIs.
Biggest changeIn PHALCON-NERD-301, a Phase 3 study evaluating the efficacy and safety of vonoprazan for the daily treatment of adults with Non-Erosive GERD, both doses of vonoprazan (10 mg and 20 mg) met the primary endpoint evaluating the mean percentage of 24-hour heartburn-free days through week four by demonstrating statistical significance versus placebo (mean 45% vonoprazan 10 mg, 44% vonoprazan 20 mg, compared to 28% for placebo; p 7 and 61% for vonoprazan 20 mg.
H. pylori . The FDA’s approval of VOQUEZNA TRIPLE PAK and VOQUEZNA DUAL PAK was based on the results from PHALCON-HP, our Phase 3 clinical trial in the United States and Europe studying two vonoprazan-based treatment regimens for the eradication of H. pylori infection, both of which successfully met their primary and all secondary endpoints.
The FDA’s approval of VOQUEZNA TRIPLE PAK and VOQUEZNA DUAL PAK was based on the results from PHALCON-HP, our Phase 3 clinical trial in the United States and Europe studying two vonoprazan-based treatment regimens for the eradication of H. pylori infection, both of which successfully met their primary and all secondary endpoints.
In addition, vonoprazan is primarily metabolized by CYP3A4/5, an enzyme which has less genetic variability than CYP2C19, and may exhibit more consistent activity than PPIs across U.S. and European populations. 13 The mechanistic and pharmacologic differences of PPIs and vonoprazan are summarized in the table below: Vonoprazan Pharmacodynamics vs.
In addition, vonoprazan is primarily metabolized by CYP3A4/5, an enzyme which has less genetic variability than CYP2C19, and may exhibit more consistent activity than PPIs across U.S. and European populations. The mechanistic and pharmacologic differences of PPIs and vonoprazan are summarized in the table below: 13 Vonoprazan Pharmacodynamics vs.
The graph below shows the percentage of subjects without heartburn over the entire 24-week course of the study in the intent-to-treat subject set, which represents subjects who received at least one dose of study medication during randomized treatment. Vonoprazan was generally well tolerated in the 20-week extension period.
The graph below shows the percentage of subjects without heartburn over the entire 24-week course of the study in the intent-to-treat subject set, which represents subjects who received at least one dose of study medication during randomized treatment. 20 Vonoprazan was generally well tolerated in the 20-week extension period.
The objective of the PHALCON-HP trial was to compare eradication rates in all treated subjects as well as in two pre-identified subgroups of patients: those patients with clarithromycin resistant strains of H. pylori, and those patients who did not have clarithromycin or amoxicillin resistant strains of H. pylori.
The objective of the PHALCON-HP trial was to compare eradication rates in all treated subjects as well as in two pre-identified subgroups of patients: those patients with clarithromycin resistant strains of H. pylori, and those patients who did not have clarithromycin or amoxicillin resistant strains of H. pylori.
The overall adverse events for all vonoprazan arms were comparable to placebo and consistent with what was reported in previous studies. The most commonly reported adverse event was nausea (2.3% vonoprazan 10 mg, 3.1% vonoprazan 20 mg, 0.4% placebo) with no other events reported above 3.0% in either vonoprazan dose arm.
The overall adverse events for all vonoprazan arms were comparable to placebo and consistent with what was reported in previous studies. The most commonly reported adverse event was nausea (2.3% vonoprazan 10 mg, 3.1% vonoprazan 20 mg, 0.4% placebo) with no other events reported above 3.0% in either vonoprazan dose arm.
We believe that an ODT formulation represents a meaningful commercial opportunity for patients with difficulty swallowing in adults as well as will provide a more desirable dosing administration options for children. It is estimated peak U.S. sales of the lansoprazole ODT formulation were over $450 million.
We believe that an ODT formulation represents a meaningful commercial opportunity for patients with difficulty swallowing in adults as well as will provide more desirable dosing administration options for children. It is estimated peak U.S. sales of the lansoprazole ODT formulation were over $450 million.
We agreed to make milestone payments to Takeda upon achieving certain tiered aggregate annual net sales of licensed products in the United States, Europe and Canada up a total maximum milestone amount of $250 million.
We agreed to make milestone payments to Takeda upon achieving certain tiered aggregate annual net sales of licensed products in the United States, Europe and Canada up to a total maximum milestone amount of $250 million.
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 other non-physician practitioners (physician assistants, nurse practitioners, clinical nurse specialists, anesthesiologist assistants, certified registered nurse anesthetists, anesthesiology assistants and certified nurse midwives), and teaching hospitals, and applicable manufacturers and applicable group purchasing organizations to report annually to CMS ownership and investment interests held by physicians and their immediate family members.
The federal Physician Payments Sunshine Act requires certain manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program, with specific exceptions, to report annually to 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 other non-physician practitioners (physician assistants, nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists, anesthesiology assistants and certified nurse midwives), and teaching hospitals, and applicable manufacturers and applicable group purchasing organizations to report annually to CMS ownership and investment interests held by physicians and their immediate family members.
These studies test for safety, dosage tolerance, absorption, metabolism, distribution and excretion and, if possible, to gain an early indication of its effectiveness. • Phase 2 : The product candidate is administered to a limited patient population with a specified disease or condition to evaluate the preliminary efficacy, optimal dosages and dosing schedule and to identify possible adverse side effects and safety risks. 39 • Phase 3 : The product candidate is administered to an expanded patient population to further evaluate dosage, to provide statistically significant evidence of the product’s effectiveness for its intended use(s) and to further test for safety, generally at multiple geographically dispersed clinical trial sites.
These studies test for safety, dosage tolerance, absorption, metabolism, distribution and excretion and, if possible, to gain an early indication of its effectiveness. • Phase 2 : The product candidate is administered to a limited patient population with a specified disease or condition to evaluate the preliminary efficacy, optimal dosages and dosing schedule and to identify possible adverse side effects and safety risks. • Phase 3 : The product candidate is administered to an expanded patient population to further evaluate dosage, to provide statistically significant evidence of the product’s effectiveness for its intended use(s) and to further test for safety, generally at multiple geographically dispersed clinical trial sites.
Unlike PPIs, vonoprazan: • is stable in the presence of acid; • does not require activation by gastric acid; • is designed to selectively concentrate in the parietal cells in both the resting and stimulated states, bind to the active pumps and remain associated with the active and inactive pumps; • can be taken independent from meal intake; • binds to the pumps in a noncovalent and reversible manner; and • has a long plasma half-life that replenishes the drug at the site of action over the course of the day.
Unlike PPIs, vonoprazan: • is stable in the presence of acid; • does not require activation by gastric acid; • is designed to selectively concentrate in the parietal cells in both the resting and stimulated states, bind to the active pumps and remain associated with the active and inactive pumps; 6 • can be taken independent from meal intake; • binds to the pumps in a noncovalent and reversible manner; and • has a long plasma half-life that replenishes the drug at the site of action over the course of the day.
Vonoprazan has demonstrated clinical advantages over the PPI lansoprazole in the treatment of Erosive GERD and H. pylori infection in completed Phase 3 clinical trials conducted in the United States and Europe, including: • more complete healing of Erosive GERD in patients with moderate to severe disease after two weeks; • more durable healing of Erosive GERD in patients with all grades of disease; 6 • higher H. pylori eradication rates in combination with antibiotics compared to standard of care triple therapy; and • more flexible dosing, including dosing independent of food and time of day.
Vonoprazan has demonstrated clinical advantages over the PPI lansoprazole in the treatment of Erosive GERD and H. pylori infection in completed Phase 3 clinical trials conducted in the United States and Europe, including: • more complete healing of Erosive GERD in patients with moderate to severe disease after two weeks; • more durable healing of Erosive GERD in patients with all grades of disease; • higher H. pylori eradication rates in combination with antibiotics compared to standard of care triple therapy; and • more flexible dosing, including dosing independent of food and time of day.
Daily Dosing of Vonoprazan for the Treatment of Heartburn Associated with Symptomatic Non-Erosive GERD (PHALCON-NERD-301) In January 2023, we reported positive topline data from the primary endpoint in PHALCON-NERD-301, our Phase 3 study evaluating the safety and efficacy of vonoprazan 10 mg and 20 mg as a daily dosing (QD) treatment, as compared to placebo (QD), in the relief of heartburn over four weeks in adult participants with symptomatic Non-Erosive reflux disease, or Non-Erosive GERD.
Daily Dosing of Vonoprazan for the Treatment of Heartburn Associated with Non-Erosive GERD (PHALCON-NERD-301) In January 2023, we reported positive topline data from the primary endpoint in PHALCON-NERD-301, our Phase 3 study evaluating the safety and efficacy of vonoprazan 10 mg and 20 mg as a daily dosing (QD) treatment, as compared to placebo (QD), in the relief of heartburn over four weeks in adult participants with Non-Erosive reflux disease, or Non-Erosive GERD.
For regulatory purposes, the primary endpoint of this study was a non-inferiority comparison in the non-resistant subgroup for each of vonoprazan triple therapy and vonoprazan dual therapy compared to lansoprazole triple therapy. All endpoints measured the percentage of patients with successful eradication of H. pylori infection as assessed by 13 C-urea breath test four weeks after completion of treatment.
For regulatory purposes, the primary endpoint of this study was a 24 non-inferiority comparison in the non-resistant subgroup for each of vonoprazan triple therapy and vonoprazan dual therapy compared to lansoprazole triple therapy. All endpoints measured the percentage of patients with successful eradication of H. pylori infection as assessed by 13 C-urea breath test four weeks after completion of treatment.
Henderson previously held the role of Chief Financial Officer at various companies such as UroGen Pharma, Advaxis, Inc., and Iovance Biotherapeutics, Inc. where she oversaw all aspects of the corporate finance strategy, investor relations and capital raising. Martin Gilligan, our Chief Commercial Officer, has more than 30 years in the industry working at both large and small biopharmaceutical companies.
Henderson previously held the role of Chief Financial Officer at various companies such as UroGen Pharma and Iovance Biotherapeutics, Inc. where she oversaw all aspects of the corporate finance strategy, investor relations and capital raising. Martin Gilligan, our Chief Commercial Officer, has more than 30 years in the industry working at both large and small biopharmaceutical companies.
GERD Treatment Paradigm PPIs are currently the most widely used anti-secretory agents available in the United States and Europe for relieving GERD symptoms and healing erosions in gastric mucosa. Our market research suggests that approximately 80% of patients who are 16 pharmacologically treated receive a PPI, and approximately 85% of PPI use is prescription rather than OTC.
GERD Treatment Paradigm PPIs are currently the most widely used anti-secretory agents available in the United States and Europe for relieving GERD symptoms and healing erosions in gastric mucosa. Our market research suggests that approximately 80% of patients who are pharmacologically treated receive a PPI, and approximately 85% of PPI use is prescription rather than OTC.
We plan to seek any available patent term extension to any issued patents we may be granted in any jurisdiction where such extensions are available; however, there is no guarantee that the applicable authorities, including the FDA in the United States, will agree with our assessment of whether such extensions should be granted, and if granted, the length of such extensions.
While we plan to seek any available patent term extension to any issued patents we may be granted in any jurisdiction where such extensions are available; however, there is no guarantee that the applicable authorities, including the FDA in the United States, will agree with our assessment of whether such extensions should be granted, and if granted, the length of such extensions.
Lansoprazole at Day 1 and Day 7 This improved potency and duration of pH control with vonoprazan, as measured by 24-hour pH hold time and time above pH 4.0, was evident not only at Day 1, but also at Day 7 when lansoprazole had reached its steady state (see table below). 14 24-hr Hold Time > pH 4.0 and Mean pH of Vonoprazan vs.
Lansoprazole at Day 1 and Day 7 This improved potency and duration of pH control with vonoprazan, as measured by 24-hour pH hold time and time above pH 4.0, was evident not only at Day 1, but also at Day 7 when lansoprazole had reached its steady state (see table below). 24-hr Hold Time > pH 4.0 and Mean pH of Vonoprazan vs.
The majority of PPI use is chronic, with more than 70% of patients prescribed PPIs for daily use. According to IQVIA Xponent prescription data, approximately 110 million PPI prescriptions are written and filled annually across all indications. There are few treatment options for GERD patients who are inadequately managed on PPI therapy.
The majority of PPI use is chronic, with more than 70% of patients prescribed PPIs for daily use. According to IQVIA prescription data, approximately 110 million PPI prescriptions are written and filled annually across all indications. There are few treatment options for GERD patients who are inadequately managed on PPI therapy.
A product candidate can receive Breakthrough Therapy designation if preliminary clinical evidence indicates that the product candidate, alone or in combination with one or more other drugs or biologics, may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development.
A product candidate can receive Breakthrough Therapy designation if 38 preliminary clinical evidence indicates that the product candidate, alone or in combination with one or more other drugs or biologics, may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development.
We believe we can successfully commercialize our approved products in the United States with a focused sales force targeting high prescribers of PPIs, particularly gastroenterologists and primary care physicians. Our strategy is to target approximately 52,000 high volume PPI prescribers in the treatment of GERD and H. pylori infection.
We believe we can successfully commercialize our approved products in the United States with a focused sales force targeting high prescribers of PPIs, particularly gastroenterologists and primary care physicians. Our strategy is to target approximately 52,000 core high volume PPI prescribers in the treatment of GERD and H. pylori infection.
Finally, vonoprazan 20 mg was also compared to lansoprazole 30 mg in a superiority test for onset of sustained resolution of heartburn by day three of the healing phase but did not achieve statistical significance (p=0.2196). Symptomatic Non-Erosive gastroesophageal reflux disease (Non-Erosive GERD).
Finally, vonoprazan 20 mg was also compared to lansoprazole 30 mg in a superiority test for onset of sustained resolution of heartburn by day three of the healing phase but did not achieve statistical significance (p=0.2196). Non-Erosive gastroesophageal reflux disease (Non-Erosive GERD).
Our Chief Executive Officer, Terrie Curran, has more than 25 years of experience in the biopharmaceutical industry. Ms. Curran served as President, Global Inflammation and Immunology (I&I) Franchise and as a member of the Executive Committee at Celgene Corporation from 2017 to 2019. Ms. Curran joined Celgene in 2013 as the U.S.
Our Chief Executive Officer, Terrie Curran, has more than 25 years of experience in the biopharmaceutical industry. Ms. Curran served as President, Global Inflammation and Immunology (I&I) Franchise and as a member of the Executive Committee at Celgene Corporation from 2017 to 2019. Ms. Curran joined Celgene in 2013 as the 8 U.S.
Moreover, fewer than 50% of patients in the study reported they were satisfied with their current treatment. In patients with more severe grades of Erosive GERD, studies with PPIs have reported failure rates of healing of esophageal erosions exceeding 25%. Additionally, recurrence of erosions is common in healed Erosive GERD patients receiving maintenance PPI 12 therapy.
Moreover, fewer than 50% of patients in the study reported they were satisfied with their current treatment. In patients with more severe grades of Erosive GERD, studies with PPIs have reported failure rates of healing of esophageal erosions exceeding 25%. Additionally, recurrence of erosions is common in healed Erosive GERD patients receiving maintenance PPI therapy.
Moreover, the final results from the VISION trial, a five-year randomized, open-label, multicenter study conducted by Takeda evaluating the long-term efficacy and safety of vonoprazan compared with the PPI lansoprazole in patients with EE, further demonstrate that the safety profile of vonoprazan is generally comparable to lansoprazole.
Moreover, the final results from the VISION trial, a five-year randomized, open-label, 28 multicenter study conducted by Takeda evaluating the long-term efficacy and safety of vonoprazan compared with the PPI lansoprazole in patients with EE, further demonstrate that the safety profile of vonoprazan is generally comparable to lansoprazole.
However, H. pylori eradication rates with PPI triple therapy in the 1990s have fallen to current levels of H. pylori to clarithromycin and metronidazole. A 25 recent meta-analysis indicates that U.S. resistance rates measured from 2012 to 2016 were 20% for clarithromycin, 29% for metronidazole, and 19% for levofloxacin.
However, H. pylori eradication rates with PPI triple therapy in the 1990s have fallen to current levels of H. pylori to clarithromycin and metronidazole. A recent meta-analysis indicates that U.S. resistance rates measured from 2012 to 2016 were 20% for clarithromycin, 29% for metronidazole, and 19% for levofloxacin.
Although not approved for this indication, PPIs are often prescribed as a first-line therapy for the treatment of EoE. Vonoprazan demonstrated similar efficacy to PPIs in an investigator-sponsored EoE clinical trial in Japan. In this clinical trial, 112 patients with EoE were treated with vonoprazan, or the PPI rabeprazole or esomeprazole.
Although not 30 approved for this indication, PPIs are often prescribed as a first-line therapy for the treatment of EoE. Vonoprazan demonstrated similar efficacy to PPIs in an investigator-sponsored EoE clinical trial in Japan. In this clinical trial, 112 patients with EoE were treated with vonoprazan, or the PPI rabeprazole or esomeprazole.
Before approving an NDA, the FDA will inspect the facility or facilities where the product is manufactured. The FDA will not approve an application unless it determines that the manufacturing processes and facilities are in compliance with cGMP 40 requirements and adequate to assure consistent production of the product within required specifications.
Before approving an NDA, the FDA will inspect the facility or facilities where the product is manufactured. The FDA will not approve an application unless it determines that the manufacturing processes and facilities are in compliance with cGMP requirements and adequate to assure consistent production of the product within required specifications.
In addition, the FDA currently requires as a condition for accelerated approval pre-approval of promotional materials, which could adversely impact the timing of the commercial launch of the product. Fast Track designation, Breakthrough Therapy designation, accelerated approval, and priority do not change the standards for approval but may expedite the development or approval process.
In addition, the FDA requires as a condition for accelerated approval pre-approval of promotional materials, which could adversely impact the timing of the commercial launch of the product. Fast Track designation, Breakthrough Therapy designation, accelerated approval, and priority do not change the standards for approval but may expedite the development or approval process.
Physicians may prescribe, in their independent professional medical judgment, legally available products for uses that are not described in the product’s labeling and that differ from those tested by us and approved by the FDA. Physicians may believe that such off-label uses are the best treatment for many patients in varied circumstances.
Physicians may prescribe, in their independent professional medical judgment, legally available products for uses that are not described in the product’s labeling and that differ from those tested by us and approved by the FDA. Physicians may believe that such off-label uses 39 are the best treatment for many patients in varied circumstances.
In November 2023, we received FDA approval of vonoprazan, under the brand name VOQUEZNA, for the healing and maintenance of healing of all grades of erosive esophagitis and relief of heartburn associated with erosive esophagitis in adults, and in September 2023, we submitted an NDA seeking approval of vonoprazan as a once-daily treatment of heartburn associated with symptomatic Non-Erosive GERD in adults.
In November 2023, we received FDA approval of vonoprazan, under the brand name VOQUEZNA, for the healing and maintenance of healing of all grades of erosive esophagitis and relief of heartburn associated with erosive esophagitis in adults, and in September 2023, we submitted an NDA seeking approval of vonoprazan as a once-daily treatment of heartburn associated with Non-Erosive GERD in adults.
Marketing Authorizations 48 In the EU, medicinal product candidates can only be commercialized after obtaining a marketing authorization, or MA. To obtain regulatory approval of a product candidate in the EU, we must submit a MA Application, or MAA. The process for doing this depends, among other things, on the nature of the medicinal product.
Marketing Authorizations In the EU, medicinal product candidates can only be commercialized after obtaining a marketing authorization, or MA. To obtain regulatory approval of a product candidate in the EU, we must submit a MA Application, or MAA. The process for doing this depends, among other things, on the nature of the medicinal product.
The FDA does not regulate the behavior of physicians in their choice of treatments. The FDA does, however, restrict manufacturer’s communications on the subject of off-label use of their 42 products. However, companies may share truthful and not misleading information that is otherwise consistent with a product’s FDA-approved labelling.
The FDA does not regulate the behavior of physicians in their choice of treatments. The FDA does, however, restrict manufacturer’s communications on the subject of off-label use of their products. However, companies may share truthful and not misleading information that is otherwise consistent with a product’s FDA-approved labelling.
The 340B ceiling price is calculated using a statutory formula, 45 which is based on the AMP and rebate amount for the covered outpatient drug as calculated under the MDRP. In general, products subject to Medicaid price reporting and rebate liability are also subject to the 340B ceiling price calculation and discount requirement.
The 340B ceiling price is calculated using a statutory formula, which is based on the AMP and rebate amount for the covered outpatient drug as calculated under the MDRP. In general, products subject to Medicaid price reporting and rebate liability are also subject to the 340B ceiling price calculation and discount requirement.
The H. pylori eradication rate of vonoprazan dual therapy was superior to that of lansoprazole triple therapy in the subset of patients with H. pylori strains resistant to clarithromycin in both the mITT population (69.6% vs. 31.9%; p 27 Results of US/EU Phase 3 Clinical Trial in H. pylori Infection Primary Endpoint Analysis –Subjects without clarithromycin or amoxicillin resistant strains Secondary Endpoint Analyses – All subject and subjects with clarithromycin resistant strains Antibiotic resistance and declining eradication rates are significant clinical issues, and we believe that vonoprazan triple therapy and vonoprazan dual therapy have the potential to provide improvements over PPI-based therapies in addressing each of these issues.
The H. pylori eradication rate of vonoprazan dual therapy was superior to that of lansoprazole triple therapy in the subset of patients with H. pylori strains resistant to clarithromycin in both the mITT population (69.6% vs. 31.9%; p 25 Results of US/EU Phase 3 Clinical Trial in H. pylori Infection Primary Endpoint Analysis –Subjects without clarithromycin or amoxicillin resistant strains Secondary Endpoint Analyses – All subject and subjects with clarithromycin resistant strains Antibiotic resistance and declining eradication rates are significant clinical issues, and we believe that vonoprazan triple therapy and vonoprazan dual therapy have the potential to provide improvements over PPI-based therapies in addressing each of these issues.
Clinical Data for Vonoprazan in GERD Our Development Program in Erosive GERD Five Phase 3 clinical trials have been completed comparing vonoprazan to PPIs in Erosive GERD: our healing and maintenance of healing trial in the United States and Europe; a healing trial in Japan; a maintenance of healing trial in Japan; a healing trial in Asia (China, Taiwan, and Korea); and a maintenance of healing trial in Asia.
Clinical Data for Vonoprazan in GERD Our Development Program in Erosive GERD 16 Five Phase 3 clinical trials have been completed comparing vonoprazan to PPIs in Erosive GERD: our healing and maintenance of healing trial in the United States and Europe; a healing trial in Japan; a maintenance of healing trial in Japan; a healing trial in Asia (China, Taiwan, and Korea); and a maintenance of healing trial in Asia.
In addition to EoE, Barrett’s esophagus and Zollinger Ellison syndrome are severe diseases related to acid secretion where PPIs are the current standard of care. The improved acid control of vonoprazan relative to PPIs may lead to use in these indications improved results over PPIs.
In addition to EoE, Barrett’s esophagus and Zollinger Ellison syndrome are severe diseases related to acid secretion where PPIs are the current standard of care. The improved acid control of vonoprazan relative to PPIs may lead to use in these indications with improved results over PPIs.
The Tablet Supply Agreement may also be terminated at any time upon 37 written notice by either party if the other party has failed to remedy a material breach of the terms of the Tablet Supply Agreement within a specified period following receipt of written notice of such breach.
The Tablet Supply Agreement may also be terminated at any time upon written notice by either party if the other party has failed to remedy a material breach of the terms of the Tablet Supply Agreement within a specified period following receipt of written notice of such breach.
In additional pre-specified secondary endpoint superiority comparisons, vonoprazan 20 mg healing rates were numerically greater than lansoprazole 30 mg in all patients at Week 2 (nominal p=0.0348) and in moderate-to-severe patients by Week 8 (nominal p Vonoprazan 20 mg was also compared to lansoprazole 30 mg in a superiority test for onset of sustained resolution of heartburn by day 3 but did not achieve statistical significance (p=0.439). 18 Results of US/EU Phase 3 Clinical Trial in the Healing of Erosive GERD Maintenance Phase Vonoprazan met the primary and all secondary endpoints in the Maintenance Phase.
In additional pre-specified secondary endpoint superiority comparisons, vonoprazan 20 mg healing rates were numerically greater than lansoprazole 30 mg in all patients at Week 2 (nominal p=0.0348) and in moderate-to-severe patients by Week 8 (nominal p Vonoprazan 20 mg was also compared to lansoprazole 30 mg in a superiority test for onset of sustained resolution of heartburn by day 3 but did not achieve statistical significance (p=0.439). 17 Results of US/EU Phase 3 Clinical Trial in the Healing of Erosive GERD Maintenance Phase Vonoprazan met the primary and all secondary endpoints in the Maintenance Phase.
The most common adverse events (≥2.0%) reported in the vonoprazan triple therapy, vonoprazan dual therapy, and lansoprazole triple therapy arms, respectively, were diarrhea (4.0%, 5.2%, and 9.6%), dysgeusia (4.3%, 29 0.6%, and 6.1%), abdominal pain (2.3%, 2.6% and 2.9%), headache (2.6%, 1.4%, 1.4%), vulvovaginal candidiasis (2.3%, 1.4%, 1.2%), hypertension (2.0%, 1.1%, 0.9%), and nasopharyngitis (0.3%, 2.0%, 0.9%).
The most common adverse events (≥2.0%) reported in the vonoprazan triple therapy, vonoprazan dual therapy, and lansoprazole triple therapy arms, respectively, were diarrhea (4.0%, 5.2%, and 9.6%), dysgeusia (4.3%, 0.6%, and 6.1%), abdominal pain (2.3%, 2.6% and 2.9%), headache (2.6%, 1.4%, 1.4%), vulvovaginal candidiasis (2.3%, 1.4%, 1.2%), hypertension (2.0%, 1.1%, 0.9%), and nasopharyngitis (0.3%, 2.0%, 0.9%).
We believe we have an opportunity to achieve significant share of voice and exposure to physicians given the scarcity of actively marketed anti-secretory medicines. Given the limitations of PPIs and current unmet need, we believe the commercial opportunity for VOQUEZNA is substantial.
We believe we have an opportunity 9 to achieve significant share of voice and exposure to physicians given the scarcity of actively marketed anti-secretory medicines. Given the limitations of PPIs and current unmet need, we believe the commercial opportunity for VOQUEZNA is substantial.
In that trial, greater duration of pH control with vonoprazan, as measured by time above pH 4.0 was observed both on Day 1 and Day 7 (see table below). 24-hr Hold Time > pH 4.0 of Vonoprazan vs.
In that trial, greater duration of pH control with vonoprazan, as measured by time above pH 4.0 was observed both on Day 1 and Day 7 (see table below). 14 24-hr Hold Time > pH 4.0 of Vonoprazan vs.
Sales and Marketing We have established robust marketing, sales, and distribution capabilities to support the launch of our approved products and we are independently commercializing VOQUEZNA, VOQUEZNA TRIPLE PAK and VOQUEZNA DUAL PAK in the United States through 32 an experienced national sales force.
Sales and Marketing We have established robust marketing, sales, and distribution capabilities to support the launch of our approved products and we are independently commercializing VOQUEZNA, VOQUEZNA TRIPLE PAK and VOQUEZNA DUAL PAK in the United States through an experienced national sales force.
Additional Vonoprazan Development Opportunities Eosinophilic Esophagitis and Other Indications While we are initially focused on the development of vonoprazan for the treatment of GERD and H. pylori infection, we believe there are opportunities to expand the use of vonoprazan to other indications in our licensed territories.
Additional Vonoprazan Development Opportunities Eosinophilic Esophagitis and Other Indications While we are initially focused on the commercialization of vonoprazan for the treatment of GERD and H. pylori infection, we believe there are opportunities to expand the use of vonoprazan to other indications in our licensed territories.
In addition, for patents that cover an FDA-approved drug, the Drug Price Competition and Patent Term Restoration Act of 1984, or the Hatch-Waxman Act, permits a patent term extension of up to five years beyond the expiration of the patent.
In addition, for patents that cover an FDA-approved drug, the Drug Price Competition and 32 Patent Term Restoration Act of 1984, or the Hatch-Waxman Act, permits a patent term extension of up to five years beyond the expiration of the patent.
In addition, 35 the scope of the rights granted under any issued patents may not provide us with protection or competitive advantages against competitors with similar technology. Furthermore, our competitors may independently develop similar technologies that are outside the scope of the rights granted under any issued patents.
In addition, the scope of the rights granted under any issued patents may not provide us with protection or competitive advantages against competitors with similar technology. Furthermore, our competitors may independently develop similar technologies that are outside the scope of the rights granted under any issued patents.
Royalties will be payable, on a product-by-product and country-by-country basis from the first commercial sale of such product in such country, until the latest of expiration of 36 the licensed patents covering the applicable product, expiration of regulatory exclusivity in such country, or 15 years following first commercial sale in such country.
Royalties will be payable, on a product-by-product and country-by-country basis from the first commercial sale of such product in such country, until the latest of expiration of the licensed patents covering the applicable product, expiration of regulatory exclusivity in such country, or 15 years following first commercial sale in such country.
This review typically takes twelve months from the date the NDA is submitted to FDA because the FDA has approximately two months to make a “filing” decision after the application is submitted. The FDA may refer an application for a novel drug to an advisory committee.
This review typically takes twelve months from the date the NDA is submitted to FDA because the FDA has approximately two months to make a “filing” decision after the application is submitted. 37 The FDA may refer an application for a novel drug to an advisory committee.
HRSA has also finalized an administrative dispute resolution process through which 340B covered entities may pursue claims against participating manufacturers for overcharges, and through which manufacturers may pursue claims against 340B covered entities for engaging in unlawful diversion or duplicate discounting of 340B drugs.
HRSA has also 42 finalized an administrative dispute resolution process through which 340B covered entities may pursue claims against participating manufacturers for overcharges, and through which manufacturers may pursue claims against 340B covered entities for engaging in unlawful diversion or duplicate discounting of 340B drugs.
There are two types of MAs: • "Centralized MAs" are issued by the European Commission through the centralized procedure, based on the opinion of the Committee for Medicinal Products for Human Use, or CHMP, of the European Medicines Agency, or EMA, and are valid throughout the EU.
There are two types of MAs: 45 • "Centralized MAs" are issued by the European Commission through the centralized procedure, based on the opinion of the Committee for Medicinal Products for Human Use, or CHMP, of the European Medicines Agency, or EMA, and are valid throughout the EU.
Azmi Nabulsi, M.D., M.P.H., our Chief Operating Officer, was Deputy Chief Medical and Scientific Officer at Takeda. Our Chief Development Sciences Officer, Tom Harris, was Senior Vice President and Head of Global Regulatory at Takeda. Both Dr. Nabulsi and 8 Mr.
Azmi Nabulsi, M.D., M.P.H., our Chief Operating Officer, was Deputy Chief Medical and Scientific Officer at Takeda. Our Chief Development Sciences Officer, Tom Harris, was Senior Vice President and Head of Global Regulatory at Takeda. Both Dr. Nabulsi and Mr.
Results of Phase 3 Clinical Trial in the Treatment of Non-Erosive GERD 21 During the 20-week extension period, patients randomized to vonoprazan 10 mg and 20 mg during the initial 4-week period remained on their blinded treatment assignment.
Results of Phase 3 Clinical Trial in the Treatment of Non-Erosive GERD During the 20-week extension period, patients randomized to vonoprazan 10 mg and 20 mg during the initial 4-week period remained on their blinded treatment assignment.
The FDA or the sponsor may suspend a clinical trial at any time on various grounds, including a finding that the research subjects or patients are being exposed to an unacceptable health risk.
The FDA or the sponsor may suspend a clinical trial at any time on various grounds, including a finding that the research 36 subjects or patients are being exposed to an unacceptable health risk.
The process required by the FDA before a drug may be marketed in the United States generally involves the following: • completion of preclinical laboratory tests, animal studies and formulation studies in accordance with Good Laboratory Practice, or GLP, regulations and other applicable regulations; • submission to the FDA of an investigational new drug application, or IND, which must become effective before human clinical trials may begin; • approval by an independent institutional review board, or IRB, at each clinical site before each trial may be initiated; • performance of adequate and well-controlled human clinical trials in accordance with Good Clinical Practice, or GCP, regulations to establish the safety and efficacy of the proposed drug for its intended use; • submission to the FDA of an NDA; • satisfactory completion of an FDA advisory committee review, if applicable; • satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the drug is produced to assess compliance with current Good Manufacturing Practice, or cGMP, requirements to assure that the facilities, 38 methods and controls are adequate to preserve the drug’s identity, strength, quality and purity, and of selected clinical investigation sites to assess compliance with GCPs; and • FDA review and approval of the NDA to permit commercial marketing of the product for particular indications for use in the United States.
The process required by the FDA before a drug may be marketed in the United States generally involves the following: 35 • completion of certain preclinical laboratory tests, animal studies and formulation studies in accordance with Good Laboratory Practice, or GLP, regulations and other applicable regulations; • submission to the FDA of an investigational new drug application, or IND, which must become effective before human clinical trials may begin; • approval by an independent institutional review board, or IRB, at each clinical site before each trial may be initiated; • performance of adequate and well-controlled human clinical trials in accordance with Good Clinical Practice, or GCP, regulations to establish the safety and efficacy of the proposed drug for its intended use; • submission to the FDA of an NDA; • satisfactory completion of an FDA advisory committee review, if applicable; • satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the drug is produced to assess compliance with current Good Manufacturing Practice, or cGMP, requirements to assure that the facilities, methods and controls are adequate to preserve the drug’s identity, strength, quality and purity; • satisfactory completion of potential FDA inspection of selected clinical investigation sites to assess compliance with GCPs; and • FDA review and approval of the NDA to permit commercial marketing of the product for particular indications for use in the United States.
The PDCO can grant a deferral of the obligation to implement some or all of the measures of the PIP until there are sufficient data to 49 demonstrate the efficacy and safety of the product in adults.
The PDCO can grant a deferral of the obligation to implement some or all of the measures of the PIP until there are sufficient data to demonstrate the efficacy and safety of the product in adults.
Where applicable, the agreements provide that all inventions to which the individual contributed as an inventor shall be assigned to Phathom, and as such, will become our property. There can be no assurance, however, that these agreements will provide meaningful protection or adequate remedies for our trade secrets in the event of unauthorized use or disclosure of such information.
Where applicable, the agreements provide that all inventions to which the individual contributed as an inventor shall be assigned to us, and as such, will become our property. There can be no assurance, however, that these agreements will provide meaningful protection or adequate remedies for our trade secrets in the event of unauthorized use or disclosure of such information.
Individual states in the U.S. have also become increasingly active in implementing regulations designed to control pharmaceutical product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.
Individual states in the U.S. have also become increasingly active in implementing regulations designed to control pharmaceutical product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure, drug price reporting and other transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.
PPI-Based Therapy for First Line Treatment of H. pylori Infection in Japan from 2015-2019 This same real-world study utilizing Japanese claims data also shows that improved eradication rates have the potential to result in significant reductions of H. pylori -related healthcare costs and healthcare resource utilization.
PPI-Based Therapy for First Line Treatment of H. pylori Infection in Japan from 2015-2019 This same real-world study utilizing Japanese claims data also suggests that improved eradication rates have the potential to result in significant reductions of H. pylori -related healthcare costs and healthcare resource utilization.
Our commercial success also depends in part on our ability to operate without infringing on the proprietary rights of others and to 34 prevent others from infringing our proprietary rights.
Our commercial success also depends in part on our ability to operate without infringing on the proprietary rights of others and to prevent others from infringing our proprietary rights.
The GAIN Act provisions prohibit the grant of an exclusivity extension where the application is a supplement to an application for which an extension is in effect or has expired, is a 43 subsequent application for a specified change to an approved product, or is an application for a product that does not meet a definition of QIDP based on the uses for which it is ultimately approved.
The GAIN Act provisions prohibit the grant of an exclusivity extension where the application is a supplement to an application for which an extension is in effect or has expired, is a 40 subsequent application for a specified change to an approved product, or is an application for a product that does not meet a definition of QIDP based on the uses for which it is ultimately approved.
The time required to obtain approval in other countries and jurisdictions might differ from and be longer than that required to obtain 47 FDA approval.
The time required to obtain approval in other countries and jurisdictions might differ from and be longer than that required to obtain FDA approval.
Although vonoprazan and Dexilant are priced at a premium to generic PPIs in Japan and the United States, respectively, both have experienced commercial success. Vonoprazan Commercial Opportunity and Strategy The market for prevention and treatment of acid-related GI diseases in the United States and Europe is large.
Although vonoprazan and 29 Dexilant are priced at a premium to generic PPIs in Japan and the United States, respectively, both have experienced commercial success. VOQUEZNA Commercial Opportunity and Strategy The market for prevention and treatment of acid-related GI diseases in the United States and Europe is large.
Within this Japanese database, the number of patients using vonoprazan-based regimens increased from 6,594 to 28,956 patients, while the number of patients using a PPI-based regimen decreased from 11,238 to 2,629, shown in the figure below. 24 Uptake of Vonoprazan-Based vs.
Within this Japanese database, the number of patients using vonoprazan-based regimens increased from 6,594 to 28,956 patients, while the number of patients using a PPI-based regimen decreased from 11,238 to 2,629, shown in the figure below. 22 Uptake of Vonoprazan-Based vs.
Clinical guidelines suggest that endoscopy be performed in patients who continue to have symptoms despite a four- to-eight-week course of daily PPIs or have alarm symptoms, including GI bleeding, anemia, weight loss, chest pain, or difficult or painful swallowing. Our market research suggests that most patients are treated empirically based on symptoms rather than based on endoscopic characterization of disease.
Clinical guidelines suggest that endoscopy be performed in patients who continue to have symptoms despite an eight-week course of daily PPIs or have alarm symptoms, including GI bleeding, anemia, weight loss, chest pain, or difficult or painful swallowing. Our market research suggests that most patients are treated empirically based on symptoms rather than based on endoscopic characterization of disease.
Violation of any of such laws or any other governmental regulations that apply may result in significant criminal, civil and administrative penalties including damages, fines, imprisonment, disgorgement, additional reporting requirements and oversight if we become subject to a corporate integrity agreement or similar agreement to resolve allegations of non-compliance with these 44 laws, contractual damages, reputational harm, diminished profits and future earnings, disgorgement, exclusion from participation in government healthcare programs and the curtailment or restructuring of our operations.
Violation of any of such laws or any other governmental regulations that apply may result in significant criminal, civil and administrative penalties including damages, fines, imprisonment, disgorgement, additional reporting requirements and oversight if we become subject to a corporate integrity agreement or similar agreement to resolve allegations of non-compliance with these laws, contractual damages, reputational harm, diminished profits and future earnings, disgorgement, exclusion from participation in government healthcare programs and the curtailment or restructuring of our operations. 41 U.S.
On March 11, 2021, the American Rescue Plan Act of 2021 was signed into law, which eliminates the statutory Medicaid drug rebate cap, beginning January 1, 2024. Previously, the rebate was capped at 100% of a drug’s AMP.
On March 11, 2021, the American Rescue Plan Act of 2021 was signed into law, which eliminated the statutory Medicaid drug rebate cap, beginning January 1, 2024. Previously, the rebate was capped at 100% of a drug’s AMP.
We intend to take advantage of our management team’s GI expertise to opportunistically in-license or acquire additional innovative therapies for diseases treated by gastroenterologists. We plan to leverage our development and planned commercial infrastructure to support multiple assets targeting GI indications. Acid-Related GI Diseases Overview Gastric acid is a digestive fluid formed in the stomach.
We plan to evaluate and to take advantage of our management team’s GI expertise to opportunistically in-license or acquire additional innovative therapies for diseases treated by gastroenterologists. We plan to leverage our development and commercial infrastructure to support multiple assets targeting GI indications. Acid-Related GI Diseases Overview Gastric acid is a digestive fluid formed in the stomach.
Results of US/EU Phase 3 Clinical Trial in Maintenance of Healing of Erosive GERD 19 Healing and Maintenance of Healing of Erosive GERD Clinical Trials in Japan and Asia The results of PHALCON-EE were consistent with the results of earlier Phase 3 trials of vonoprazan in healing and maintenance of healing of Erosive GERD after which it was modeled.
Results of US/EU Phase 3 Clinical Trial in Maintenance of Healing of Erosive GERD 18 Healing and Maintenance of Healing of Erosive GERD Clinical Trials in Japan and Asia The results of PHALCON-EE were consistent with the results of earlier Phase 3 trials of vonoprazan in healing and maintenance of healing of Erosive GERD after which it was modeled.
Information relating to our corporate governance is also included on our investor relations website. The information in or accessible through the SEC and our website are not incorporated into, and are not considered part of, this filing. 52
Information relating to our corporate governance is also included on our investor relations website. The information in or accessible through the SEC and our website are not incorporated into, and are not considered part of, this filing. 48
These diseases are detailed below: • Erosive GERD : Approximately 30% of GERD patients have Erosive GERD, which is classified by erosions in the gastric mucosa caused by acidic reflux of stomach contents into the esophagus.
These diseases are detailed below: • Erosive GERD : Approximately 30% of GERD patients have Erosive GERD, which is classified by erosions in the esophageal mucosa caused by acidic reflux of stomach contents into the esophagus.
Clinical trials involve the administration of the investigational product to human subjects under the supervision of one or more qualified investigators in accordance with GCP regulations, which include the requirement that all research subjects provide their informed consent in writing for their participation in any clinical trial.
Clinical trials involve the administration of the investigational product to human subjects under the supervision of one or more qualified investigators in accordance with GCP regulations, which include, among other things, the requirement that all research subjects provide their informed consent in writing for their participation in any clinical trial.
Three classes of drugs with distinct mechanisms of action are principally used for treatment in the United States and Europe: antacids, histamine receptor antagonists, or H2RAs, and PPIs.
Three classes of drugs with distinct mechanisms of action were principally used for treatment in the United States and Europe: antacids, histamine receptor antagonists, or H2RAs, and PPIs.
Similarly, in patients with H. pylori infection, a more neutral gastric pH of 6.0 to 8.0 preserves antibiotic function and is optimal for successful eradication. Drug-induced gastric acid suppression is a key component of the management of acid-related GI diseases.
Similarly, in patients with H. pylori infection, a more neutral gastric pH of 6.0 to 8.0 preserves antibiotic function and is optimal for successful eradication. Drug-induced gastric acid suppression is a key component of the management of acid-related GI diseases prior to the launch of VOQUEZNA.
Vonoprazan was subsequently approved in Japan in February 2016 for the treatment of H. pylori in combination packs with antibiotics (Vonosap Pack 400, Vonosap Pack 800, and Vonopion Pack), and has since been approved in numerous other countries in Asia and Latin America as well as Russia. Vonoprazan Commercialization in Japan Vonoprazan was approved in Japan in December 2014.
Vonoprazan was subsequently approved in Japan in February 2016 for the treatment of H. pylori in combination packs with antibiotics (Vonosap Pack 400, Vonosap Pack 800, and Vonopion Pack), and has since been approved in numerous other countries in Asia and Latin America as well as Russia.
U.S. Coverage and Reimbursement Significant uncertainty exists as to the coverage and reimbursement status of any product candidate for which we may seek regulatory approval.
Coverage and Reimbursement Significant uncertainty exists as to the coverage and reimbursement status of any product candidate for which we may seek regulatory approval.
Among other things, the IRA requires manufacturers of certain drugs to engage in price negotiations with Medicare (beginning in 2026), with prices that can be negotiated subject to a cap; imposes rebates under Medicare Part B and Medicare Part D to penalize price increases that outpace inflation (first due in 2023); and replaces the Part D coverage gap discount program with a new discounting program (beginning in 2025).
Among other things, the IRA requires manufacturers of certain drugs to engage in price negotiations with Medicare (beginning in 2026), with prices that can be negotiated subject to a cap; imposes rebates under Medicare Part B and Medicare Part D to penalize price increases that outpace inflation (first due in 2023); and replaces the Part D coverage gap discount program with a new discounting program (which began on January 1, 2025).
As of December 31, 2023, our patent portfolio covering vonoprazan consists predominantly of exclusively licensed patents and patent applications from Takeda.
As of December 31, 2024, our patent portfolio covering vonoprazan consists predominantly of exclusively licensed patents and patent applications from Takeda.
Pediatric exclusivity is another type of market exclusivity available in the United States. Pediatric exclusivity provides for an additional six months of marketing exclusivity attached to another period of exclusivity if a sponsor conducts clinical trials in children in response to a written request from the FDA.
Pediatric exclusivity is another type of market exclusivity available in the United States. Pediatric exclusivity provides for an additional six months of marketing exclusivity attached to another period of non-patent regulatory exclusivity or patent term if a sponsor conducts clinical trials in children in response to a written request from the FDA.
As of December 31, 2023, our portfolio consists of approximately 25 issued U.S. patents, 4 pending U.S. applications, 15 issued European patents subsequently validated in individual European countries, 3 pending European applications, 6 issued Canadian patents, and 2 pending Canadian applications.
As of December 31, 2024, our portfolio consists of approximately 25 issued U.S. patents, 4 pending U.S. applications, 16 issued European patents subsequently validated in individual European countries, 2 pending European applications, 6 issued Canadian patents, and 3 pending Canadian applications.
Based on these symptoms, patients are typically treated first-line with PPIs prior to a diagnostic endoscopy for specific disease classification of Erosive GERD or Non-Erosive GERD.
GERD patients typically present with heartburn and reflux symptoms. Based on these symptoms, patients are typically treated first-line with PPIs prior to a diagnostic endoscopy for specific disease classification of Erosive GERD or Non-Erosive GERD.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeOur future capital requirements will depend on many factors, including: • the costs of sales and marketing activities in support of the commercial launch of VOQUEZNA, VOQUEZNA TRIPLE PAK, and VOQUEZNA DUAL PAK, or any future product candidate; • the initiation, type, number, scope, results, costs and timing of our clinical trials of vonoprazan, and preclinical studies or clinical trials of other potential product candidates we may choose to pursue in the future, including feedback received from regulatory authorities; • the costs and timing of manufacturing for vonoprazan or any future product candidates, including commercial scale manufacturing if any product candidate is approved; • the costs, timing and outcome of regulatory review of our NDA for vonoprazan for the treatment of heartburn associated with symptomatic Non-Erosive GERD, and the costs, timing and outcome of regulatory review of any future product candidates; • the costs of obtaining, maintaining and enforcing our patents and other intellectual property rights; • our efforts to enhance operational systems and hire additional personnel to satisfy our obligations as a public company, including enhanced internal controls over financial reporting; • the costs associated with hiring additional personnel and consultants as our business grows particularly commercial personnel; • the timing and amount of the milestone or other payments we must make to Takeda and any future licensors; • our ability to achieve sufficient market acceptance, coverage and adequate reimbursement from third-party payers and adequate market share and revenue for any approved products; • patients’ willingness to pay out-of-pocket for any approved products in the absence of coverage and/or adequate reimbursement from third-party payers; • the terms and timing of establishing and maintaining collaborations, licenses and other similar arrangements; and • the costs associated with any products or technologies that we may in-license or acquire. 56 Conducting clinical trials and preclinical studies is a time consuming, expensive, and uncertain process that takes years to complete, and we may never generate the necessary data or results required to obtain regulatory approval of future product candidates.
Biggest changeOur future capital requirements will depend on many factors, including: • the costs of sales and marketing activities in support of the commercial launch of VOQUEZNA, VOQUEZNA TRIPLE PAK, and VOQUEZNA DUAL PAK, or any future product candidate; 51 • the initiation, type, number, scope, results, costs and timing of our clinical trials of vonoprazan, and preclinical studies or clinical trials of other potential product candidates we may choose to pursue in the future, including feedback received from regulatory authorities; • the costs and timing of manufacturing for vonoprazan or any future product candidates, including commercial scale manufacturing if any product candidate is approved; • the costs, timing and outcome of regulatory review of future vonoprazan applications or such applications for any future product candidates; • the costs of obtaining, maintaining and enforcing our patents and other intellectual property rights; • our efforts to enhance operational systems and hire additional personnel to satisfy our obligations as a public company, including enhanced internal controls over financial reporting; • the costs associated with hiring additional personnel and consultants as our business grows particularly commercial personnel; • the timing and amount of the milestone or other payments we must make to Takeda and any future licensors; • our ability to achieve sufficient market acceptance, coverage and adequate reimbursement from third-party payers and adequate market share and revenue for any approved products; • patients’ willingness to pay out-of-pocket for any approved products in the absence of coverage and/or adequate reimbursement from third-party payers; • the terms and timing of establishing and maintaining collaborations, licenses and other similar arrangements; and • the costs associated with any products or technologies that we may in-license or acquire.
In the event of an event of default under the Revenue Interest Financing Agreement, the investors may be entitled to foreclose on the pledged collateral which includes the applicable royalty under the Royalty Interest Financing Agreement from net sales of VOQUEZNA and other products containing vonoprazan.
In the event of an event of default under the Revenue Interest Financing Agreement, the investors may be entitled to foreclose on the pledged collateral which includes the applicable royalty under the Revenue Interest Financing Agreement from net sales of VOQUEZNA and other products containing vonoprazan.
Our ability to utilize our NOL carryforwards and other tax attributes to offset future taxable income or tax liabilities may be limited as a result of ownership changes, including changes in connection with our IPO or future offerings. Similar rules may apply under state tax laws.
Our ability to utilize our NOL carryforwards and other tax attributes to offset future taxable income or tax liabilities may be limited as a result of ownership changes, including changes in connection with our IPO or other offerings. Similar rules may apply under state tax laws.
The provisions in our charter documents include the following: • a classified board of directors with three-year staggered terms, which may delay the ability of stockholders to change the membership of a majority of our board of directors; • no cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates; • the exclusive right of our board of directors, unless the board of directors grants such right to the stockholders, to elect a director to fill a vacancy created by the expansion of the board of directors or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our board of directors; • the required approval of at least 66-2/3% of the shares entitled to vote to remove a director for cause, and the prohibition on removal of directors without cause; • the ability of our board of directors to authorize the issuance of shares of preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquiror; • the ability of our board of directors to alter our amended and restated bylaws without obtaining stockholder approval; • the required approval of at least 66-2/3% of the shares entitled to vote to adopt, amend or repeal our amended and restated bylaws or repeal the provisions of our amended and restated certificate of incorporation regarding the election and removal of directors; • a prohibition on stockholder action by written consent, which forces stockholder action to be taken at an annual or special meeting of our stockholders; • an exclusive forum provision providing that the federal district courts will be the exclusive forum for actions and proceedings a cause of action arising under the Securities Act of 1933, as amended, and that the Court of Chancery of the State of Delaware will be the exclusive forum for certain other actions and proceedings; • the requirement that a special meeting of stockholders may be called only by the board of directors, which may delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors; and • advance notice procedures that stockholders must comply with in order to nominate candidates to our board of directors or to propose matters to be acted upon at a stockholders’ meeting, which may discourage or deter a potential acquiror from conducting a solicitation of proxies to elect the acquiror’s own slate of directors or otherwise attempting to obtain control of us.
The provisions in our charter documents include the following: • a classified board of directors with three-year staggered terms, which may delay the ability of stockholders to change the membership of a majority of our board of directors; • no cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates; • the exclusive right of our board of directors, unless the board of directors grants such right to the stockholders, to elect a director to fill a vacancy created by the expansion of the board of directors or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our board of directors; • the required approval of at least 66-2/3% of the shares entitled to vote to remove a director for cause, and the prohibition on removal of directors without cause; • the ability of our board of directors to authorize the issuance of shares of preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquiror; • the ability of our board of directors to alter our amended and restated bylaws without obtaining stockholder approval; • the required approval of at least 66-2/3% of the shares entitled to vote to adopt, amend or repeal our amended and restated bylaws or repeal the provisions of our amended and restated certificate of incorporation regarding the election and removal of directors; • a prohibition on stockholder action by written consent, which forces stockholder action to be taken at an annual or special meeting of our stockholders; • an exclusive forum provision providing that the federal district courts will be the exclusive forum for actions and proceedings a cause of action arising under the Securities Act of 1933, as amended, and that the Court of Chancery of the State of Delaware will be the exclusive forum for certain other actions and proceedings; 97 • the requirement that a special meeting of stockholders may be called only by the board of directors, which may delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors; and • advance notice procedures that stockholders must comply with in order to nominate candidates to our board of directors or to propose matters to be acted upon at a stockholders’ meeting, which may discourage or deter a potential acquiror from conducting a solicitation of proxies to elect the acquiror’s own slate of directors or otherwise attempting to obtain control of us.
The degree of market acceptance of our current products or any future products, if approved, will depend on a number of factors, including: • demonstration of clinical efficacy and safety compared to other more-established products; • the indications for which our current or any future product candidates are approved; • the limitation of our targeted patient population and other limitations or warnings contained in any FDA-approved labeling or comparable approved labeling; • acceptance of a new drug for the relevant indication by healthcare providers and their patients; 58 • the pricing and cost-effectiveness of our products, as well as the cost of treatment with our products in relation to alternative treatments and therapies; • our ability to obtain and maintain sufficient third-party coverage and adequate reimbursement from government healthcare programs, including Medicare and Medicaid, private health insurers and other third-party payers; • the willingness of patients to pay all, or a portion of, out-of-pocket costs associated with our products in the absence of sufficient third-party coverage or adequate reimbursement; • any restrictions on the use of our products, and the prevalence and severity of any adverse effects; • potential product liability claims; • the timing of market introduction of our products as well as competitive drugs; • the effectiveness of our or any of our potential future collaborators’ sales and marketing strategies; and • unfavorable publicity relating to the product.
The degree of market acceptance of our current products or any future products, if approved, will depend on a number of factors, including: • demonstration of clinical efficacy and safety compared to other more-established products; • the indications for which our current or any future product candidates are approved; • the limitation of our targeted patient population and other limitations or warnings contained in any FDA-approved labeling or comparable approved labeling; • acceptance of a new drug for the relevant indication by healthcare providers and their patients; • the pricing and cost-effectiveness of our products, as well as the cost of treatment with our products in relation to alternative treatments and therapies; • our ability to obtain and maintain sufficient third-party coverage and adequate reimbursement from government healthcare programs, including Medicare and Medicaid, private health insurers and other third-party payers; • the willingness of patients to pay all, or a portion of, out-of-pocket costs associated with our products in the absence of sufficient third-party coverage or adequate reimbursement; • any restrictions on the use of our products, and the prevalence and severity of any adverse effects; • potential product liability claims; • the timing of market introduction of our products as well as competitive drugs; • the effectiveness of our or any of our potential future collaborators’ sales and marketing strategies; and • unfavorable publicity relating to the product.
The commencement and completion of clinical trials can be delayed for a number of reasons, including delays related to: • the FDA, EMA or comparable foreign regulatory authorities disagreeing as to the design or implementation of our clinical trials and reaching consensus among the FDA and EMA over the design of the same clinical trial; • any failure or delay in obtaining regulatory authorizations to commence a trial; • any failure or delay in reaching an agreement with contract research organizations, or CROs, and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites; • institutional review boards, or IRBs, or other reviewing bodies refusing to approve, suspending or terminating the trial at an investigational site, precluding enrollment of additional subjects, or withdrawing their approval of the trial; • changes to clinical trial protocols; • clinical sites deviating from trial protocols or dropping out of a trial; • manufacturing or obtaining sufficient quantities of vonoprazan and any future product candidates; • inability to obtain and deliver sufficient quantities of vonoprazan and any future product candidates to clinical sites; • subjects failing to enroll or remain in our trials at the rate we expect, or failing to return for post- treatment follow-up; • subjects choosing an alternative treatment for the indication for which we are developing vonoprazan and any future product candidates, or participating in competing clinical trials; • lack of adequate funding to continue the clinical trial; • subjects experiencing severe or unexpected drug-related adverse effects; 67 • occurrence of serious adverse events in trials of the same class of agents conducted by other companies; • selection of clinical endpoints that require prolonged periods of clinical observation or analysis of the resulting data; • a facility manufacturing vonoprazan or any future product candidates or any of their components being ordered by the FDA or comparable foreign regulatory authorities to temporarily or permanently shut down due to violations of current good manufacturing, or cGMP, regulations or other applicable requirements, or infections or cross-contaminations of product candidates in the manufacturing process; • any changes to our manufacturing process that may be necessary or desired; • third-party clinical investigators losing the licenses or permits necessary to perform our clinical trials, not performing our clinical trials on our anticipated schedule or consistent with the clinical trial protocol, good clinical practices, or GCP, or other regulatory requirements; • third-party contractors not performing data collection or analysis in a timely or accurate manner; or • third-party contractors becoming debarred or suspended or otherwise penalized by the FDA or other government or regulatory authorities for violations of regulatory requirements, in which case we may need to find a substitute contractor, and we may not be able to use some or all of the data produced by such contractors in support of our marketing applications.
The commencement and completion of clinical trials can be delayed for a number of reasons, including delays related to: • the FDA, EMA or comparable foreign regulatory authorities disagreeing as to the design or implementation of our clinical trials and reaching consensus among the FDA and EMA over the design of the same clinical trial; • any failure or delay in obtaining regulatory authorizations to commence a trial; • any failure or delay in reaching an agreement with contract research organizations, or CROs, and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites; • institutional review boards, or IRBs, or other reviewing bodies refusing to approve, suspending or terminating the trial at an investigational site, precluding enrollment of additional subjects, or withdrawing their approval of the trial; • changes to clinical trial protocols; • clinical sites deviating from trial protocols or dropping out of a trial; • manufacturing or obtaining sufficient quantities of vonoprazan and any future product candidates; • inability to obtain and deliver sufficient quantities of vonoprazan and any future product candidates to clinical sites; • subjects failing to enroll or remain in our trials at the rate we expect, or failing to return for post- treatment follow-up; • subjects choosing an alternative treatment for the indication for which we are developing vonoprazan and any future product candidates, or participating in competing clinical trials; • lack of adequate funding to continue the clinical trial; • subjects experiencing severe or unexpected drug-related adverse effects; • occurrence of serious adverse events in trials of the same class of agents conducted by other companies; • selection of clinical endpoints that require prolonged periods of clinical observation or analysis of the resulting data; • a facility manufacturing vonoprazan or any future product candidates or any of their components being ordered by the FDA or comparable foreign regulatory authorities to temporarily or permanently shut down due to violations of current good manufacturing, or cGMP, regulations or other applicable requirements, or infections or cross-contaminations of product candidates in the manufacturing process; • any changes to our manufacturing process that may be necessary or desired; 62 • third-party clinical investigators losing the licenses or permits necessary to perform our clinical trials, not performing our clinical trials on our anticipated schedule or consistent with the clinical trial protocol, good clinical practices, or GCP, or other regulatory requirements; • third-party contractors not performing data collection or analysis in a timely or accurate manner; or • third-party contractors becoming debarred or suspended or otherwise penalized by the FDA or other government or regulatory authorities for violations of regulatory requirements, in which case we may need to find a substitute contractor, and we may not be able to use some or all of the data produced by such contractors in support of our marketing applications.
If any of our products that receives marketing approval, including VOQUEZNA, is discovered to cause undesirable side effects, a number of potentially significant negative consequences could result, including: • withdrawal, suspension or limitation by regulatory authorities of approvals of such product; • seizure of the product by regulatory authorities; • recall of the product or changes to the manner in which it is administered; • restrictions on the marketing of the product or the manufacturing process for any component thereof; • requirement by regulatory authorities of additional warnings on the label, such as a “black box” warning or contraindications; • requirement that we implement a REMS or create a medication guide outlining the risks of such side effects for distribution to patients; • commitment to expensive additional safety studies prior to approval or post-marketing studies required by regulatory authorities of such product; • the product may become less competitive; • initiation of regulatory investigations and government enforcement actions; • initiation of legal action against us to hold us liable for harm caused to patients; and • harm to our reputation and resulting harm to physician or patient acceptance of our products.
If any of our products that receives marketing approval, including VOQUEZNA, is discovered to cause undesirable side effects, a number of potentially significant negative consequences could result, including: • withdrawal, suspension or limitation by regulatory authorities of approvals of such product; • seizure of the product by regulatory authorities; • recall of the product or changes to the manner in which it is administered; • restrictions on the marketing of the product or the manufacturing process for any component thereof; • requirement by regulatory authorities of additional warnings on the label, such as a “black box” warning or contraindications; • requirement that we implement a REMS or create a medication guide outlining the risks of such side effects for distribution to patients; 64 • commitment to expensive additional safety studies prior to approval or post-marketing studies required by regulatory authorities of such product; • the product may become less competitive; • initiation of regulatory investigations and government enforcement actions; • initiation of legal action against us to hold us liable for harm caused to patients; and • harm to our reputation and resulting harm to physician or patient acceptance of our products.
For example: • others may be able to develop products that are similar to VOQUEZNA or any future product candidates but that are not covered by the claims of the patents that we own in the future or license; • we or our current and future licensors or predecessors might not have been the first to make the inventions covered by the issued patents or patent applications that we own in the future or license; • we or our current and future licensors or predecessors might not have been the first to file patent applications covering certain of the claimed inventions; • others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our intellectual property rights; • it is possible that the pending patent applications we own or license will not lead to issued patents; • issued patents that we own in the future or license may be held invalid or unenforceable, as a result of legal challenges by our competitors; • our competitors might conduct research and development activities in countries where we do not have patent rights and then use the information learned from such activities to develop competitive products for sale in our major commercial markets; • we may not develop additional proprietary technologies that are patentable; and • the patents of others may have an adverse effect on our business.
For example: • others may be able to develop products that are similar to VOQUEZNA or any future product candidates but that are not covered by the claims of the patents that we own in the future or license; • we or our current and future licensors or predecessors might not have been the first to make the inventions covered by the issued patents or patent applications that we own in the future or license; • we or our current and future licensors or predecessors might not have been the first to file patent applications covering certain of the claimed inventions; • others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our intellectual property rights; • it is possible that the pending patent applications we own or license will not lead to issued patents; • issued patents that we own in the future or license may be held invalid or unenforceable, as a result of legal challenges by our competitors; • our competitors might conduct research and development activities in countries where we do not have patent rights and then use the information learned from such activities to develop competitive products for sale in our major commercial markets; 87 • we may not develop additional proprietary technologies that are patentable; and • the patents of others may have an adverse effect on our business.
Our common stock has a limited trading history and the market price has fluctuated widely, and may in the future fluctuate widely, depending upon many factors such as those discussed in this “Risk Factors” section and many others, some of which are beyond our control, including the following: • a relatively low-volume trading market for our shares of common stock that could cause trades of small blocks of shares to have a significant impact on the price of our shares of common stock; • market conditions in the biopharmaceutical sector and issuance of securities analysts’ reports or recommendations; • establishment of short positions by holders or non-holders of our common stock; • an inability to obtain additional funding; • sales of our stock by insiders and stockholders, including Takeda; • our ability to enroll patients in our ongoing and any future clinical trials; • results of our clinical trials and preclinical studies, the results of clinical trials conducted by Takeda and others for vonoprazan, and the results of trials of our competitors or those of other companies in our market sector; • additional regulatory approvals of vonoprazan and approvals of any future product candidates, or limitations to specific label indications or patient populations for use of any approved products, or changes or delays in the regulatory review process; • any termination or loss of rights under the Takeda License; • regulatory developments in the United States and foreign countries; • changes in the structure of healthcare payment systems, especially in light of reforms to the U.S. healthcare system; • the success or failure of our efforts to acquire, license or develop additional product candidates; • innovations or new products developed by us or our competitors; • announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments; 102 • manufacturing, supply or distribution delays or shortages; • any changes to our relationship with any manufacturers, suppliers, licensors, future collaborators or other strategic partners; • achievement of expected product sales and profitability; • variations in our financial results or those of companies that are perceived to be similar to us; • general economic, industry and market conditions, public health emergencies or other events or factors, many of which are beyond our control; • additions or departures of key personnel; • intellectual property, product liability or other litigation against us; • changes in our capital structure, such as future issuances of securities and the incurrence of additional debt; and • changes in accounting standards, policies, guidelines, interpretations or principles.
Our common stock has a limited trading history and the market price has fluctuated widely, and may in the future fluctuate widely, depending upon many factors such as those discussed in this “Risk Factors” section and many others, some of which are beyond our control, including the following: • a relatively low-volume trading market for our shares of common stock that could cause trades of small blocks of shares to have a significant impact on the price of our shares of common stock; • market conditions in the biopharmaceutical sector and issuance of securities analysts’ reports or recommendations; • establishment of short positions by holders or non-holders of our common stock; • an inability to obtain additional funding; • sales of our stock by insiders and stockholders, including Takeda; • our ability to enroll patients in our ongoing and any future clinical trials; • results of our clinical trials and preclinical studies, the results of clinical trials conducted by Takeda and others for vonoprazan, and the results of trials of our competitors or those of other companies in our market sector; • additional regulatory approvals of vonoprazan and approvals of any future product candidates, or limitations to specific label indications or patient populations for use of any approved products, or changes or delays in the regulatory review process; • any termination or loss of rights under the Takeda License; • regulatory developments in the United States and foreign countries; 95 • changes in the structure of healthcare payment systems, especially in light of reforms to the U.S. healthcare system; • the success or failure of our efforts to acquire, license or develop additional product candidates; • innovations or new products developed by us or our competitors; • announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments; • manufacturing, supply or distribution delays or shortages; • any changes to our relationship with any manufacturers, suppliers, licensors, future collaborators or other strategic partners; • achievement of expected product sales and profitability; • variations in our financial results or those of companies that are perceived to be similar to us; • general economic, industry and market conditions, public health emergencies or other events or factors, many of which are beyond our control; • additions or departures of key personnel; • intellectual property, product liability or other litigation against us; • changes in our capital structure, such as future issuances of securities and the incurrence of additional debt; and • changes in accounting standards, policies, guidelines, interpretations or principles.
Despite the implementation of cybersecurity measures, our internal information systems and those of our current and any future CROs, contract manufacturers, and other service providers, contractors, consultants and collaborators are vulnerable to numerous and evolving cybersecurity risks that threaten the confidentiality, integrity and availability of our information systems and confidential Information, including from diverse threat actors, such as state-sponsored organizations, opportunistic hackers and hacktivists, as well as through diverse attack vectors, such as social engineering/phishing, malware (including ransomware), malfeasance by insiders, human or technological error, and as a result of malicious code embedded in open-source software, or misconfigurations, 'bugs' or other vulnerabilities in commercial software that is integrated into our (or our suppliers’ or service providers’) IT systems, products or services, alongside damage from natural disasters, terrorism, war and telecommunication and electrical failures.
Despite the implementation of cybersecurity measures, our internal information systems and those of our current and any future CROs, contract manufacturers, and other service providers, contractors, consultants and collaborators are 80 vulnerable to numerous and evolving cybersecurity risks that threaten the confidentiality, integrity and availability of our information systems and confidential information, including from diverse threat actors, such as state-sponsored organizations, opportunistic hackers and hacktivists, as well as through diverse attack vectors, such as social engineering/phishing, malware (including ransomware), malfeasance by insiders, human or technological error, and as a result of malicious code embedded in open-source software, or misconfigurations, 'bugs' or other vulnerabilities in commercial software that is integrated into our (or our suppliers’ or service providers’) IT systems, products or services, alongside damage from natural disasters, terrorism, war and telecommunication and electrical failures.
As the regulatory guidance and enforcement landscape in relation to data transfers continue to develop, we could suffer additional costs, complaints and/or regulatory investigations or fines, we may have to stop using certain tools and vendors and make other operational changes, we have had to and will have to implement revised standard contractual clauses for existing customer and vendor arrangements within required time frames, and/or if we are otherwise unable to transfer personal data 86 between and among countries and regions in which we operate, it could affect the manner in which we provide our services, the geographical location or segregation of our relevant systems and operations, and could adversely affect our financial results.
As the regulatory guidance and enforcement landscape in relation to data transfers continue to develop, we could suffer additional costs, complaints and/or regulatory investigations or fines, we may have to stop using certain tools and vendors and make other operational changes, we have had to and will have to implement revised standard contractual clauses for existing customer and vendor arrangements within required time frames, and/or if we are otherwise unable to transfer personal data between and among countries and regions in which we operate, it could affect the manner in which we provide our services, the geographical location or segregation of our relevant systems and operations, and could adversely affect our financial results.
Disputes may arise between us and our licensors regarding intellectual property subject to a license agreement, including: • the scope of rights granted under the license agreement and other interpretation-related issues; • whether and the extent to which our technology and processes infringe on intellectual property of the licensor that is not subject to the licensing agreement; • our right to sublicense patents and other rights to third parties; • our diligence obligations with respect to the use of the licensed technology in relation to our development and commercialization of vonoprazan and any future product candidates, and what activities satisfy those diligence obligations; • our right to transfer or assign the license; and • the ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our licensors and us and our partners.
Disputes may arise between us and our licensors regarding intellectual property subject to a license agreement, including: • the scope of rights granted under the license agreement and other interpretation-related issues; 84 • whether and the extent to which our technology and processes infringe on intellectual property of the licensor that is not subject to the licensing agreement; • our right to sublicense patents and other rights to third parties; • our diligence obligations with respect to the use of the licensed technology in relation to our development and commercialization of vonoprazan and any future product candidates, and what activities satisfy those diligence obligations; • our right to transfer or assign the license; and • the ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our licensors and us and our partners.
If the license agreement is terminated, we would lose our rights to develop and commercialize vonoprazan; ● If the scope of any patent protection or non-patent regulatory exclusivity we obtain is not sufficiently broad, or if we lose or fail to obtain any of our patent protection or non-patent regulatory exclusivity, our ability to prevent our competitors from commercializing similar or identical product candidates would be adversely affected; ● The successful commercialization of VOQUEZNA, VOQUEZNA TRIPLE PAK and Voquezna Dual Pak will depend in part on the extent to which governmental authorities and health insurers establish coverage, adequate reimbursement levels and favorable pricing policies.
If the license agreement is terminated, we would lose our rights to develop and commercialize vonoprazan; 49 ● If the scope of any patent protection or non-patent regulatory exclusivity we obtain is not sufficiently broad, or if we lose or fail to obtain any of our patent protection or non-patent regulatory exclusivity, our ability to prevent our competitors from commercializing similar or identical product candidates would be adversely affected; ● The successful commercialization of VOQUEZNA, VOQUEZNA TRIPLE PAK and Voquezna Dual Pak will depend in part on the extent to which governmental authorities and health insurers establish coverage, adequate reimbursement levels and favorable pricing policies.
In addition, the U.S. government has the right, under certain limited circumstances, to require us to grant exclusive, partially exclusive, or non-exclusive licenses to any of these inventions to a third party if it determines that: (i) adequate steps have not been taken to commercialize the invention; (ii) government action is necessary to meet public health or safety needs; or (iii) government action is necessary to meet requirements for public use under federal regulations (also 101 referred to as “march-in rights”).
In addition, the U.S. government has the right, under certain limited circumstances, to require us to grant exclusive, partially exclusive, or non-exclusive licenses to any of these inventions to a third party if it determines that: (i) adequate steps have not been taken to commercialize the invention; (ii) government action is necessary to meet public health or safety needs; or (iii) government action is necessary to meet requirements for public use under federal regulations (also referred to as “march-in rights”).
If we obtain regulatory approval of our current products and any future product candidates and ultimately commercialize our products in foreign markets, we would be subject to additional risks and uncertainties, including: • different regulatory requirements for approval of drugs in foreign countries; • reduced protection for intellectual property rights; • the existence of additional third-party patent rights of potential relevance to our business; • unexpected changes in tariffs, trade barriers and regulatory requirements; • economic weakness, including inflation, public health emergencies or political instability in particular foreign economies and markets; • compliance with tax, employment, immigration and labor laws for employees living or traveling internationally; • foreign currency fluctuations, which could result in increased operating expenses and reduced revenues, and other obligations incident to doing business in another country; • foreign reimbursement, pricing and insurance regimes; • workforce uncertainty in countries where labor unrest is common; • production shortages resulting from any events affecting raw material supply or manufacturing capabilities internationally; and 64 • business interruptions resulting from geopolitical actions, including war and terrorism, or natural disasters including earthquakes, typhoons, floods and fires.
If we obtain regulatory approval of our current products and any future product candidates and ultimately commercialize our products in foreign markets, we would be subject to additional risks and uncertainties, including: • different regulatory requirements for approval of drugs in foreign countries; • reduced protection for intellectual property rights; • the existence of additional third-party patent rights of potential relevance to our business; • unexpected changes in tariffs, trade barriers and regulatory requirements; • economic weakness, including inflation, public health emergencies or political instability in particular foreign economies and markets; • compliance with tax, employment, immigration and labor laws for employees living or traveling internationally; • foreign currency fluctuations, which could result in increased operating expenses and reduced revenues, and other obligations incident to doing business in another country; • foreign reimbursement, pricing and insurance regimes; • workforce uncertainty in countries where labor unrest is common; 59 • production shortages resulting from any events affecting raw material supply or manufacturing capabilities internationally; and • business interruptions resulting from geopolitical actions, including war and terrorism, or natural disasters including earthquakes, typhoons, floods and fires.
Misconduct by these parties could include intentional, reckless and/or negligent conduct or other unauthorized activities that violate: (i) the laws and regulations of the FDA and other similar regulatory bodies, including those laws that require the reporting of true, complete and accurate information to such regulatory bodies, (ii) manufacturing standards, including cGMP and similar requirements, or (iii) federal and state healthcare, security, fraud and abuse laws, data privacy and cybersecurity laws, and other similar non-U.S. laws that require the true, complete and accurate reporting of financial information or data.
Misconduct by these parties could include intentional, reckless and/or negligent conduct or other unauthorized activities that violate: (i) the laws and regulations of the FDA and other similar regulatory bodies, including those laws that require the reporting of true, complete and accurate information to such 81 regulatory bodies, (ii) manufacturing standards, including cGMP and similar requirements, or (iii) federal and state healthcare, security, fraud and abuse laws, data privacy and cybersecurity laws, and other similar non-U.S. laws that require the true, complete and accurate reporting of financial information or data.
Patent terms may be inadequate to protect our competitive position on VOQUEZNA and any future product candidates for an adequate amount of time. Patents have a limited lifespan. In the United States, if all maintenance fees are timely paid, the natural expiration of a patent is generally 20 years from its earliest U.S. non-provisional filing date.
Patent terms may be inadequate to protect our competitive position on VOQUEZNA and any future product candidates for an adequate amount of time. 91 Patents have a limited lifespan. In the United States, if all maintenance fees are timely paid, the natural expiration of a patent is generally 20 years from its earliest U.S. non-provisional filing date.
If these relationships and any related compensation result in perceived or actual conflicts of interest, or the FDA or comparable regulatory authority concludes that the financial relationship may have affected the interpretation of the study, the integrity of the data generated at the applicable clinical trial site may be questioned and the utility of the clinical trial itself may be jeopardized, which could result in the delay or rejection of any NDA or similar marketing application we submit by the FDA or by comparable regulatory authority.
If these relationships and any related compensation result in perceived or actual conflicts of interest, or the FDA or comparable regulatory authority concludes that the financial relationship may have affected the interpretation of the study, the integrity of the data generated at the applicable clinical trial site may be questioned and the utility of the clinical trial itself may be jeopardized, which could result in the delay or rejection of any NDA, sNDA or similar marketing application we submit by the FDA or by comparable regulatory authority.
To the extent that any disruption or cybersecurity incident were to jeopardize the confidentiality, integrity, or availability of our information systems, or result in a loss of, or damage to, our data or applications, or inappropriate disclosure of confidential or proprietary 87 information, we could incur liability, the further development and commercialization of vonoprazan and any future product candidates could be delayed, and we could be subject to significant fines, penalties or liabilities for any noncompliance to certain privacy and cybersecurity laws.
To the extent that any disruption or cybersecurity incident were to jeopardize the confidentiality, integrity, or availability of our information systems, or result in a loss of, or damage to, our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur liability, the further development and commercialization of vonoprazan and any future product candidates could be delayed, and we could be subject to significant fines, penalties or liabilities for any noncompliance to certain privacy and cybersecurity laws.
The total addressable market across indications for our current products and any future product candidates will ultimately depend upon, among other things, the diagnosis criteria included in the final label for each of product and any future product candidates approved for sale for these indications, the availability of alternative treatments and the safety, convenience, cost and efficacy of our current products and any future product candidates relative to such alternative treatments, acceptance by the medical community and patient access, drug pricing and reimbursement.
The total addressable market across indications for our current products and any future product 58 candidates will ultimately depend upon, among other things, the diagnosis criteria included in the final label for each of product and any future product candidates approved for sale for these indications, the availability of alternative treatments and the safety, convenience, cost and efficacy of our current products and any future product candidates relative to such alternative treatments, acceptance by the medical community and patient access, drug pricing and reimbursement.
If we do not achieve one or more of these factors in a timely manner or at all, we could experience significant delays or an inability to successfully complete clinical trials, obtain regulatory approval or, if approved, commercialize additional vonoprazan indications or any other product candidates, which would materially harm our business, financial condition and results of operations.
If we do not achieve one or more of these factors in a timely manner or at all, we could experience significant delays or an inability to successfully complete clinical trials, obtain regulatory approval or, if 60 approved, commercialize additional vonoprazan indications or any other product candidates, which would materially harm our business, financial condition and results of operations.
Moreover, if vonoprazan or any other future product candidates are associated with undesirable side effects in clinical trials or have characteristics that are unexpected, we may elect to abandon their development or limit their development to more narrow uses or subpopulations in which the undesirable side effects or other characteristics are less prevalent, less severe or more 69 acceptable from a risk-benefit perspective, which may limit the commercial expectations for the product candidate, if approved.
Moreover, if vonoprazan or any other future product candidates are associated with undesirable side effects in clinical trials or have characteristics that are unexpected, we may elect to abandon their development or limit their development to more narrow uses or subpopulations in which the undesirable side effects or other characteristics are less prevalent, less severe or more acceptable from a risk-benefit perspective, which may limit the commercial expectations for the product candidate, if approved.
Foreign Corrupt Practices Act of 1977, as amended, which prohibits, among other things, U.S. companies and their employees and agents from authorizing, promising, offering, or providing, directly or indirectly, corrupt or improper payments or anything else of value to foreign government officials, employees of public international organizations and foreign government owned or affiliated entities, candidates for foreign political office, and foreign political parties or officials thereof.
Foreign Corrupt Practices Act of 1977, as amended, which prohibits, among other things, U.S. companies and their employees and agents from authorizing, promising, offering, or providing, directly or indirectly, corrupt or improper payments or anything else of 75 value to foreign government officials, employees of public international organizations and foreign government owned or affiliated entities, candidates for foreign political office, and foreign political parties or officials thereof.
Certain states have also adopted comprehensive and health-specific privacy and security laws and regulations, some of which may be more stringent than HIPAA. Such laws and regulations will be subject to interpretation 85 by various courts and other governmental authorities, thus creating potentially complex compliance issues for us and our future customers and strategic partners.
Certain states have also adopted comprehensive and health-specific privacy and security laws and regulations, some of which may be more stringent than HIPAA. Such laws and regulations will be subject to interpretation by various courts and other governmental authorities, thus creating potentially complex compliance issues for us and our future customers and strategic partners.
We expect to experience pricing pressures in connection with the sale of any of our products due to the trend toward managed healthcare, the increasing influence of health maintenance organizations and additional legislative changes. The downward pressure on healthcare costs in general, particularly 60 prescription drugs and surgical procedures and other treatments, has become very intense.
We expect to experience pricing pressures in connection with the sale of any of our products due to the trend toward managed healthcare, the increasing influence of health maintenance organizations and additional legislative changes. The downward pressure on healthcare costs in general, particularly prescription drugs and surgical procedures and other treatments, has become very intense.
We plan on entering into collaboration agreements with respect to marketing, sales and distribution of our products in Europe and Canada. Any revenue we receive in these markets will depend in whole or in part upon the efforts of these third-party collaborators, which may not be successful and are generally not within our control.
In addition, we plan on entering into collaboration agreements with respect to marketing, sales and distribution of our products in Europe and Canada. Any revenue we receive in these markets will depend in whole or in part upon the efforts of these third-party collaborators, which may not be successful and are generally not within our control.
Switching or adding additional CROs, investigators and other third parties involves additional cost and requires management time and focus. In addition, there is a natural transition period when a new CRO commences work. As a result, delays occur, which can materially impact our ability to meet our desired clinical development timelines.
Switching or adding additional CROs, investigators and other third parties involves additional cost and requires management time and focus. In addition, there is a natural transition period when a new CRO 69 commences work. As a result, delays occur, which can materially impact our ability to meet our desired clinical development timelines.
Such a loss of patent protection would have a material adverse impact on our business. Even if resolved in our favor, litigation or other legal proceedings relating to our intellectual property rights may cause us to incur significant expenses and could distract our technical and management personnel from their normal responsibilities.
Such a loss of patent protection would have a material adverse impact on our business. 89 Even if resolved in our favor, litigation or other legal proceedings relating to our intellectual property rights may cause us to incur significant expenses and could distract our technical and management personnel from their normal responsibilities.
Because these approvals were for QIDP-designated drugs containing the active moiety, 92 vonoprazan, which had not previously been approved, the FDA granted five-years of NCE exclusivity, which was extended by an additional five-years pursuant to the GAIN Act, resulting in a total of ten-years of NCE exclusivity, until May 3, 2032.
Because these approvals were for QIDP-designated drugs containing the active moiety, vonoprazan, which had not previously been approved, the FDA granted five-years of NCE exclusivity, which was extended by an additional five-years pursuant to the GAIN Act, resulting in a total of ten-years of NCE exclusivity, until May 3, 2032.
The number of patients in the United States and other major markets and elsewhere may turn out to be lower than expected, patients may not be otherwise amenable to 63 treatment with our products or new patients may become increasingly difficult to identify or gain access to, all of which would adversely affect our results of operations and our business.
The number of patients in the United States and other major markets and elsewhere may turn out to be lower than expected, patients may not be otherwise amenable to treatment with our products or new patients may become increasingly difficult to identify or gain access to, all of which would adversely affect our results of operations and our business.
In addition, approval policies or regulations may change, and the FDA and EMA and comparable 70 regulatory authorities have substantial discretion in the drug approval process, including the ability to delay, limit or deny approval of a product candidate for many reasons. Despite the time and expense invested in clinical development of product candidates, regulatory approval is never guaranteed.
In addition, approval policies or regulations may change, and the FDA and EMA and comparable regulatory authorities have substantial discretion in the drug approval process, including the ability to delay, limit or deny approval of a product candidate for many reasons. Despite the time and expense invested in clinical development of product candidates, regulatory approval is never guaranteed.
In addition, treating physicians may be less willing to prescribe vonoprazan due to concerns over such trial results or adverse events, which would limit our ability to commercialize vonoprazan. In addition, the FDA’s and other regulatory authorities’ policies with respect to clinical trials may change and additional government regulations may be enacted.
In addition, treating physicians may be less willing to prescribe vonoprazan due to concerns over such trial results or adverse events, which would limit our ability to commercialize our vonoprazan products. In addition, the FDA’s and other regulatory authorities’ policies with respect to clinical trials may change and additional government regulations may be enacted.
Based on the first marketing approval by the FDA for vonoprazan, we believe one or more of our U.S. patents or those of our current and future licensors, may be eligible for limited patent term restoration under the Drug Price Competition and Patent Term 98 Restoration Act of 1984, or the Hatch-Waxman Amendments.
Based on the first marketing approval by the FDA for vonoprazan, we believe one or more of our U.S. patents or those of our current and future licensors, may be eligible for limited patent term restoration under the Drug Price Competition and Patent Term Restoration Act of 1984, or the Hatch-Waxman Amendments.
We may encounter unforeseen expenses, difficulties, complications and delays, and may not be successful in such a transition. 54 We have incurred significant operating losses since inception and anticipate that we will continue to incur substantial operating losses for the foreseeable future and may never achieve or maintain profitability. Since our inception, we have incurred significant operating losses.
We may encounter unforeseen expenses, difficulties, complications and delays, and may not be successful in such a transition. We have incurred significant operating losses since inception and anticipate that we will continue to incur substantial operating losses for the foreseeable future and may never achieve or maintain profitability. Since our inception, we have incurred significant operating losses.
In the U.S., HIPAA imposes, among other things, certain standards relating to the privacy, security, transmission and breach reporting of individually identifiable health information. While we are not a covered entity under HIPAA, we interact with healthcare providers regulated by HIPAA as covered entities.
In the U.S., HIPAA imposes, among other things, certain standards relating to the privacy, security, transmission and breach reporting 79 of individually identifiable health information. While we are not a covered entity under HIPAA, we interact with healthcare providers regulated by HIPAA as covered entities.
Any patent-related legal action against us claiming damages and seeking to enjoin activities relating to VOQUEZNA and any future product candidates or processes could subject us to potential liability for damages, including treble damages if we were determined to willfully infringe, and require us to obtain a license to manufacture or develop VOQUEZNA and any future product candidates.
Any patent-related legal action against us claiming damages and seeking to enjoin activities relating to VOQUEZNA and any future product candidates or processes could subject us to potential liability for damages, including treble damages if we were determined to willfully infringe, and require us to obtain a license to manufacture or develop VOQUEZNA and any future product 88 candidates.
We may lack the necessary expertise, personnel and resources to successfully commercialize any of our product candidates that have received or may receive regulatory approval, including VOQUEZNA; 53 ● We rely on third parties to conduct our preclinical and clinical trials and perform other tasks for us.
We may lack the necessary expertise, personnel and resources to successfully commercialize any of our product candidates that have received or may receive regulatory approval, including VOQUEZNA; ● We rely on third parties to conduct our preclinical and clinical trials and perform other tasks for us.
Many countries have compulsory licensing laws under which a patent owner may be compelled to grant licenses to third parties. In addition, many countries limit the enforceability of patents against government agencies or government contractors. In these countries, the patent owner may have limited remedies, which could materially diminish the value of such patent.
Many countries have compulsory licensing laws under which a patent owner may be compelled to grant licenses to third parties. In addition, many countries limit the enforceability of patents against government agencies or government contractors. In 92 these countries, the patent owner may have limited remedies, which could materially diminish the value of such patent.
Under the UPC, all European patents, including those issued prior to ratification of the European Patent Package, will by default automatically fall under the jurisdiction of the UPC. The UPC will 97 provide our competitors with a new forum to centrally revoke our European patents, and allow for the possibility of a competitor to obtain pan-European injunctions.
Under the UPC, all European patents, including those issued prior to ratification of the European Patent Package, will by default automatically fall under the jurisdiction of the UPC. The UPC will provide our competitors with a new forum to centrally revoke our European patents, and allow for the possibility of a competitor to obtain pan-European injunctions.
The 340B ceiling price is calculated using a statutory formula, which is based on the AMP and rebate amount for the covered outpatient drug as calculated under the MDRP. In general, products subject to Medicaid price reporting and rebate liability are also subject to the 340B ceiling price calculation and discount requirement.
The 340B ceiling price is calculated using a statutory formula, which is based on the AMP and rebate amount for the covered outpatient drug as calculated under the MDRP. In general, products subject to Medicaid 56 price reporting and rebate liability are also subject to the 340B ceiling price calculation and discount requirement.
We and any of our third-party manufacturers or suppliers will use biological materials, potent chemical agents and may use hazardous materials, including chemicals and biological agents and compounds that could be dangerous to human health and safety of the environment. Our operations and the operations of our third-party manufacturers and suppliers also produce hazardous waste products.
We and any of our third-party manufacturers or suppliers will use biological materials, potent chemical agents and may use hazardous materials, including chemicals and biological agents and compounds that could be dangerous to human health and safety 77 of the environment. Our operations and the operations of our third-party manufacturers and suppliers also produce hazardous waste products.
It is possible that defects of form in the preparation or filing of our or our current and future licensors’ patents or patent applications may exist, or may arise in the future, for example with respect to proper priority claims, inventorship, claim scope, or requests for patent term adjustments.
It is 85 possible that defects of form in the preparation or filing of our or our current and future licensors’ patents or patent applications may exist, or may arise in the future, for example with respect to proper priority claims, inventorship, claim scope, or requests for patent term adjustments.
In addition, the Sarbanes-Oxley Act, as well as rules subsequently adopted by the SEC and Nasdaq to implement provisions of the Sarbanes-Oxley Act, impose significant requirements on public companies, including requiring establishment and maintenance of effective disclosure and financial controls and changes in corporate governance practices.
In addition, the Sarbanes-Oxley Act, as well as rules subsequently adopted by the SEC and Nasdaq to implement provisions of the Sarbanes-Oxley Act, impose significant requirements on public companies, including 99 requiring establishment and maintenance of effective disclosure and financial controls and changes in corporate governance practices.
The occurrence of any of these events could have a material adverse effect on our business, financial condition and results of operations. 79 Our Revenue Interest Financing Agreement could limit cash flow available for our operations and expose us to risks that could adversely affect our business, financial condition and results of operations.
The occurrence of any of these events could have a material adverse effect on our business, financial condition and results of operations. Our Revenue Interest Financing Agreement could limit cash flow available for our operations and expose us to risks that could adversely affect our business, financial condition and results of operations.
In May 2022, we entered into a Revenue Interest Financing Agreement with the Initial Investors pursuant to which we can receive up to $260.0 million in funding from the Initial Investors, and in October 2022, we entered into the Joinder Agreement under which we can receive up to $40 million from the Additional Investor, bringing the total funding available under the Revenue Interest Financing Agreement to up to $300 million.
In May 2022, we entered into a Revenue Interest Financing Agreement with the Initial Investors pursuant to which we can receive up to $260 million in funding from the Initial Investors, and in October 2022, we entered into the Joinder Agreement under which we can receive up to $40 million from the Additional Investor, bringing the total funding available under the Revenue Interest Financing Agreement to up to $300 million.
We employ 99 reputable law firms and other professionals to help us comply, and in many cases, an inadvertent lapse can be cured by payment of a late fee or by other means in accordance with rules applicable to the particular jurisdiction.
We employ reputable law firms and other professionals to help us comply, and in many cases, an inadvertent lapse can be cured by payment of a late fee or by other means in accordance with rules applicable to the particular jurisdiction.
Our efforts to enforce or protect our proprietary rights related to trademarks, 100 trade names, trade secrets, domain names, copyrights or other intellectual property may be ineffective and could result in substantial costs and diversion of resources and could adversely affect our financial condition or results of operations.
Our efforts to enforce or protect our proprietary rights related to trademarks, trade names, trade secrets, domain names, copyrights or other intellectual property may be ineffective and could result in substantial costs and diversion of resources and could adversely affect our financial condition or results of operations.
Our operations could be subject to earthquakes, power shortages, telecommunications failures, water shortages, floods, hurricanes, typhoons, fires, extreme weather conditions, medical epidemics and other natural or manmade disasters or business 106 interruptions, for which we are predominantly self-insured.
Our operations could be subject to earthquakes, power shortages, telecommunications failures, water shortages, floods, hurricanes, typhoons, fires, extreme weather conditions, medical epidemics and other natural or manmade disasters or business interruptions, for which we are predominantly self-insured.
If we fail to comply with our obligations under these agreements, or we are subject to bankruptcy-related proceedings, the licensor 90 may have the right to terminate the license, in which event we would not be able to market products covered by the license.
If we fail to comply with our obligations under these agreements, or we are subject to bankruptcy-related proceedings, the licensor may have the right to terminate the license, in which event we would not be able to market products covered by the license.
If our trademarks and trade names are not adequately protected, then we may not be able to build name recognition in our markets of interest and our business may be adversely affected. We intend to use registered or unregistered trademarks or trade names to brand and market ourselves and our products.
If our trademarks and trade names are not adequately protected, then we may not be able to build name recognition in our markets of interest and our business may be adversely affected. 93 We intend to use registered or unregistered trademarks or trade names to brand and market ourselves and our products.
Any violations of the laws and regulations described above may 88 result in substantial civil and criminal fines and penalties, imprisonment, the loss of export or import privileges, debarment, tax reassessments, breach of contract and fraud litigation, reputational harm and other consequences.
Any violations of the laws and regulations described above may result in substantial civil and criminal fines and penalties, imprisonment, the loss of export or import privileges, debarment, tax reassessments, breach of contract and fraud litigation, reputational harm and other consequences.
Although we started developing marketing and distribution capabilities in 2021 in advance of the planned commercialization of VOQUEZNA, VOQUEZNA TRIPLE PAK and VOQUEZNA DUAL PAK, due to approval and launch delays, we did not hire our field force until late 2023.
Although we started developing marketing and distribution 53 capabilities in 2021 in advance of the planned commercialization of VOQUEZNA, VOQUEZNA TRIPLE PAK and VOQUEZNA DUAL PAK, due to approval and launch delays, we did not hire our field force until late 2023.
The successful commercialization of our current products or any future product candidate, will depend in part on the extent to which governmental authorities and health insurers establish coverage, adequate reimbursement levels and favorable pricing 59 policies.
The successful commercialization of our current products or any future product candidate, will depend in part on the extent to which governmental authorities and health insurers establish coverage, adequate reimbursement levels and favorable pricing policies.
Clinical trials for which an application was submitted (i) prior to January 31, 2022 under the EU Clinical Trials Directive, or (ii) between January 31, 2022 and January 31, 2023 and for which the sponsor has opted for the application of the EU Clinical Trials Directive remain governed by said Directive until January 31, 2025.
Clinical trials for which an application was submitted (i) prior to January 31, 2022 under the EU Clinical Trials Directive, or (ii) between January 31, 2022 and 61 January 31, 2023 and for which the sponsor has opted for the application of the EU Clinical Trials Directive remain governed by said Directive until January 31, 2025.
Additionally, we may pursue additional in-licenses or acquisitions of development-stage assets or programs, which entails additional risk to us. Identifying, selecting and acquiring promising product candidates requires substantial technical, financial and 72 human resources expertise.
Additionally, we may pursue additional in-licenses or acquisitions of development-stage assets or programs, which entails additional risk to us. Identifying, selecting and acquiring promising product candidates requires substantial technical, financial and human resources expertise.
In addition, if any of the commercial milestones or other cash payments become due under the terms of the Takeda License, we may not have sufficient funds available to meet our obligations, which would allow Takeda to terminate the 74 Takeda License.
In addition, if any of the commercial milestones or other cash payments become due under the terms of the Takeda License, we may not have sufficient funds available to meet our obligations, which would allow Takeda to terminate the Takeda License.
In March 2020, due to efforts to combat the COVID-19 pandemic, we 78 announced a temporary pause in randomization of new patients in our Phase 3 trials and did not recommence randomizations in either trial until June 2020.
In March 2020, due to efforts to combat the COVID-19 pandemic, we announced a temporary pause in randomization of new patients in our Phase 3 trials and did not recommence randomizations in either trial until June 2020.
Furthermore, strategic partners may negotiate for certain rights to control 77 decisions regarding the development and commercialization of vonoprazan and any future product candidates and may not conduct those activities in the same manner as we do.
Furthermore, strategic partners may negotiate for certain rights to control decisions regarding the development and commercialization of vonoprazan and any future product candidates and may not conduct those activities in the same manner as we do.
We may not be able to initiate or continue clinical trials if we are unable to locate a sufficient number of eligible patients to participate in the clinical trials required by the FDA or comparable foreign regulatory authorities.
We may not be able to initiate or continue 63 clinical trials if we are unable to locate a sufficient number of eligible patients to participate in the clinical trials required by the FDA or comparable foreign regulatory authorities.
From time to time, we or others may also disclose interim data from clinical trials. Interim data from clinical trials are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment continues and more patient data 73 become available.
From time to time, we or others may also disclose interim data from clinical trials. Interim data from clinical trials are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment continues and more patient data become available.
We have entered into an agreement with Catalent for the supply of finished drug product, an agreement with Evonik for the supply of drug substance, and an agreement with Sandoz for commercial supply of amoxicillin, clarithromycin 75 and finished convenience packs containing VOQUEZNA and one or both of those antibiotics.
We have entered into an agreement with Catalent for the supply of finished drug product, an agreement with Evonik for the supply of drug substance, and an agreement with Sandoz for commercial supply of amoxicillin, clarithromycin and finished convenience packs containing VOQUEZNA and one or both of those antibiotics.
Regardless of the merits or eventual outcome, liability claims may result in: • decreased demand for our products; • injury to our reputation and significant negative media attention; • withdrawal of clinical trial participants; • costs to defend the related litigation; • a diversion of management’s time and our resources; 84 • substantial monetary awards to trial participants or patients; • product recalls, withdrawals or labeling, marketing or promotional restrictions; • significant negative financial impact; • the inability to commercialize our current products and any future product candidates; and • a decline in our stock price.
Regardless of the merits or eventual outcome, liability claims may result in: • decreased demand for our products; 78 • injury to our reputation and significant negative media attention; • withdrawal of clinical trial participants; • costs to defend the related litigation; • a diversion of management’s time and our resources; • substantial monetary awards to trial participants or patients; • product recalls, withdrawals or labeling, marketing or promotional restrictions; • significant negative financial impact; • the inability to commercialize our current products and any future product candidates; and • a decline in our stock price.
We cannot be certain that such activities by third parties have been or will be conducted in compliance with applicable laws and regulations or will result in valid and enforceable patents or other intellectual property rights.
We cannot be certain that such activities by third parties have been or will be conducted in compliance 86 with applicable laws and regulations or will result in valid and enforceable patents or other intellectual property rights.
We expect to continue to incur losses for the foreseeable future, and we anticipate these losses will increase substantially as we: • initiate, continue, or complete planned or ongoing clinical trials of vonoprazan, including related support activities; • make required milestone and royalty payments under license agreements by which we acquired rights to vonoprazan; • make required royalty payments under the Revenue Interest Financing Agreement, or RIFA, entered into in May 2022, as amended; • make required payments under the Loan and Security Agreement with Hercules Capital, Inc., entered into in September 2021, as amended; • initiate clinical trials for VOQUEZNA, vonoprazan or any future product candidates; • build a portfolio of product candidates through the acquisition or in-license of additional product candidates or technologies; • pursue regulatory approvals for new indications for vonoprazan and future product candidates that successfully complete clinical trials; and • incur additional legal, accounting and other expenses in connection with operating as a public company.
We expect to continue to incur losses for the foreseeable future, and we anticipate these losses will continue as we: • initiate, continue, or complete planned or ongoing clinical trials for VOQUEZNA, vonoprazan or any future product candidates, including related support activities; • make required milestone and royalty payments under license agreements by which we acquired rights to vonoprazan; • make required royalty payments under the Revenue Interest Financing Agreement, or RIFA, entered into in May 2022, as amended; 50 • make required payments under the Loan and Security Agreement with Hercules Capital, Inc., or Loan Agreement, entered into in September 2021, as amended; • build a portfolio of product candidates through the acquisition or in-license of additional product candidates or technologies; • pursue regulatory approvals for new indications for vonoprazan and future product candidates that successfully complete clinical trials; and • incur additional legal, accounting and other expenses in connection with operating as a public company.
These requirements include submissions of safety and other post-marketing information and reports, registration, as well as continued compliance with cGMPs and similar requirements and GCP requirements for any clinical trials that we conduct post-approval.
These requirements include submissions of safety and other post-marketing information and reports, registration, as well as continued compliance with cGMPs and similar requirements and GCP requirements for any clinical trials that we conduct.
Coast Guard, and the U.S. Public Health Service (including the Indian Health Service). The manufacturer must also pay rebates on products purchased by military personnel and dependents through the TRICARE retail 61 pharmacy program.
Coast Guard, and the U.S. Public Health Service (including the Indian Health Service). The manufacturer must also pay rebates on products purchased by military personnel and dependents through the TRICARE retail pharmacy program.
We may make 68 formulation or manufacturing changes to vonoprazan or any future product candidates, in which case we may need to conduct additional preclinical studies to bridge our modified product candidates to earlier versions.
We may make formulation or manufacturing changes to vonoprazan or any future product candidates, in which case we may need to conduct additional preclinical studies to bridge our modified product candidates to earlier versions.
For example, the FDA has approved VOQUEZNA for the treatment for healing and maintenance of healing of all grades of erosive esophagitis and relief of heartburn associated with erosive esophagitis in adults and, in combination with either amoxicillin, or amoxicillin and clarithromycin, treatment of H. pylori infection in adults, and we are not currently permitted to promote this product for any other uses unless and until such uses are approved by the FDA.
For example, the FDA has approved VOQUEZNA for the treatment for healing and maintenance of healing of all grades of erosive esophagitis and relief of heartburn associated with erosive esophagitis in adults, for the relief of heartburn associated with Non-Erosive GERD in adults and, in combination with either amoxicillin, or amoxicillin and clarithromycin, treatment of H. pylori infection in adults, and we are not currently permitted to promote this product for any other uses unless and until such uses are approved by the FDA.
The CTR allows sponsors to make a single submission to both the competent authority and an ethics committee 66 in each member state, leading to a single decision per member state.
The CTR allows sponsors to make a single submission to both the competent authority and an ethics committee in each member state, leading to a single decision per member state.
At the state level, legislatures have increasingly passed legislation and implemented regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.
At the state level, legislatures have increasingly passed legislation and implemented regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure, drug price reporting and other transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.
We will require substantial additional financing to achieve our goals, and a failure to obtain this necessary capital when needed on acceptable terms, or at all, could force us to delay, limit, reduce or terminate our product development programs, commercialization efforts or other operations. The development and commercialization of biopharmaceutical product candidates is capital-intensive.
We may require substantial additional financing to achieve our goals, and a failure to obtain this necessary capital when needed on acceptable terms, or at all, could force us to delay, limit, reduce or terminate our product development programs, commercialization efforts or other operations. The development and commercialization of biopharmaceutical product candidates is capital-intensive.
Disruptions at the FDA and other government agencies caused by funding shortages or global health concerns could hinder their ability to hire and retain key leadership and other personnel, or otherwise prevent new products and services from being developed or commercialized in a timely manner, which could negatively impact our business.
Disruptions at the FDA and other government agencies caused by funding shortages, staffing limitations or global health concerns could hinder their ability to hire and retain key leadership and other personnel, or otherwise prevent new products and services from being developed or commercialized in a timely manner, which could negatively impact our business.
Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations or financial condition. In this section, we first provide a summary of the more significant risks and uncertainties we face and then provide a full set of risk factors and discuss them in greater detail.
Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations or financial condition. In this section, we first provide a summary of the more principal risks and uncertainties we face and then provide a full set of risk factors and discuss them in greater detail.
Similar to the U.S. federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the healthcare fraud statute implemented under HIPAA or specific intent to violate it in order to have committed a violation; • the U.S. federal Physician Payments Sunshine Act, which requires certain manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) to report annually to CMS, information related to certain payments and other “transfers of value” made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors) , certain non-physician practitioners (physician assistants, nurse practitioners, clinical nurse specialists, anesthesiologist assistants, certified registered nurse anesthetists, anesthesiology assistants and certified nurse midwives)and teaching hospitals, as well as ownership and investment interests held by the physicians described above and their immediate family members; and • analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, which may apply to our business practices, including but not limited to, research, distribution, sales and marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payers, including private insurers, or by the patients themselves; state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government, or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; and state laws and regulations that require drug manufacturers to file reports relating to pricing and marketing information or which require tracking gifts and other remuneration and items of value provided to physicians, other healthcare providers and entities. 81 We may also be subject to additional regulation in the conduct of our business.
Similar to the U.S. federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the healthcare fraud statute implemented under HIPAA or specific intent to violate it in order to have committed a violation; • the U.S. federal Physician Payments Sunshine Act, which requires certain manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) to report annually to CMS, information related to certain payments and other “transfers of value” made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors) , certain non-physician practitioners (physician assistants, nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists, anesthesiology assistants and certified nurse midwives)and teaching hospitals, as well as ownership and investment interests held by the physicians described above and their immediate family members; and • analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, which may apply to our business practices, including but not limited to, research, distribution, sales and marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payers, including private insurers, or by the patients themselves; state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government, or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; and state laws and regulations that require drug manufacturers to file reports relating to pricing and marketing information or which require tracking gifts and other remuneration and items of value provided to physicians, other healthcare providers and entities.
If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing approval that we may have obtained, may be subject to enforcement action, and we may not achieve or sustain profitability.
If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing approvals that we may have obtained, may be subject to enforcement action, and we may not achieve or sustain profitability.
We may be incorrect in our belief regarding the potential of vonoprazan as an as needed treatment for Non-Erosive GERD and any future clinical trial we conduct studying as needed dosing of vonoprazan in Non-Erosive GERD patients may not succeed including as a result of our design and enrollment criteria.
We may be incorrect in our belief regarding the potential of vonoprazan as 66 an as needed treatment for Non-Erosive GERD and any potential clinical trial we conduct studying as needed dosing of vonoprazan in Non-Erosive GERD patients may not succeed including as a result of our design and enrollment criteria.
Under prevailing U.S. tax law, federal net operating loss, or NOL, carryforwards generated in periods after December 31, 2017, may be carried forward indefinitely but may only be used to offset 80% of our taxable income annually. Our NOL carryforwards are subject to review and possible adjustment by the Internal Revenue Service, or the IRS, and state tax authorities.
Under prevailing U.S. tax law, federal NOL, carryforwards generated in periods after December 31, 2017, may be carried forward indefinitely but may only be used to offset 80% of our taxable income annually. Our NOL carryforwards are subject to review and possible adjustment by the Internal Revenue Service, or the IRS, and state tax authorities.
On March 11, 2021, the American Rescue Plan Act of 2021 was signed into law, which eliminates the statutory Medicaid drug rebate cap, beginning January 1, 2024. Previously, the rebate was capped at 100% of a drug’s AMP.
On March 11, 2021, the American Rescue Plan Act of 2021 was signed into law, which eliminated the statutory Medicaid drug rebate cap, beginning January 1, 2024. Previously, the rebate was capped at 100% of a drug’s AMP.
In addition, if serious adverse events or other problems occur with patients using vonoprazan marketed outside of our licensed territories, or if the results of ongoing or future clinical trials of vonoprazan conducted by Takeda or others generate negative results or results that conflict with the results of our clinical trials, the FDA or other regulatory authorities may delay, limit, or deny approval of vonoprazan, require us to conduct additional clinical trials as a condition to marketing approval, or withdraw their approval of vonoprazan or otherwise restrict our ability to market and sell vonoprazan, if approved.
In addition, if serious adverse events or other problems occur with patients using vonoprazan marketed outside of our licensed territories, or if the results of ongoing or future clinical trials of vonoprazan conducted by Takeda or others generate negative results or results that conflict with the results of our clinical trials, the FDA or other regulatory authorities may delay, limit, or deny approval of vonoprazan for additional indications, require us to conduct additional clinical trials as a condition to marketing approval, withdraw their approval of our products containing vonoprazan or otherwise restrict our ability to market and sell our products containing vonoprazan, if approved.
If we face such litigation, it could result in substantial costs and a diversion of management’s attention and resources, which could harm our business. 108 Item 1B. Unresolve d Staff Comments Not applicable.
If we face such litigation, it could result in substantial costs and a diversion of management’s attention and resources, which could harm our business. 100 Item 1B. Unresolve d Staff Comments Not applicable.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur 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; • an internal team responsible for, inter alia, managing (1) our cybersecurity risk assessment processes, (2) our security controls, and (3) our response to cybersecurity incidents; • the use of external service providers with subject matter expertise, 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 evaluation process for service providers, suppliers, and vendors with access to our information systems or data.
Biggest changeKey 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; • an internal team responsible for, inter alia, managing (1) our cybersecurity risk assessment processes, (2) our security controls, and (3) our response to cybersecurity incidents; • the use of external service providers with subject matter expertise, 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; • artificial intelligence based managed detection and response system that provides 24×7 monitoring of our networks, endpoints, and cloud environments; alerts from this system are handled by an external 24x7 staff that reviews the alerts and acts where necessary; • a cybersecurity incident response plan that includes procedures for responding to cybersecurity incidents; and • a third-party risk management evaluation process for key service providers, based on our assessment of their criticality to our operations and respective risk profile, suppliers, and vendors with access to our information systems or data.
Our cybersecurity risk management program is part of our overall enterprise risk management program and shares similar governance processes and reporting channels that apply across the enterprise risk management program to financial, legal, compliance, and other operational risk areas.
Our cybersecurity risk management program is part of our overall risk management program and shares similar governance processes and reporting channels that apply across the risk management program to financial, legal, compliance, and other operational risk areas.
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.
Our management team supervises efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various means, which may include briefings from internal IT personnel; threat intelligence and other information obtained from governmental, public or private sources, including external consultants engaged by us; and alerts and reports produced by security tools deployed in our internal IT environment.
Our information technology team takes steps to stay informed about and monitor efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various means, which may include briefings from internal IT personnel; threat intelligence and other information obtained from governmental, public or private sources, including external consultants engaged by us; and alerts and reports produced by security tools deployed in our internal IT environment.
We design and assess our program based on the National Institute of Standards and Technology Cybersecurity Framework, or NIST CSF. This means that we use the NIST CSF as a guide to help us identify, assess, and manage cybersecurity risks relevant to our business. It does not, however, mean that we meet any technical standards, specifications, or requirements.
This means that we use the NIST CSF as a guide to help us identify, assess, and manage cybersecurity risks relevant to our business. It does not, however, mean that we meet any technical standards, specifications, or requirements.
Item 1C. 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. 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 design and assess our program based on the National Institute of Standards and Technology Cybersecurity Framework, or NIST CSF.
In addition, management is required to update the Committee, as necessary, regarding any material cybersecurity incidents. The Committee reports to the full Board regarding its activities, including those related to cybersecurity. The full Board also receives briefings from management on our cyber risk management program.
The Committee receives periodic reports from management on our cybersecurity risks. In addition, management is required to update the Committee where it deems appropriate, regarding any cybersecurity incidents it considers to be significant or potentially significant. The Committee reports to the full Board regarding its activities, including those related to cybersecurity.
Our management team, including our Chief Financial and Business 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 IT personnel who in turn manage our retained external cybersecurity consultants.
The Vice President of Information Technology reports to our Chief Financial and Business Officer. The Vice President of Information Technology has primary responsibility for our overall cybersecurity risk management program and supervises both our internal IT personnel and our retained external cybersecurity consultants. The Vice President of Information Technology has over 25 years of experience in information technology.
Cybersecurity Governance Our Board considers cybersecurity risk as part of its risk oversight function and has delegated to the Audit Committee (Committee) oversight of cybersecurity and other information technology risks. The Committee oversees management’s implementation of our cybersecurity risk management program. The Committee receives periodic reports from management on our cybersecurity risks.
See “Risk Factors – “ Our internal information systems, or those of any of our CROs, contract manufacturers, service providers, other contractors or consultants or potential future collaborators, may fail or suffer cybersecurity incidents or breaches, which could result in a material disruption of our product development programs .” Cybersecurity Governance Our Board considers cybersecurity risk as part of its risk oversight function and has delegated to the Audit Committee (Committee) oversight of cybersecurity risks, including oversight of management’s implementation of our cybersecurity risk management program.
Removed
Our 109 management team’s experience includes significant responsibility for developing and maintaining cybersecurity risk management programs and for managing cybersecurity risks prior to joining us.
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.
Added
The full Board also receives briefings from management on our cyber risk management program. 101 Our information technology team, led by our Vice President of Information Technology, is responsible for managing and directing day-to-day assessment and management of materials risks from cybersecurity threats , including oversight of our cybersecurity tools, controls and strategies to protect organization assets, networks and data.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Pr operties Our corporate offices are located in Buffalo Grove, Illinois, and Florham Park, New Jersey. We believe that our facilities are adequate to meet our current needs, and that suitable additional alternative spaces will be available in the future on commercially reasonable terms, if required.
Biggest changeItem 2. Pr operties Our corporate offices are located in leased offices in Buffalo Grove, Illinois, and Florham Park, New Jersey. We believe that our facilities are adequate to meet our current needs, and that suitable additional alternative spaces will be available in the future on commercially reasonable terms, if required.
For additional information, see Note 5, Lease Commitments included in Item 15 of this Annual Report on Form 10-K.
For additional information, see Note 4, Lease Commitments included in Item 15 of this Annual Report on Form 10-K.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeRegardless of the outcome, such proceedings or claims can have an adverse impact on us because of defense and settlement costs, diversion of resources and other factors, and there can be no assurances that favorable outcomes will be obtained. Item 4. Mine Safe ty Disclosures Not applicable. 110 PART II
Biggest changeRegardless of the outcome, such proceedings or claims can have an adverse impact on us because of defense and settlement costs, diversion of resources and other factors, and there can be no assurances that favorable outcomes will be obtained. Item 4. Mine Safe ty Disclosures Not applicable. 102 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changePrior to our initial public offering, there was no public market for our common stock. Holders of Common Stock As of March 4, 2024, there were 58,477,351 shares of our common stock outstanding held by approximately 46 holders of record of our common stock.
Biggest changePrior to our initial public offering, there was no public market for our common stock. Holders of Common Stock As of March 3, 2025, there were 69,636,970 shares of our common stock outstanding held by approximately 56 holders of record of our common stock.
Performance Graph Not applicable. Unregistered Sales of Equity Securities Not applicable. Use of Proceeds from Registered Securities Not applicable. Issuer Repurchases of Equity Securities None. Item 6. [R eserved] 111
Performance Graph Not applicable. Unregistered Sales of Equity Securities Not applicable. Use of Proceeds from Registered Securities Not applicable. Issuer Repurchases of Equity Securities None. Item 6. [R eserved] 103

Item 7. Management's Discussion & Analysis

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

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Biggest changeBeginning on December 14, 2023, interest expense under the Hercules Loan consists of (i) cash interest at a variable annual rate equal to the greater of (a) 9.85% and (b) the Prime Rate (as reported in the Wall Street Journal) plus 1.35% and provided that the cash interest rate shall be capped at 10.35% and upon Company achieving the certain milestones, the cash interest shall be decreased by 0.35%, (ii) payment-in-kind interest at a per annum rate of interest equal to 2.15%, and (iii) amortization of the Hercules Loan Agreement debt discount recorded in connection with the fair value of warrants issued to the lenders, the debt issuance costs incurred, and the obligation to make a final payment.
Biggest changeBeginning on December 14, 2023, interest expense under the Loan Agreement consists of (i) cash interest at a variable annual rate equal to the greater of (a) 9.85% and (b) the Prime Rate (as reported in the Wall Street Journal) plus 1.35% and provided that the cash interest rate shall be capped at 10.35% and upon Company achieving the certain milestones, the cash interest shall be decreased by 0.35%, (ii) payment-in-kind interest at a per annum rate of interest equal to 2.15%, and (iii) amortization of the Loan Agreement debt discount recorded in connection with the fair value of warrants issued to the lenders, the debt issuance costs incurred, and the obligation to make a final payment. 107 Results of Operations Comparison of the years ended December 31, 2024 and 2023 The following table summarizes our results of operations for the years ended December 31, 2024 and 2023 (in thousands): Years Ended December 31, 2024 2023 Change Product revenue, net $ 55,252 $ 682 $ 54,570 Cost of revenue 7,973 167 7,806 Gross profit 47,279 515 46,764 Operating expenses: Research and development 34,082 49,899 (15,817 ) Selling, general and administrative 290,664 117,928 172,736 Total operating expenses 324,746 167,827 156,919 Loss from operations (277,467 ) (167,312 ) (110,155 ) Other income (expense): Interest income 15,158 7,876 7,282 Interest expense (72,009 ) (41,968 ) (30,041 ) Other expense, net (8 ) (188 ) 180 Total other expense (56,859 ) (34,280 ) (22,579 ) Net loss $ (334,326 ) $ (201,592 ) $ (132,734 ) Revenue.
From September 17, 2021 through December 13, 2023, interest expense under the Hercules Loan consisted of (i) cash interest at a variable annual rate equal to the greater of (a) 5.50% and (b) the Prime Rate (as reported in the Wall Street Journal) plus 2.25% or the Interest Rate, (ii) payment-in-kind interest at a per annum rate of interest equal to 3.35%, and (iii) amortization of the Hercules Loan Agreement debt discount recorded in connection with the fair value of warrants issued to the lenders, the debt issuance costs incurred, and the obligation to make a final payment.
Loan Agreement with Hercules From September 17, 2021 through December 13, 2023, interest expense under the Loan Agreement consisted of (i) cash interest at a variable annual rate equal to the greater of (a) 5.50% and (b) the Prime Rate (as reported in the Wall Street Journal) plus 2.25% or the Interest Rate, (ii) payment-in-kind interest at a per annum rate of interest equal to 3.35%, and (iii) amortization of the Loan Agreement debt discount recorded in connection with the fair value of warrants issued to the lenders, the debt issuance costs incurred, and the obligation to make a final payment.
On December 14, 2023, we entered into a Fourth Amendment to Loan and Security Agreement, or the Fourth Loan Amendment, with the lenders, pursuant to which, among other things, (i) increases the aggregate principal amount of the term loans from $200 million to $300 million; (ii) provides for the possibility of accessing the $200 million commitment through five additional tranches referred to as tranches 2 through 6, which are available subject to certain milestones and conditions: (a) Tranche 2: $50 million, $40 million of which was funded on December 14, 2023, available through March 15, 2024, (b) Tranche 3: $25 million available through June 15, 2024, (c) Tranche 4: $25 million available through December 15, 2024, (d) Tranche 5: $50 million available, subject to the achievement of a specified revenue milestone, through June 30, 2025, and (e) Tranche 6: $50 million available, subject to the achievement of a specified revenue milestone, through December 31, 2025; (iii) extends the interest only period and the maturity date from October 2026 to December 2027, (iv) reduces the cash interest rate from 10.75% (floating annual rate equal to the greater of (a) 5.50% and (b) the Prime Rate (as reported in the Wall Street Journal) plus 2.25% to 9.85% (floating rate based on the greater of (a) 9.85% or (b) US WSJ Prime + 1.35%), provided that the cash interest rate shall be capped at 10.35% and upon us achieving the certain milestones, the cash interest shall be decreased by 0.35%, and (v) decreases the payment-in-kind interest rate from 3.35% per annum to 2.15% per annum.
On December 14, 2023, we entered into a Fourth Amendment to Loan and Security Agreement, or the Fourth Loan Amendment, with the lenders, which, among other things, (i) increases the aggregate principal amount of the term loans from $200 million to $300 million; (ii) provides for the possibility of accessing the $200 million commitment through five additional tranches referred to as tranches 2 through 6, which are available subject to certain milestones and conditions: (a) Tranche 2: $50 million, $40 million of which was funded on December 14, 2023, available through March 15, 2024, (b) Tranche 3: $25 million available through June 15, 2024, (c) Tranche 4: $25 million available through December 15, 2024, (d) Tranche 5: $50 million available, subject to the achievement of a specified revenue milestone, through June 30, 2025, and (e) Tranche 6: $50 million available, subject to the achievement of a specified revenue milestone, through December 31, 2025; (iii) extends the interest only period and the maturity date from October 2026 to December 2027, (iv) reduces the cash interest rate from 10.75% (floating annual rate equal to the greater of (a) 5.50% and (b) the Prime Rate (as reported in the Wall Street Journal) plus 2.25% to 9.85% (floating rate based on the greater of (a) 9.85% or (b) US WSJ Prime + 1.35%), provided that the cash interest rate shall be capped at 10.35% and upon us achieving the certain milestones, the cash interest shall be decreased by 0.35%, and (v) decreases the payment-in-kind interest rate from 3.35% per annum to 2.15% per annum.
Underwritten Public Offering On May 23, 2023, we completed an underwritten public offering, in which we sold 12,793,750 shares of our common stock, which included the exercise in full by the underwriters of their option to purchase 1,668,750 shares, at a price of $11.75 per share for total gross proceeds of $150.3 million.
Underwritten Public Offerings On May 23, 2023, we completed an underwritten public offering, in which we sold 12,793,750 shares of our common stock, which included the exercise in full by the underwriters of their option to purchase 1,668,750 shares, at a price of $11.75 per share for total gross proceeds of $150.3 million.
If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market our product candidates even if we would otherwise prefer to develop and market such product candidates ourselves.
If we are unable to raise additional funds through equity or debt 112 financings when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market our product candidates even if we would otherwise prefer to develop and market such product candidates ourselves.
We cannot determine with certainty the timing of initiation, the duration or the completion costs of current or future clinical trials and nonclinical studies of vonoprazan or any future product candidates due to the inherently unpredictable nature of clinical and preclinical development. Clinical and preclinical development timelines, the probability of success and development costs can differ materially from expectations.
We cannot determine with certainty the timing of initiation, the duration or the completion costs of current or future clinical trials and nonclinical studies of vonoprazan or any future product candidates due to the inherently unpredictable nature of clinical and preclinical development. Clinical and preclinical development timelines, the probability of success and development 106 costs can differ materially from expectations.
Where appropriate, we utilize the expected value method to determine the appropriate amount for estimates of variable consideration based on factors such as current contractual and statutory 123 requirements, specific known market events and trends, industry data and forecasted customer buying and payment patterns.
Where appropriate, we utilize the expected value method to determine the appropriate amount for estimates of variable consideration based on factors such as current contractual and statutory requirements, specific known market events and trends, industry data and forecasted customer buying and payment patterns.
Market capitalization exceeding $900 million; b. Minimum cash balance exceeding (x) outstanding principal amount of term loans, multiplied by (y) (A) 50%, prior to achieving trailing three months net product revenue of greater than $35 million, and (B) 35% thereafter; c.
Market capitalization exceeding $900 million; b. Minimum cash balance exceeding (x) outstanding principal amount of term loans, multiplied by (y) (A) 50%, prior to achieving trailing three months net product revenue of greater than $35 million, and (B) 35% thereafter; or c.
We also agreed to make tiered royalty payments at percentages in the low double digits on net sales of licensed products, subject to specified offsets and reductions.
We also agreed to make tiered royalty payments at percentages averaging in the low double digits on net sales of licensed products, subject to specified offsets and reductions.
We may make payments of interest only through the Maturity Date. After the interest-only period, the principal balance and related interest will be required to be repaid in full on the Maturity Date.
We may make payments of interest 109 only through the Maturity Date. After the interest-only period, the principal balance and related interest will be required to be repaid in full on the Maturity Date.
These fees have been 117 recorded as debt discount and are being amortized to interest expense using the effective interest method over the remaining term of the Term Loan.
These fees have been recorded as debt discount and are being amortized to interest expense using the effective interest method over the remaining term of the Term Loan.
Under the Revenue Interest Financing Agreement, the Initial Investors and the Additional Investor, are entitled to receive a 10% royalty on net sales of products containing vonoprazan.
Under the Revenue Interest Financing Agreement, the Initial Investors and the Additional Investors, are entitled to receive a 10% royalty on net sales of products containing vonoprazan.
Additionally, on October 31, 2022, we entered into a Joinder and Waiver Agreement with the Initial Investors and CO Finance LVS XXXVII LLC, or the Additional Investor, and Hercules Capital, Inc. in its capacity as administrative agent and collateral agent for itself and the lenders under that certain Loan Agreement, or the Joinder Agreement, in respect of the Revenue Interest Financing Agreement.
Additionally, on October 31, 2022, we entered into a Joinder and Waiver Agreement with the Initial Investors and CO Finance LVS XXXVII LLC, or the Additional Investor, and Hercules in its capacity as administrative agent and collateral agent for itself and the lenders under that certain Loan Agreement, or the Joinder Agreement, in respect of the Revenue Interest Financing Agreement.
Cost of Revenue Cost of revenue includes the cost of producing and distributing inventories that are related to product sales. This also includes royalties payable to Takeda, pursuant to the Takeda License Agreement (Refer to Note 4 for further details). In addition, shipping and handling costs for product sales are recorded as incurred.
Cost of Revenue Cost of revenue includes the cost of producing and distributing inventories that are related to product sales. This also includes royalties payable to Takeda, pursuant to the Takeda License Agreement (Refer to Note 3 for further details). In addition, shipping and handling costs for product sales are recorded as incurred.
On September 27, 2022, we entered into an amendment to the Loan Agreement, or the Second Loan Amendment, pursuant to which the date the second tranche of funding of $50 million will remain available to the Company has been moved until May 15, 2023, rather than December 15, 2022.
On September 27, 2022, we entered into an amendment to the Loan Agreement, or the Second Loan Amendment, pursuant to which the date the second tranche of funding of $50 million will remain available to us has been moved until May 15, 2023, rather than December 15, 2022.
Our future capital requirements will depend on many factors, including: • the initiation, type, number, scope, results, costs and timing of our clinical trials of vonoprazan, and preclinical studies or clinical trials of other potential product candidates we may choose to pursue in the future, including feedback received from regulatory authorities; • the costs and timing of manufacturing for vonoprazan or any future product candidates, including commercial scale manufacturing if any product candidate is approved; 120 • the costs, timing and outcome of regulatory review of vonoprazan or any future product candidates; • the costs of obtaining, maintaining and enforcing our patents and other intellectual property rights; • our efforts to enhance operational systems and hire additional personnel to satisfy our obligations as a public company, including enhanced internal controls over financial reporting; • the costs associated with hiring additional personnel and consultants as our business grows, including additional executive officers and clinical development personnel; • the timing and amount of the milestone or other payments we must make to Takeda and any future licensors; • the costs and timing of establishing or securing sales and marketing capabilities for vonoprazan or any future product candidate; • our ability to achieve sufficient market acceptance, coverage and adequate reimbursement from third-party payers and adequate market share and revenue for any approved products; • patients’ willingness to pay out-of-pocket for any approved products in the absence of coverage and/or adequate reimbursement from third-party payers; • the terms and timing of establishing and maintaining collaborations, licenses and other similar arrangements; and • costs associated with any products or technologies that we may in-license or acquire.
Our future capital requirements will depend on many factors, including: • our ability to achieve sufficient market acceptance, coverage and adequate reimbursement from third-party payers and adequate market share and revenue for any approved products; • patients’ willingness to pay out-of-pocket for any approved products in the absence of coverage and/or adequate reimbursement from third-party payers; • the initiation, type, number, scope, results, costs and timing of our clinical trials of vonoprazan, and preclinical studies or clinical trials of other potential product candidates we may choose to pursue in the future, including feedback received from regulatory authorities; • the costs and timing of manufacturing for vonoprazan or any future product candidates, including commercial scale manufacturing for any approved product candidates; • the costs, timing and outcome of regulatory review of future vonoprazan applications or such applications for any future product candidates; • the costs of obtaining, maintaining and enforcing our patents and other intellectual property rights; • our efforts to enhance operational systems and hire additional personnel to satisfy our obligations as a public company, including enhanced internal controls over financial reporting; • the costs associated with hiring additional personnel and consultants as our business grows; • the timing and amount of the milestone or other payments we must make to Takeda and any future licensors; • the costs and timing of establishing or securing sales and marketing capabilities for vonoprazan or any future product candidate; • the terms and timing of establishing and maintaining collaborations, licenses and other similar arrangements; and • costs associated with any products or technologies that we may in-license or acquire.
We anticipate that our general and administrative expenses will increase in the future to support our continued research and development activities and commercialization activities.
We anticipate that our selling, general and administrative expenses will increase in the future to support our commercialization activities and research and development activities.
The net cash used in operating activities for the year ended December 31, 2023 was due to approximately $123.9 million spent on ongoing research and development and selling, general and administrative activities and a $13.6 million net change in operating assets and liabilities.
The net cash used in operating activities for the year ended December 31, 2023 was due to approximately $124.0 million spent on ongoing research and development and selling, general and administrative activities and a $13.6 million net change in operating assets and liabilities.
We plan to evaluate commercial partnerships for vonoprazan in Europe and Canada, expand development of vonoprazan into other indications, dosing regimens and alternative formulations and packaging, and in-license or acquire additional clinical or commercial stage product candidates for the treatment of GI diseases in a capital efficient manner.
We continue to evaluate potential commercial partnerships for vonoprazan in Europe and Canada, expand development of vonoprazan into other indications, dosing regimens and alternative formulations and packaging, and evaluate the in-license or acquisition of additional clinical or commercial stage product candidates for the treatment of GI diseases in a capital efficient manner.
Under the Revenue Interest Financing Agreement, the Initial Investors and Additional Investor are entitled to receive a 10% royalty on net sales of products containing vonoprazan. The investors’ right to receive royalties on net sales will terminate when the investors have aggregate payments equal to 200% of the Investment Amount.
Under the Revenue Interest Financing Agreement, the Initial Investors and Additional Investors are entitled to receive a 10% royalty on net sales of products containing vonoprazan. The investors’ right to receive royalties on net sales will terminate when the investors have aggregate payments equal to 200% of the Investment Amount less any royalties already paid.
The supply agreement commits us to a minimum purchase obligation of approximately $3.2 million during the first 24-month period following the launch of the final product. We have incurred $0.3 million of expenses under the agreement during the year ended December 31, 2023.
The supply agreement commits us to a minimum purchase obligation of approximately $3.2 million during the first 24-month period following the launch of the final product. We have incurred $0.3 million of expenses under the agreement during each of the years ended December 31, 2024 and 2023.
Finally, cost of revenue may also include costs related to excess or obsolete inventory adjustment charges. Operating Expenses Research and Development To date, our research and development expenses have related to the development of vonoprazan.
Cost of revenue also includes costs related to excess or obsolete inventory adjustment charges. Operating Expenses Research and Development To date, our research and development expenses have related to the development of vonoprazan.
If actual results vary from our estimates, we will adjust these estimates, which would affect net product revenue and earnings in the period such variances become known. We make significant estimates and judgments that materially affect our recognition of net product revenue.
Actual amounts of consideration ultimately received may differ from our estimates. If actual results vary from our estimates, we will adjust these estimates, which would affect net product revenue and earnings in the period such variances become known. We make significant estimates and judgments that materially affect our recognition of net product revenue.
In periods prior to receiving FDA approval for VOQUEZNA, we recognized inventory and related costs associated with the manufacture of VOQUEZNA as research and development expense and as such, the cost of goods sold and related gross margins are not necessarily indicative of future costs of goods sold and gross margin.
In periods prior to receiving FDA approval for VOQUEZNA, we recognized inventory and related costs associated with the manufacture of VOQUEZNA as research and development expense and as such, the cost of revenue and related gross profits are not necessarily indicative of future costs of revenue and gross profit.
Funding Requirements Based on our current operating plan, we believe that our existing cash and cash equivalents together with the drawdown of the remaining $160 million under our Loan Agreement with Hercules together with anticipated product revenues, are sufficient to fund operations for at least the next twelve months and will be sufficient to fund our operations through the end of 2026.
Funding Requirements Based on our current operating plan, we believe that our existing cash and cash equivalents together with the drawdown of the remaining $100 million under our Loan Agreement with Hercules together with anticipated product revenues, are sufficient to fund operations for at least the next twelve months and we believe will be sufficient to enable us to reach cashflow positivity.
Based on our qualified infectious disease product, or QIDP, designations for VOQUEZNA TRIPLE PAK and VOQUEZNA DUAL PAK, we received an extension of five years of new chemical entity, or NCE, exclusivity based on the vonoprazan component in those NDAs.
In May 2021, the FDA granted qualified infectious disease product, or QIDP, designations for VOQUEZNA TRIPLE PAK and VOQUEZNA DUAL PAK and we thereby received an extension of five years of new chemical entity, or NCE, exclusivity based on the vonoprazan component in the applicable NDAs.
Based on our current operating plan, we believe that our existing cash and cash equivalents together with the drawdown of the remaining $160 million under our Loan Agreement with Hercules together with anticipated product revenues, are sufficient to fund operations for at least the next twelve months and will be sufficient to fund our operations through the end of 2026.
Based on our current operating plan, we believe that our existing cash and cash equivalents together with the drawdown of the remaining $100 million under our Loan Agreement with Hercules together with anticipated product revenues, are sufficient to fund operations for at least the next twelve months and we believe will be sufficient to enable us to reach cashflow positivity.
Since inception, we have incurred significant operating losses. Our net loss was $201.6 million and $197.7 million for the years ended December 31, 2023 and 2022, respectively. As of December 31, 2023, we had an accumulated deficit of $928.7 million. We expect to continue to incur operating losses for the foreseeable future.
Since inception, we have incurred significant operating losses. Our net loss was $334.3 million and $201.6 million for the years ended December 31, 2024 and 2023, respectively. As of December 31, 2024, we had an accumulated deficit of $1.3 billion. We expect to continue to incur operating losses for the foreseeable future.
The amount of variable consideration that is included in the transaction price may be constrained and is included in net product revenues only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. Actual amounts of consideration ultimately received may differ from our estimates.
The amount of variable consideration that is included in the transaction price may be 114 constrained and is included in net product revenues only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period.
We also anticipate increased expenses related to audit, legal, regulatory, and tax-related services associated with maintaining compliance with exchange listing and SEC requirements, director and officer insurance premiums, and investor relations costs associated with operating as a public company.
We also anticipate increased expenses related to audit, legal, regulatory, and tax-related services associated with maintaining compliance with exchange listing and SEC requirements, director and officer insurance premiums, and investor relations costs associated with operating as a public company. Interest Income Interest income consists of interest on our money market funds.
Therefore, the manufacturing costs related to the inventory build-up incurred before FDA approval 116 were already expensed in a prior period and are therefore excluded from the cost of goods sold for the year ended December 31, 2023. These previously expensed costs were not material for the year ended December 31, 2023. Research and Development Expenses.
Therefore, the manufacturing costs related to the inventory purchased before FDA approval were already expensed in a prior period and are therefore excluded from the cost of revenue for the year ended December 31, 2024. These previously expensed costs were not material. Research and Development Expenses.
At-the-Market-Offerings On November 10, 2020, we entered into an Open Market Sale Agreement SM , or the Sales Agreement, with Jefferies LLC, or the Sales Agent, under which we may, from time to time, sell shares of our common stock having an aggregate offering price of up to $125 million through the Sales Agent, or the 2020 ATM Offering.
At-the-Market-Offerings In November 2020, we entered into an Open Market Sale Agreement SM , or the Sales Agreement, with Jefferies LLC, or the Sales Agent, under which we may, from time to time, sell shares of our common stock having an aggregate offering price of up to an amount registered under an effective registration statement through the Sales Agent.
Research and development expenses are recognized as incurred and payments made prior to the receipt of goods or services to be used in research and development are capitalized until the goods or services are received.
Research and development expenses are recognized as incurred and payments made prior to the receipt of goods or services to be used in research and development are capitalized until the goods or services are received. We do not track total research and development expenses by indication.
We recalculate the effective interest rate each period based on the current carrying value and the revised estimated future payments. Changes in future payments from previous estimates are included in current and future financing expense.
We recalculate the effective interest rate each period based on the current carrying value and the revised estimated future payments. Changes in future payments from previous estimates are included in the current and future financing expense. See Note 6 "Revenue Interest Financing Liability" for additional details.
We have not made any payments under the Revenue Interest Financing Agreement during the years ended December 31, 2023 and 2022. We enter into contracts in the normal course of business for our contract research services, contract manufacturing services, professional services and other services and products for operating purposes.
During the years ended December 31, 2024 and 2023 we made $2.6 million and no royalty payments, respectively, under the Revenue Interest Financing Agreement. We enter into contracts in the normal course of business for our contract research services, contract manufacturing services, professional services and other services and products for operating purposes.
We received $100 million at the initial closing and an additional $175 million in fourth quarter 2023 following FDA approval of vonoprazan for treatment of Erosive GERD, or the Investment Amount. In addition, we were eligible for $25 million in additional funding for achievement of a sales milestone.
We received $100 million at the initial closing and an additional $175 million in fourth quarter 2023 following FDA approval of vonoprazan for treatment of Erosive GERD, or the Investment Amount.
The net cash used in operating activities for the year ended December 31, 2022 was due to approximately $152.0 million spent on ongoing research and development and general and administrative activities offset by a $5.5 million change in operating assets and liabilities.
The net cash used in operating activities for the year ended December 31, 2024 was due to approximately $251.5 million spent on ongoing research and development and selling, general and administrative activities and a $15.3 million net change in operating assets and liabilities.
Takeda Pharmaceutical Company Limited, or Takeda, developed vonoprazan and has received marketing approval in numerous countries in Asia and Latin America as well as Russia. Vonoprazan generated approximately $850 million in net sales in its seventh full year on the market since its approval in Japan in late 2014.
Takeda Pharmaceutical Company Limited, or Takeda, developed vonoprazan and has received marketing approval in numerous countries in Asia and Latin America as well as Russia. Vonoprazan generated peak net sales of approximately $850 million and continues to achieve volume growth during its tenth full year on the market since its approval in 2014.
Selling, General and Administrative Expenses. Selling, general and administrative expenses were $117.9 million and $101.0 million for the years ended December 31, 2023 and 2022, respectively.
Selling, General and Administrative Expenses. Selling, general and administrative expenses were $290.7 million and $117.9 million for the years ended December 31, 2024 and 2023, respectively.
Research and development expenses were $49.9 million and $71.4 million for the years ended December 31, 2023 and 2022, respectively.
Research and development expenses were $34.1 million and $49.9 million for the years ended December 31, 2024 and 2023, respectively.
(in such capacity, the Agent or Hercules), as administrative agent and collateral agent and as a lender and the other financial institutions that from time to time become parties to the Loan Agreement as lenders (collectively, the Lenders).
Loan Agreement with Hercules On September 17, 2021, or the Closing Date, we entered into the Loan Agreement with Hercules (in such capacity, the Agent or Hercules), as administrative agent and collateral agent and as a lender and the other financial institutions that from time to time become parties to the Loan Agreement as lenders (collectively, the Lenders).
Research and development expenses include: • salaries, payroll taxes, employee benefits, and stock-based compensation charges for those individuals involved in research and development efforts; 114 • external research and development expenses incurred under agreements with CROs, and consultants to conduct and support our ongoing clinical trials of vonoprazan; and • costs related to the manufacturing of vonoprazan for our clinical trials.
Research and development expenses include: • Clinical development expenses: external research and development expenses incurred under agreements with CROs, regulatory costs, and consultants to conduct and support our clinical trials of vonoprazan; • Personnel related expenses : salaries, payroll taxes, and employee benefits; • Chemistry manufacturing and controls, or CMC, expenses: costs related to the manufacturing of vonoprazan for our clinical trials; • Consulting, professional and other costs: external costs related to consulting and professional services and other research costs incurred; and • Stock-based compensation expenses : stock-based compensation expense recognized for those individuals involved in research and development efforts.
As of December 31, 2023, we were in compliance with all applicable covenants under the Loan Agreement. As collateral for the obligations, we granted Hercules a senior security interest in all of our right, title, and interest in, to and under substantially all of our property, inclusive of intellectual property.
As collateral for the obligations, we granted Hercules a senior security interest in all of our right, title, and interest in, to and under substantially all of our property, inclusive of intellectual property.
In addition, at any time after the earlier of (i) April 30, 2024 and (ii) the date that the payment for Erosive GERD regulatory approval is made, we have the right to make a cap payment equal to 200% of the Investment Amount less any royalties already paid, at which time the agreement will terminate.
In addition, at any time after April 30, 2024, we have the right to make a cap payment equal to 200% of the Investment Amount less any royalties already paid, at which time the agreement will terminate.
As of December 31, 2023, the aggregate final payment fee for the first Term Loan Advance of $7.5 million and $2.2 million for the second Term Loan Advance, and have both been recorded within other long-term liabilities.
As of December 31, 2024, the aggregate $11.5 million of final payment fees includes the first Term Loan Advance of $7.5 million, $2.5 million for the second Term Loan Advance, $0.8 million for the third Term Loan Advance, and $0.7 million for the fourth Term Loan Advance have been recorded within other long-term liabilities.
Other expense of $34.3 million for the year ended December 31, 2023 consisted of $42.0 million of interest expense under the Hercules Loan and Revenue Interest Financing Agreements, partially offset by $7.9 million of interest income on deposits.
Other expense of $34.3 million for the year ended December 31, 2023 consisted of $42.0 million of interest expense under the Loan Agreement and Revenue Interest Financing Agreement, partially offset by $7.9 million of interest income related to cash held in money market funds.
As a result, we initiated commercial launch for VOQUEZNA for both the Erosive GERD and H. pylori indications, and VOQUEZNA TRIPLE PAK and VOQUEZNA DUAL PAK for treatment of H. pylori infection in the fourth quarter of 2023. We are also continuing to develop vonoprazan as a treatment for heartburn symptoms associated with Non-Erosive GERD.
We initiated commercial launch for VOQUEZNA for both the Erosive GERD and H. pylori indications, and VOQUEZNA TRIPLE PAK and VOQUEZNA DUAL PAK for treatment of H. pylori infection in the fourth quarter of 2023. In September 2023, we submitted an NDA seeking approval of vonoprazan as a once-daily treatment for heartburn symptoms associated with Non-Erosive GERD in adults.
However, our forecast of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement that involves risks and uncertainties and actual results could vary materially. We have based this estimate on assumptions that may prove to be wrong, and we could deplete our capital resources sooner than we expect.
However, our forecast of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement that involves risks and uncertainties and actual results could vary materially.
Investing Activities Net cash used in investing activities for the years ended December 31, 2023 and 2022 was primarily due to the cash we paid for acquiring property, plant and equipment.
Investing Activities Net cash used in investing activities for the years ended December 31, 2024 and 2023 was related to payments for acquiring property and equipment.
Our failure to raise capital or enter into such other arrangements when needed would have a negative impact on our financial condition and could force us to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves. 113 License Agreement with Takeda On May 7, 2019, we and Takeda entered into an exclusive license, or the Takeda License, pursuant to which we in-licensed the U.S., European, and Canadian rights to vonoprazan fumarate.
Our failure to raise capital or enter into such other arrangements when needed would have a negative impact on our financial condition and could force us to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.
For the year ended December 31, 2023, we sold 1,514,219 shares of our common stock under the ATM Offering for net proceeds of approximately $14.1 million after deducting $0.4 million of issuance costs. As of December 31, 2023, we utilized $39.9 million of the available $125 million under the 2020 ATM Offering.
For the year ended December 31, 2023, we sold 1,514,219 shares for net proceeds of approximately $14.1 million after deducting $0.4 million of issuance costs. No shares were sold during the year ended December 31, 2024. As of December 31, 2024, all of the available $150 million under the 2023 ATM Offering remains available.
Accordingly, we recognized the transaction as a debt obligation with interest expense based on an imputed effective rate derived from the initial carrying value of the obligation and the expected future payments. We recalculate the effective interest rate each period based on the current carrying value and the revised estimated future payments.
Revenue Interest Financing Liability We have accounted for the Revenue Interest Financing Agreement as a debt instrument. Accordingly, we recognized the transaction as a debt obligation with interest expense based on an imputed effective rate derived from the initial carrying value of the obligation and the expected future payments.
Product revenues were $0.7 million for the year ended December 31, 2023 related to sales of VOQUEZNA which was launched in the fourth quarter of 2023. Cost of Revenue. Cost of revenue was $0.2 million for the year ended December 31, 2023.
Product revenues were $55.3 million and $0.7 million for the years ended December 31, 2024 and 2023, respectively, related to sales of VOQUEZNA, VOQUEZNA TRIPLE PAK, and VOQUEZNA DUAL PAK which was launched during the fourth quarter of 2023. Cost of Revenue.
We commenced our operations in 2018 and have devoted substantially all of our resources to date to organizing and staffing our company, business planning, raising capital, in-licensing our initial and approved product candidate, vonoprazan, meeting with regulatory authorities, conducting our Phase 3 clinical trials of vonoprazan, preparing applications for regulatory approval for vonoprazan and preparing our commercial launch.
We commenced our operations in 2018 and have devoted substantially all of our resources to date to organizing and staffing our company, business planning, raising capital, in-licensing our initial and approved product candidate, vonoprazan, meeting with regulatory authorities, managing our clinical trials of vonoprazan, preparing for commercialization of our initial products containing vonoprazan, commercially launching our approved products, and providing other selling, general and administrative support for our 104 operations.
The net purchase price after deducting underwriting discounts and commissions was $11.08 per share, which generated net proceeds of $141.8 million. We incurred an additional $0.4 million of offering expenses in connection with this public offering.
The net purchase price after deducting underwriting discounts and commissions was $11.08 per share, which generated net proceeds of $141.8 million.
As of December 31, 2023, we had cash and cash equivalents of $381.4 million.
As of December 31, 2024, we had cash and cash equivalents of $297.3 million.
In connection with the Fourth Loan Amendment, an amendment fee of $250,000 was paid to the Agent and was recorded as a debt discount and being amortized to interest expense using the effective interest method over the remaining term of the Term Loan. The Term Loan will mature on December 1, 2027, or the Maturity Date.
In connection with the Fourth Loan Amendment, an amendment fee of $250,000 was paid to the Agent and was recorded as a debt discount and being amortized to interest expense using the effective interest method over the remaining term of the Term Loan. On March 15, 2024, we drew down the remaining $10 million available under the Second Tranche.
If the investors have not received aggregate payments of at least 100% of the Investment Amount by December 31, 2028, and at least 200% of the Investment Amount by December 31, 2037, each a Minimum Amount, then we will be obligated to make a cash payment to the investors in an amount sufficient to gross the investors up to the applicable Minimum Amount. 119 Upon the occurrence of an event of default taking place prior to April 1, 2025, between April 1, 2025 and April 1, 2028, and after April 1, 2028, we are obligated to pay 1.30 times Investment Amount, 1.65 times Investment Amount, and 2.0 times investment amount, respectively, less any amounts we previously paid pursuant to the agreement.
If the investors have not received aggregate payments of at least 100% of the Investment Amount by December 31, 2028, and at least 200% of the Investment Amount by December 31, 2037, each a Minimum Amount, then we will be obligated to make a cash payment to the investors in an amount sufficient to gross the investors up to the applicable Minimum Amount.
The royalty rate is subject to a step-down on net sales exceeding certain annual thresholds and if we receive FDA approval for vonoprazan for an indication relating to the treatment of heartburn associated with Non-Erosive GERD. The investors’ right to receive royalties on net sales will terminate when the investors have aggregate payments equal to 200% of the Investment Amount.
The royalty rate is subject to a step-down on net sales exceeding certain annual thresholds and upon FDA approval for vonoprazan for an indication relating to the treatment of heartburn associated with Non-Erosive GERD, which occurred on July 17, 2024.
The net change in operating assets and liabilities primarily related to a $7.7 million increase in accounts payable and accrued expenses in support of the growth in our operating activities, partially offset by a $2.2 million increase in prepaid assets and other assets.
The net change in operating assets and liabilities primarily related to a $35.7 million increase in accounts payable and accrued expenses (including interest, operating lease assets and liabilities), and a $51.0 million increase in accounts receivable, inventory, and prepaid assets and other current assets in support of our growth and continued launch of our commercial products.
Food and Drug Administration, or FDA, approved the NDAs for vonoprazan triple therapy, under the brand name VOQUEZNA TRIPLE PAK, and vonoprazan dual therapy, under the brand name VOQUEZNA DUAL PAK.
In May 2019, we in-licensed the U.S., European, and Canadian rights to vonoprazan from Takeda. In May 2022, the U.S. Food and Drug Administration, or FDA, approved the NDAs for vonoprazan triple therapy, under the brand name VOQUEZNA TRIPLE PAK, and vonoprazan dual therapy, under the brand name VOQUEZNA DUAL PAK.
Revenue Interest Financing Agreement On May 3, 2022, we entered into a Revenue Interest Financing Agreement, or the Revenue Interest Financing Agreement, with entities managed or advised by NovaQuest Capital Management, or NQ, Sagard Holdings Manager LP, or Sagard, and Hercules Capital, Inc., or Hercules, together with NQ and Sagard, or the Initial Investors, pursuant to which we could receive up to $260 million in funding from the Initial Investors.
The initial $1.3 million fair value of the Warrant, the $11.5 million final interest payment fees and $4.6 million of debt issuance costs have been recorded as debt discount and are being amortized to interest expense using the effective interest method over the term of the Term Loan. 110 Revenue Interest Financing Agreement On May 3, 2022, we entered into a Revenue Interest Financing Agreement, or the Revenue Interest Financing Agreement, with entities managed or advised by NovaQuest Capital Management, or NQ, Sagard Holdings Manager LP, or Sagard, and Hercules, together with NQ and Sagard, or the Initial Investors, pursuant to which we could receive up to $260 million in funding from the Initial Investors.
Changes in future payments from previous estimates are included in the current and future financing expense. See Note 7 "Revenue Interest Financing Liability" for additional details.
Changes in future payments from previous estimates are included in current and future interest expense.
Components of Results of Operations Revenue We began to recognize revenue from product sales, net of rebates, chargebacks, discounts, and other adjustments, in November 2023 in conjunction with the commercial launch of VOQUEZNA, VOQUEZNA TRIPLE PAK, and VOQUEZNA DUAL PAK in the United States.
Royalties will be payable, on a product-by-product and country-by-country basis from the first commercial sale of such product in such country, until the latest of expiration of the licensed patents covering the applicable product, expiration of regulatory exclusivity in such country, or 15 years following first commercial sale in such country. 105 Components of Results of Operations Revenue We began to recognize revenue from product sales, net of rebates, chargebacks, discounts, and other adjustments, in November 2023 in conjunction with the commercial launch of VOQUEZNA, VOQUEZNA TRIPLE PAK, and VOQUEZNA DUAL PAK in the United States.
Trailing three months net product revenue of at least (x) 30% of agreed upon projected net revenues for periods in the calendar year 2024 and 25% for all periods thereafter or (y) $120 million. 118 Upon the occurrence of an event of default, subject to any specified cure periods, all amounts owed by us may be declared immediately due and payable by Hercules, as collateral agent.
Trailing three months net product revenue of at least (x) 30% of agreed upon projected net revenues for periods in the calendar year 2024 and 25% for all periods thereafter or (y) $120 million.
The Initial Investors waived their right of first offer for any Additional Investor Funding. The total amount funded by the Initial Investors and any subsequent investors is referred to herein as the Investment Amount.
The total amount funded by the Initial Investors and any subsequent investors is referred to herein as the Investment Amount. As of December 31, 2024, no additional funding is available under the Revenue Interest Financing Agreement.
Reserves are established for the estimates of variable consideration based on the amounts earned or to be claimed on the related sales. The reserves are classified as reductions to trade receivable, net if payable to a customer or accrued expenses if payable to a third-party.
The reserves are classified as reductions to accounts receivable, net if payable to a customer or accrued expenses if payable to a third-party or related to product returns.
Financing Activities Net cash provided by financing activities for the year ended December 31, 2023 was $367.6 million, due to $172.7 million of net proceeds from the Revenue Interest Financing Agreement, $155.6 million due to the proceeds from the sale of common stock, and $39.3 million from the issuance of debt under our Loan Agreement, as amended, with Hercules.
Net cash provided by financing activities for the year ended December 31, 2023 was $367.6 million, primarily due to $172.7 million of net proceeds from the Revenue Interest Financing Agreement, $155.6 million due to the proceeds from the sale of our common stock, and $39.3 million from the issuance of debt under our Loan Agreement. 113 Contractual Obligations and Commitments On December 30, 2020, we entered into a Supply and Packaging Services Agreement with Sandoz, pursuant to which Sandoz has agreed to supply commercial quantities of amoxicillin capsules and clarithromycin tablets, to package these antibiotics with vonoprazan, in finished convenience packs, and to supply us with these convenience packs.
Interest Income Interest income consists of interest on our money market funds. 115 Interest Expense Beginning on May 3, 2022, interest expense includes interest on the Revenue Interest Financing Agreement, which is based on the imputed effective rate derived from expected future payments and the carrying value of the obligation.
Interest Expense Revenue Interest Financing Agreement Interest expense under the Revenue Interest Financing Agreement is based on the imputed effective interest rate derived from expected future payments and the carrying value of the obligation. We recalculate the effective interest rate each period based on the current carrying value and the revised estimated future payments.
Other expense of $25.3 million for the year ended December 31, 2022 consisted of $27.4 million of interest expense under the Hercules Loan and Revenue Interest Financing Agreements, partially offset by $2.1 million of interest income on deposits.
Other Income (Expense). Other expense of $56.9 million for the year ended December 31, 2024 consisted of $72.0 million of interest expense under the Loan Agreement and Revenue Interest Financing Agreement, partially offset by $15.1 million of interest income related to cash held in money market funds.
Sales of our common stock made pursuant to the Sales Agreement, if any, will be made under our shelf registration statement on Form S-3 which was filed on November 9, 2023 and declared effective by the SEC on November 17, 2023.
In November 2023, we filed a shelf registration statement on Form S-3 which was declared effective by the SEC on November 17, 2023, which included an at-the-market prospectus pursuant to which we may, from time to time, sell up to an aggregate of $150 million of our common stock through the Sales Agent, or the 2023 ATM Offering.
While the NDAs for VOQUEZNA TRIPLE PAK and VOQUEZNA DUAL PAK were still under review by the FDA, in March 2022, we submitted an additional NDA for vonoprazan, under the brand name VOQUEZNA, as a treatment for adults for the healing of all grades of Erosive GERD, maintenance of healing of all grades of Erosive GERD, and relief of heartburn associated with Erosive GERD.
Subsequently, on November 1, 2023, the FDA approved vonoprazan, under the brand name VOQUEZNA, as a treatment for adults for the healing of all grades of Erosive GERD, maintenance of healing of all grades of Erosive GERD, and relief of heartburn associated with Erosive GERD, as well as in combination with amoxicillin, with or without clarithromycin, for the treatment of H. pylori infection in adults.
Liquidity and Capital Resources We have incurred net losses and negative cash flows from operations since our inception and anticipate we will continue to incur net losses for the foreseeable future. As of December 31, 2023, we had cash and cash equivalents of $381.4 million.
Interest expense increased due to a higher debt balance under the Loan Agreement as well as a higher liability related to our Revenue Interest Financing Agreement versus the prior period, partially offset by higher interest income due to higher rates and our increased cash position. 108 Liquidity and Capital Resources We have incurred net losses and negative cash flows from operations since our inception and anticipate we will continue to incur net losses for the foreseeable future.
Based on our current operating plan, we believe that our existing cash and cash equivalents together with the drawdown of the remaining $160 million under our Loan Agreement with Hercules together with anticipated product revenues, are sufficient to fund operations for at least the next twelve months and will be sufficient to fund our operations through the end of 2026. 121 Cash Flows The following table sets forth a summary of the net cash flow activity for each of the periods indicated (in thousands): Years Ended December 31, 2023 2022 $ Change Net cash provided by (used in): Operating activities $ (137,580 ) $ (146,530 ) $ 8,950 Investing activities (1,634 ) (1,041 ) (593 ) Financing activities 367,580 120,042 247,538 Net increase (decrease) in cash $ 228,366 $ (27,529 ) $ 255,895 Operating Activities Net cash used in operating activities was approximately $137.6 million and $146.5 million for the years ended December 31, 2023 and 2022, respectively.
Cash Flows The following table sets forth a summary of the net cash flow activity for each of the periods indicated (in thousands): Years Ended December 31, 2024 2023 Change Net cash provided by (used in): Operating activities $ (266,770 ) $ (137,580 ) $ (129,190 ) Investing activities (135 ) (1,634 ) 1,499 Financing activities 182,774 367,580 (184,806 ) Net (decrease) increase in cash $ (84,131 ) $ 228,366 $ (312,497 ) Operating Activities Net cash used in operating activities was approximately $266.8 million and $137.6 million for the years ended December 31, 2024 and 2023, respectively.
Removed
In May 2019, we in-licensed the U.S., European, and Canadian rights to vonoprazan from Takeda. In 2021 we reported positive topline data from two pivotal Phase 3 clinical trials for vonoprazan: one for the treatment of H. pylori infection, or PHALCON-HP, and a second for the treatment of Erosive GERD, or PHALCON-EE.
Added
On July 17, 2024, the FDA approved VOQUEZNA 10 mg tablets for the relief of heartburn associated with Non-Erosive GERD, the largest category of GERD. We are independently commercializing VOQUEZNA, VOQUEZNA TRIPLE PAK, and VOQUEZNA DUAL PAK in the United States. Our commercial launch continues to build momentum and early launch data shows strong physician and patient demand.
Removed
These data are supplemented by the extensive existing clinical data generated by Takeda as part of its development program for vonoprazan in Japan and other markets.
Added
As of February 21, 2025, over 300,000 prescriptions for VOQUEZNA tablets, VOQUEZNA Triple Pak, and VOQUEZNA Dual Pak have been filled since launch. These prescriptions were written by more than 20,000 prescribers.
Removed
In September 2021, we submitted two new drug applications, or NDAs, for combination packs that contain vonoprazan for the treatment of H. pylori infection in adults, one in combination with amoxicillin and clarithromycin (vonoprazan triple therapy) and the other in combination with amoxicillin alone (vonoprazan dual therapy). In May 2022, the U.S.
Added
In addition, due to increasing commercial demand, we continue to make progress in securing broad commercial coverage for VOQUEZNA with over 120 million, or over 80%, of total U.S. commercial lives with access to VOQUEZNA tablets.

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Other PHAT 10-K year-over-year comparisons