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Prelude Therapeutics Inc

Prelude Therapeutics IncPRLDEarnings & Financial Report

Nasdaq · Health Care · Pharmaceutical Preparations

What changed in Prelude Therapeutics Inc's 10-K — 2023 vs 2024

Top changes in Prelude Therapeutics Inc's 2024 10-K

484 paragraphs added · 445 removed · 338 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

113 edited+55 added−64 removed189 unchanged
For example, in March 2010, the ACA was enacted, which intended to broaden access to health insurance, reduce or constrain the growth of healthcare spending, enhance remedies against fraud and abuse, add new transparency requirements for the healthcare and health insurance industries, impose new taxes and fees on the health industry and impose additional health policy reforms.
For example, in March 2010, the ACA was enacted, which was intended to broaden access to health insurance, reduce or constrain the growth of healthcare spending, enhance remedies against fraud and abuse, add new transparency requirements for the healthcare and health insurance industries, impose new taxes and fees on the health industry and impose additional health policy reforms.
Other federal statutes pertaining to healthcare fraud and abuse include the civil monetary penalties statute, which prohibits, among other things, the offer or payment of remuneration to a Medicaid or Medicare beneficiary that the offeror or payor knows or should know is likely to influence the beneficiary to order a receive a reimbursable item or service from a particular supplier, and the additional federal criminal statutes created by the Health Insurance Portability and Accountability Act of 1996, or HIPAA, which prohibits, among other things, knowingly and willfully executing or attempting to execute a scheme to defraud any healthcare benefit program or obtain by means of false or fraudulent pretenses, representations or promises any money or property owned by or under the control of any healthcare benefit program in connection with the delivery of or payment for healthcare benefits, items or services.
Other federal statutes pertaining to healthcare fraud and abuse include the civil monetary penalties statute, which prohibits, among other things, the offer or payment of remuneration to a Medicaid or Medicare beneficiary that the offeror or payor knows or should know is likely to influence the beneficiary to order a receive a reimbursable item or service from a particular supplier, and the additional federal criminal statutes created by the Health Insurance Portability and Accountability Act of 1996, or HIPAA, which prohibit, among other things, knowingly and willfully executing or attempting to execute a scheme to defraud any healthcare benefit program or obtain by means of false or fraudulent pretenses, representations or promises any money or property owned by or under the control of any healthcare benefit program in connection with the delivery of or payment for healthcare benefits, items or services.
The FDA may take certain actions with respect to breakthrough therapies, including but not limited to holding meetings with the sponsor throughout the development process, providing timely advice to the product sponsor regarding development and approval, involving more senior staff in the review process, assigning a cross-disciplinary project lead for the review team, granting priority review status or Fast Track Designation, reviewing applications on a rolling basis, and taking other steps to design the clinical studies in an efficient manner.
The FDA may take certain actions with respect to breakthrough therapies, including but not limited to holding meetings with the sponsor throughout the development process, providing timely advice to the product sponsor regarding development and approval, involving more senior staff in the review process, assigning a cross-disciplinary project lead for the review team, granting priority review status or Fast Track Designation, reviewing applications on a rolling basis, 16 and taking other steps to design the clinical studies in an efficient manner.
In addition to our filings in the U.S., we own patent applications that are pending in Australia, Brazil, Canada, China, Eurasia, Europe, Hong Kong, India, Israel, Japan, Mexico, New Zealand, South Africa, South Korea, and Ukraine. Included in these applications are claims directed to the PRT1419, PRT2527, and SMARCA compositions and methods of using the same therapeutically.
In addition to our filings in the U.S., we own patent applications that are pending in Australia, Brazil, Canada, China, Eurasia, Europe, Hong Kong, India, Israel, Japan, Mexico, New Zealand, South Africa, South Korea, and Ukraine. Included in these applications are claims directed to the PRT2527, and SMARCA compositions and methods of using the same therapeutically.
The first inhibitors of two of the family members, CDK4 and CDK6, gained FDA approval for HR+ metastatic breast cancer in 2015 and are now broadly used. In contrast to CDK4 and CDK6, which regulate cell cycle progression and proliferation, it is now understood that other members of the CDK family play important roles in regulating 7 transcription.
The first inhibitors of two of the family members, CDK4 and CDK6, gained FDA approval for HR+ metastatic breast cancer in 2015 and are now broadly used. In contrast to CDK4 and CDK6, which regulate cell cycle progression and proliferation, it is now understood that other members of the CDK family play important roles in regulating transcription.
For patents listed that claim an approved method of use, under certain circumstances the ANDA applicant may also elect to submit a section viii statement certifying that its proposed ANDA label does not contain (or carves out) any language regarding the patented method-of-use rather than certify to a listed method-of-use patent.
For patents listed that claim an approved method of use, under certain circumstances the applicant may also elect to submit a section viii statement certifying that its proposed label does not contain (or carves out) any language regarding the patented method-of-use rather than certify to a listed method-of-use patent.
If the ANDA applicant has provided a Paragraph IV certification to the FDA, the applicant must also send notice of the Paragraph IV certification to the NDA-holder and patentee(s) within certain specified timeframes (referred to as the “notice letter”). The NDA and patent holders may then initiate a patent infringement lawsuit in response to the notice letter.
If the applicant has provided a Paragraph IV certification to the FDA, the applicant must also send notice of the Paragraph IV certification to the NDA-holder and patentee(s) within certain specified timeframes (referred to as the “notice letter”). The NDA and patent holders may then initiate a patent infringement lawsuit in response to the notice letter.
Federal civil and criminal false claims laws, including the federal civil False Claims Act, prohibit any person or entity from knowingly presenting, or causing to be presented, a false claim for payment to the federal government, or knowingly making, or causing to be made, a false statement to have a false claim paid, or avoiding, decreasing or concealing an obligation to pay money to the federal government.
Federal civil and criminal false claims laws, including the federal civil False Claims Act, prohibit any person or entity from knowingly presenting, or causing to be presented, a false claim for payment to the federal government, or knowingly 21 making, or causing to be made, a false statement to have a false claim paid, or avoiding, decreasing or concealing an obligation to pay money to the federal government.
Upon approval of a drug, the applicant must update its listing of patents to the NDA in timely fashion and each of the patents listed in the application for the drug is then published in the FDA’s Approved Drug 19 Products with Therapeutic Equivalence Evaluations, commonly known as the Orange Book.
Upon approval of a drug, the applicant must update its listing of patents to the NDA in timely fashion and each of the patents listed in the application for the drug is then published in the FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations, commonly known as the Orange Book.
The civil False Claims Act has been used to assert liability on the basis of claims made to programs where the federal government reimburses, such as Medicare and Medicaid, as well as programs where the federal government is a direct 22 purchaser, such as when it purchases off the Federal Supply Schedule.
The civil False Claims Act has been used to assert liability on the basis of claims made to programs where the federal government reimburses, such as Medicare and Medicaid, as well as programs where the federal government is a direct purchaser, such as when it purchases off the Federal Supply Schedule.
There have been legislative and judicial efforts to modify, repeal, or otherwise invalidate all, or certain provisions of, the ACA. We cannot predict the ultimate content, timing or effect of any healthcare reform legislation or the impact of potential legislation on us.
There have been legislative and judicial efforts to modify, repeal, or otherwise invalidate all, or 23 certain provisions of, the ACA. We cannot predict the ultimate content, timing or effect of any healthcare reform legislation or the impact of potential legislation on us.
The time can be reduced for any time FDA determines that the applicant did not pursue approval with due diligence. The United States Patent and Trademark Office, or USPTO, in consultation with the FDA, reviews and approves the application for any patent term extension or restoration.
The time can be reduced for any time the FDA determines the applicant did not pursue approval with due diligence. The United States Patent and Trademark Office, or USPTO, in consultation with the FDA, reviews and approves the application for any patent term extension or restoration.
To qualify for three-year exclusivity, there must be new clinical investigations, other than bioavailability studies, supporting the application, that were conducted or sponsored by the applicant are deemed by the FDA to be essential to the approval of the application.
To qualify for three-year exclusivity, there must be new clinical investigations, other than bioavailability studies, supporting the application, that were conducted or sponsored by the applicant, and are deemed by the FDA to be essential to the approval of the application.
In particular, for a diagnostic, the applicant must demonstrate that the diagnostic has adequate sensitivity and specificity, has adequate specimen and reagent stability, and produces reproducible results when the same sample is tested multiple times by multiple users at multiple laboratories.
In particular, for a diagnostic, the applicant must demonstrate that the diagnostic has adequate sensitivity and specificity, has 20 adequate specimen and reagent stability, and produces reproducible results when the same sample is tested multiple times by multiple users at multiple laboratories.
The Trump and Biden administrations both issued executive orders intended to favor and encourage domestic manufacturing. And on August 16, 2022, President Biden signed into the law the Inflation Reduction Act of 2022, or the IRA.
The Trump and Biden administrations both issued executive orders intended to favor and encourage domestic manufacturing. And on August 16, 2022, former President Biden signed into the law the Inflation Reduction Act of 2022, or the IRA.
If the FDA concludes that the applicable criteria have been met, the FDA will issue a PMA for 21 the approved indications, which can be more limited than those originally sought by the applicant.
If the FDA concludes that the applicable criteria have been met, the FDA will issue a PMA for the approved indications, which can be more limited than those originally sought by the applicant.
Our discovery excellence has been validated by our steady progress in creating a wholly owned, internally developed pipeline. We also began work with our partner AbCellera Biologics, Inc. ("AbCellera") on an early-stage discovery program involving potent degraders as payloads for novel antibodies targeting tumor specific antigens. Since our inception in 2016, we have received clearance from the U.S.
Our discovery excellence has been supported by our steady progress in creating a wholly owned, internally developed pipeline. We also began work with our partner AbCellera Biologics, Inc. ("AbCellera") on an early-stage discovery program involving potent degraders as payloads for novel antibodies targeting tumor specific antigens. Since our inception in 2016, we have received clearance from the U.S.
Under the breakthrough therapy program, the sponsor of a new product candidate may request that FDA designate the product candidate 17 for a specific indication as a breakthrough therapy concurrent with, or after, the filing of the IND for the product candidate.
Under the breakthrough therapy program, the sponsor of a new product candidate may request that FDA designate the product candidate for a specific indication as a breakthrough therapy concurrent with, or after, the filing of the IND for the product candidate.
We, or our collaborators, if any, will be required to obtain coverage and 25 reimbursement for these tests separate and apart from the coverage and reimbursement we seek for our product candidates, once approved.
We, or our collaborators, if any, will be required to obtain coverage and reimbursement for these tests separate and apart from the coverage and reimbursement we seek for our product candidates, once approved.
Failure to comply with applicable U.S. requirements may subject a company to a variety of administrative or judicial sanctions, such as clinical hold, FDA refusal to approve pending new drug applications, or NDAs, warning or untitled letters, product recalls, product seizures, import detention, total or partial suspension of production or distribution, injunctions, fines, civil penalties and criminal prosecution.
Failure to comply with applicable U.S. requirements may subject a company to a variety of administrative or judicial sanctions, such as clinical hold, FDA refusal to approve pending new drug applications, or NDAs, warning or untitled letters, inspectional findings product recalls, product seizures, import detention, total or partial suspension of production or distribution, injunctions, fines, civil penalties and criminal prosecution.
By leveraging our core competencies in cancer biology and medicinal chemistry, combined with our clinical development capabilities, we have built an efficient, fully-integrated drug discovery engine and the development expertise necessary to identify compelling biological targets and create new chemical entities, or NCEs, that we advance into clinical trials. We believe our approach could result in better targeted cancer therapies.
By leveraging our core competencies in cancer biology and medicinal chemistry, combined with our clinical development capabilities, we have built an efficient, drug discovery engine and the development expertise necessary to identify compelling biological targets and create new chemical entities, or NCEs, that we advance into clinical trials. We believe our approach could result in better targeted cancer therapies.
If we are successful in obtaining the necessary regulatory approval, we may pursue commercialization on our own or seek to collaborate with a third party for commercialization, particularly outside the United States. 12 The biotechnology and pharmaceutical industries are characterized by the rapid evolution of technologies and understanding of disease etiology, intense competition and a strong emphasis on intellectual property.
If we are successful in obtaining the necessary regulatory approval, we may pursue commercialization on our own or seek to collaborate with a third party for commercialization, particularly outside the United States. 11 The biotechnology and pharmaceutical industries are characterized by the rapid evolution of technologies and understanding of disease etiology, intense competition and a strong emphasis on intellectual property.
FDA has set a performance goal for reviewing standard applications as within ten months of acceptance of an NDA for filing; and for priority review drugs, within six months of acceptance of an NDA for filing.
FDA has set a performance goal for reviewing standard applications as within ten 14 months of acceptance of an NDA for filing; and for priority review drugs, within six months of acceptance of an NDA for filing.
If the applicant does not challenge the listed patents through a Paragraph IV certification, the ANDA application will not be approved until all the listed patents claiming the referenced product have expired.
If the applicant does not challenge the listed patents through a Paragraph IV certification, the application will not be approved until all the listed patents claiming the referenced product have expired.
Additionally, 14 some clinical trials are overseen by an independent group of qualified experts organized by the clinical trial sponsor, known as a data safety monitoring board or committee. This group provides authorization for whether a trial may move forward at designated checkpoints based on access to certain data from the trial.
Additionally, some clinical trials are overseen by an independent group of qualified experts organized by the clinical trial sponsor, known as a data safety monitoring board or committee. This group provides authorization for whether a trial may move forward at 13 designated checkpoints based on access to certain data from the trial.
By the date of approval of an accelerated approval product, FDA must specify the conditions for the required post approval studies, including enrollment targets, the study protocol, milestones, and target completion dates. FDA may also require that the confirmatory Phase 4 studies be commenced prior to FDA granting a product accelerated approval.
By the date of approval of an accelerated approval product, FDA must specify the conditions for the required post approval studies, including enrollment targets, the study protocol, milestones, and target completion dates. FDA may also, and frequently does, require that the confirmatory Phase 4 studies be commenced prior to FDA granting a product accelerated approval.
Compliance with these laws is difficult and time consuming, and 23 companies that do not comply with these state laws face civil penalties.
Compliance with these laws is difficult and time consuming, and companies that do not comply with these state laws face civil penalties.
Under the terms of the agreement, Prelude and AbCellera will jointly discover, develop, and commercialize products emerging from the collaboration. AbCellera will lead manufacturing activities and Prelude will lead clinical development and global commercialization, subject to AbCellera’s option to co-promote any resulting commercial products in the United States.
Under the terms of the agreement, we and AbCellera will jointly discover, develop, and commercialize products emerging from the collaboration. AbCellera will lead manufacturing activities and we will lead clinical development and global commercialization, subject to AbCellera’s option to co-promote any resulting commercial products in the United States.
As one of our first precision ADC programs, Prelude and our partner AbCellera began work on an early-stage discovery program involving potent degraders of the SMARCA family of proteins as payloads for novel antibodies targeting tumor specific antigens.
As one of our first precision ADC programs, we and our partner AbCellera began work on an early-stage discovery program involving potent degraders of the SMARCA family of proteins as payloads for novel antibodies targeting tumor specific antigens.
Although there are a number of statutory exceptions and regulatory safe harbors protecting certain common activities from prosecution or other regulatory sanctions, the exceptions and safe harbors - once implemented - are drawn narrowly, and practices that involve remuneration intended to induce prescribing, purchases or recommendations may be subject to scrutiny and enforcement action if they do not qualify for an exception or safe harbor.
Although there are a number of statutory exceptions and regulatory safe harbors protecting certain common activities from prosecution or other regulatory sanctions, the exceptions and safe harbors are drawn narrowly, and practices that involve remuneration that may be alleged to be intended to induce prescribing, purchases or recommendations may be subject to scrutiny and enforcement action if they do not qualify for an exception or safe harbor.
Since the CCPA was signed into law in 2018, several other states, including Virginia, Colorado, Utah and Connecticut, have enacted similar privacy laws that may apply to personal information that we collect or maintain.
Since the CCPA was signed into law in 2018, numerous other states, including Virginia, Colorado, Utah and Connecticut, have enacted similar privacy laws that may apply to personal information that we collect or maintain.
FDA Approval Process In the U.S., pharmaceutical products are subject to extensive regulation by the FDA, the Federal Food, Drug, and Cosmetic Act, or FD&C Act, and other federal and state statutes and regulations govern, among other things, the research, development, testing, manufacture, storage, recordkeeping, approval, labeling, promotion and marketing, distribution, post-approval monitoring and reporting, sampling and import and export of pharmaceutical products.
FDA Approval Process In the U.S., pharmaceutical products are subject to extensive regulation by the FDA, under the Federal Food, Drug, and Cosmetic Act, or FD&C Act, and other federal and state statutes and regulations governing, among other things, the research, development, testing, manufacture, storage, recordkeeping, approval, labeling, promotion and marketing, distribution, post-approval monitoring and reporting, sampling and import and export of pharmaceutical products.
In some instances, an ANDA applicant may receive approval prior to expiration of the three-year exclusivity if the applicant seeks, and FDA permits, the omission of such exclusivity-protected information from the ANDA package insert. 20 Patent Term Extension The Hatch Waxman Amendments permit a patent term extension as compensation for patent term lost during the FDA regulatory review process.
In some instances, an applicant may receive approval prior to expiration of the three-year exclusivity if the applicant seeks, and FDA permits, the omission of such exclusivity-protected information from the package insert. 19 Patent Term Extension The Hatch Waxman Amendments permit a patent term extension as compensation for patent term lost during the FDA regulatory review process.
The 24 Consolidated Appropriations Act, 2021 extended the suspension of the 2% Medicare sequester through March 31, 2021.
The Consolidated Appropriations Act, 2021 extended the suspension of the 2% Medicare sequester through March 31, 2021.
Exclusivity Upon NDA approval of a new chemical entity, or NCE, which is a drug that contains no active moiety that has been approved by FDA in any other NDA, that drug receives five years of marketing exclusivity during which FDA cannot receive any ANDA seeking approval of a generic version of that drug unless the application contains a Paragraph IV certification, in which case the application may be submitted one year prior to expiration of the NCE exclusivity.
Exclusivity Upon NDA approval of a new chemical entity, or NCE, which is a drug that contains no active moiety that has been approved by FDA in any other NDA, that drug receives five years of marketing exclusivity during which FDA cannot receive any ANDA or 505(b)(2) application seeking approval of a version of that drug unless the application contains a Paragraph IV certification, in which case the application may be submitted one year prior to expiration of the NCE exclusivity.
We used structure-based drug design to identify a novel series of potent and SMARCA2 binders and linked these binding elements to an E3 ligase binding domain to identify SMARCA2 degraders.
We used structure-based drug design in discovery to identify a novel series of potent and SMARCA2 binders and linked these binding elements to an E3 ligase binding domain to identify SMARCA2 degraders.
Objectives for this first Phase 1 clinical trial are to establish the safety and tolerability profile of PRT3789 as both monotherapy and in combination with docetaxel, evaluate efficacy, pharmacokinetics and pharmacodynamics and determine a dose and potential indications for advancement into a registrational clinical trial.
Objectives for this first Phase 1 clinical trial are to establish the safety and tolerability profile of PRT3789 as both 5 monotherapy and in combination with docetaxel, evaluate activity, pharmacokinetics and pharmacodynamics and determine a dose and potential indications for advancement into a registrational clinical trial.
The ANDA application also will not be approved until any applicable non-patent exclusivity listed in the Orange Book for the referenced product has expired. In some instances, an ANDA applicant may receive approval prior to expiration of certain non-patent exclusivity if the applicant seeks, and FDA permits, the omission of such exclusivity-protected information from the ANDA prescribing information.
The ANDA or 505(b)(2) application also will not be approved until any applicable non-patent exclusivity listed in the Orange Book for the referenced product has expired. In some instances, an applicant may receive approval prior to expiration of certain non-patent exclusivity if the applicant seeks, and FDA permits, the omission of such exclusivity-protected information from the prescribing information.
The SMARCA2 Degraders patent portfolio also includes twelve pending U.S. provisional applications that, among other things, encompass SMARCA2 and/or related inhibitors, pharmaceutical compositions comprising those inhibitors, and methods of treating cancer with those inhibitors.
The SMARCA2 Degraders patent portfolio also includes twenty-five pending U.S. provisional applications that, among other things, encompass SMARCA2 and/or related inhibitors, pharmaceutical compositions comprising those inhibitors, and methods of treating cancer with those inhibitors.
However, the USPTO may not grant an extension because of, for example, failing to exercise due diligence during the testing phase or regulatory review process, failing to apply within applicable deadlines, failing to apply prior to expiration of relevant patents or otherwise failing to satisfy applicable requirements.
However, the USPTO may deny an application for extension because of, for example, failing to exercise due diligence during the testing phase or regulatory review process, failing to apply within applicable deadlines, failing to apply prior to expiration of relevant patents or otherwise failing to satisfy applicable requirements.
We may also be debarred or excluded from participation in government healthcare programs. Regulatory requirements governing our business are evolving. FDA also continually issues guidance documents that provide FDA’s interpretation of its laws and regulations, as well as FDA’s approach to scientific issues and questions.
We may also be debarred by the FDA, excluded, deemed to be ineligible, or debarred from government contracting, or excluded from participation in government healthcare programs. Regulatory requirements governing our business are evolving. FDA also continually issues guidance documents that provide FDA’s interpretation of its laws and regulations, as well as FDA’s approach to scientific issues and questions.
Listing patents in the Orange Book that do not qualify for listing can be considered to be anticompetitive conduct and, in 2023, the Federal Trade Commission sent letters to a number of companies with respect to certain patents that agency asserted were improperly listed or inaccurate.
Listing patents in the Orange Book that do not qualify for listing can be considered to be anticompetitive conduct and subject to regulatory scrutiny and challenges. In 2023, the Federal Trade Commission, or FTC, sent letters to a number of companies with respect to certain patents that agency asserted were improperly listed or inaccurate.
Even if favorable coverage and reimbursement status is attained for one or more drug products for which we receive regulatory approval, less favorable coverage policies and reimbursement rates may be implemented in the future. Employees As of December 31, 2023, we had 128 full-time employees. Of our employees, 49% have an M.D. or a Ph.D.
Even if favorable coverage and reimbursement status is attained for one or more drug products for which we receive regulatory approval, less favorable coverage policies and reimbursement rates may be implemented in the future. Employees As of December 31, 2024, we had 131 full-time employees. Of our employees, 47% have an M.D. or a Ph.D.
Item 1. B usiness. Overview Prelude Therapeutics Incorporated ("Prelude") is a clinical-stage fully integrated oncology company built on a foundation of drug discovery excellence to deliver novel precision cancer medicines to underserved patients.
Item 1. B usiness. Overview Prelude Therapeutics Incorporated ("Prelude" or the "Company") is a clinical-stage precision oncology company built on a foundation of drug discovery excellence to deliver novel precision cancer medicines to underserved patients.
The allowable patent term extension is calculated as half of the drug’s testing phase (the time between IND application and NDA submission) and all of the review phase (the time between NDA submission and approval) up to a maximum of five years.
The allowable patent term extension is calculated as the sum of (i) half of the drug’s testing phase (the time between IND application and NDA submission) and (ii) all of the review phase (the time between the full NDA submission and approval), up to a maximum of five years.
Certain changes to an approved drug, such as the approval of a new indication, the approval of a new strength, and the approval of a new condition of use, are associated with a three-year period of exclusivity from the date of approval during which FDA cannot approve an ANDA for a generic drug that includes the change.
Certain changes to an approved drug, such as the approval of a new indication, the approval of a new strength, and the approval of a new condition of use, are associated with a three-year period of exclusivity from the date of approval during which FDA cannot approve an ANDA or 505(b)(2) application for a drug that includes the change.
Among other things, the HITECH Act and its implementing regulations, made HIPAA’s security standards and certain privacy standards directly applicable to business associates, defined as persons or organizations, other than members of a covered entity’s workforce, that create, receive, maintain or transmit protected health information on behalf of a covered entity for a function or activity regulated by HIPAA.
Among other things, the HITECH Act and its implementing regulations, made HIPAA’s security standards and certain privacy standards directly applicable to business associates, who, on behalf of covered entities, other than members of a covered entity’s workforce, create, receive, maintain or transmit protected health information for a function or activity regulated by HIPAA.
The manufacturer of an investigational drug in a Phase 2 or 3 clinical trial for a serious or life-threatening disease is required to make available, such as by posting on its website, its policy on evaluating and responding to requests for expanded access. After completion of the required clinical testing, an NDA is prepared and submitted to FDA.
The manufacturer of an investigational drug in a Phase 2 or 3 clinical trial for a serious or life-threatening disease is required to make available, such as by posting on its website, its policy on evaluating and responding to requests for expanded access.
We also rely on know-how and continuing technological innovation to develop, strengthen, and maintain our proprietary position in the field of precision oncology. As more fully described below, our patent portfolio includes, inter alia, patent families with claims directed to compositions of matter for, and methods of using, compounds that degrade SMARCA2 and PRT2527, PRT3645, and other compounds.
We also rely on know-how and continuing technological innovation to develop, strengthen, and maintain our proprietary position in the field of precision oncology. 9 As more fully described below, our patent portfolio includes, inter alia, patent families with claims directed to compositions of matter for, and methods of using, PRT3789, PRT7732, and other compounds that degrade SMARCA2; PRT2527 and other CDK inhibitors; antibody drug conjugates (ADCs); and other compounds.
Drugs may qualify for priority review if they would be a significant improvement in the safety or effectiveness of the treatment, diagnosis, or prevention of a serious condition when compared to standard applications.
Drugs may qualify for priority review if they would be a significant improvement in the safety or effectiveness of the treatment, diagnosis, or prevention of a serious condition.
Drugs listed in the Orange Book can, in turn, be cited by potential generic competitors in support of approval of an abbreviated new drug application, or ANDA.
Drugs listed in the Orange Book can, in turn, be cited by potential generic competitors in support of approval of an abbreviated new drug application, or ANDA or a 505(b)(2) NDA.
In some instances, FDA may condition approval of an NDA on the applicant’s agreement to conduct additional clinical trials to further assess the product’s safety and effectiveness after approval, to answer unresolved questions, or to ensure that population representative data is collected. Such post-approval trials are typically referred to as Phase 4 studies.
In some instances, FDA may condition approval of an NDA on the applicant’s agreement to conduct additional clinical trials to further assess the product’s safety and effectiveness after approval, to answer unresolved questions. Such post-approval trials are typically referred to as Phase 4 studies.
PRT2527 Our PRT2527 patent portfolio is wholly owned by us. The portfolio includes one issued U.S. patent, which claims among other things, PRT2527 and other compounds, pharmaceutical compositions comprising PRT2527, and methods of using such compounds.
PRT3789, PRT7732, and Other SMARCA2 Degraders Our PRT3789, PRT7732, and Other SMARCA2 Degraders patent portfolio is wholly owned by us. The portfolio includes one issued U.S. patent, which claims among other things, SMARCA degraders and other compounds, pharmaceutical compositions comprising SMARCA degraders, and methods of using such compounds.
Promotion and advertising must also be truthful and non-misleading, must be adequately substantiated, and with a fair balance between product benefit claims and risks, among other requirements. In 2023, FDA issued a final rule and a guidance on risk and efficacy disclosures in direct-to-consumer advertising, and a guidance on communication of off-label scientific information about approved products.
Promotion and advertising must also be truthful and non-misleading, must be adequately substantiated, and with a fair balance between product benefit claims and risks, among other requirements. In 2023, FDA issued a final rule and a guidance on risk and efficacy disclosures in direct-to-consumer advertising.
The filing of a patent infringement lawsuit within 45 days of the receipt of a Paragraph IV certification automatically prevents the FDA from approving the ANDA until the earlier of 30 months from the date the notice letter is received, expiration of the patent, the date of a settlement order or consent decree signed and entered by the court stating that the patent that is the subject of the certification is invalid or not infringed, or a decision in the patent case that is favorable to the ANDA applicant.
The filing of a patent infringement lawsuit within 45 days of the receipt of a Paragraph IV certification automatically prevents the FDA from approving the ANDA or 505(b)(2) application until the earlier of 30 months from the date the notice letter is received, expiration of the patent, the date of a settlement order or consent decree signed and entered by the court stating that the patent that is the subject of the certification is invalid or not infringed, a decision in the patent case that is favorable to the ANDA or 505(b)(2) NDA applicant, or such shorter or longer period as may be ordered by a court.
The ANDA applicant is required to certify to the FDA concerning any patents identified for the reference listed drug in the Orange Book.
The ANDA or 505(b)(2) NDA applicant is required to certify to the FDA concerning any patents identified for the reference listed drug in the Orange Book.
If there is no listed patent in the Orange Book, there may not be a Paragraph IV certification, and, thus, no ANDA for a generic version of the drug may be filed before the expiration of the exclusivity period.
If there is no listed patent in the Orange Book, there may not be a Paragraph IV certification, and, thus, no ANDA for a generic version of the drug or 505(b)(2) application relying on such drug may be filed before the expiration of the exclusivity period.
We believe our unique discovery engine will enable us to file a new IND every 12 to 18 months. We design our clinical trials to leverage the broad utility of our compounds with a focus on efficient regulatory pathways to enable our potentially transformative medicines to potentially quickly reach patients with high unmet medical need.
As a result, we strive to file a new IND every 12 to 18 months. 3 We design our clinical trials to leverage the broad utility of our compounds with a focus on efficient regulatory pathways to enable our potentially transformative medicines to potentially quickly reach patients with high unmet medical need.
Competition We face competition from segments of the pharmaceutical, biotechnology and other related markets that pursue the development of precision oncology therapies optimized to target the key driver mechanisms in cancers with high unmet need. Several biopharmaceutical companies, including Arvinas Inc., Aurigene, Black Diamond Therapeutics, Inc., Boehringer Ingelheim, C4 Therapeutics, Constellation Pharmaceuticals, Inc., Eli Lilly and Company, F.
Competition We face competition from segments of the pharmaceutical, biotechnology and other related markets that pursue the development of precision oncology therapies optimized to target the key driver mechanisms in cancers with high unmet need. These companies include Amgen Inc., Arvinas Inc., AstraZeneca plc, Aurigene, Boehringer Ingelheim, C4 Therapeutics, Eli Lilly and Company, F.
However, compliance may be required if approval is sought for other indications for which the product has not received orphan designation. 18 Separately, product candidates intended for the treatment of adult cancer which are directed at molecular targets that the FDA determines to be substantially relevant to the growth or progression of pediatric cancer, must submit, with the marketing application, reports from molecularly targeted pediatric cancer investigations designed to yield clinically meaningful pediatric study data, gathered using appropriate formulations for each applicable age group, to inform potential pediatric labeling.
Separately, product candidates intended for the treatment of adult cancer which are directed at molecular targets that the FDA determines to be substantially relevant to the growth or progression of pediatric cancer, must submit, with the marketing application, reports from molecularly targeted pediatric cancer investigations designed to yield clinically meaningful pediatric study data, gathered using appropriate formulations for each applicable age group, to inform potential pediatric labeling.
The Best Pharmaceuticals for Children Act, or BPCA, provides NDA holders a six-month extension of any exclusivity—patent or nonpatent—for a drug if certain conditions are met.
Orphan products are not exempt from this requirement. 17 The Best Pharmaceuticals for Children Act, or BPCA, provides NDA holders a six-month extension of any exclusivity—patent or nonpatent—for a drug if certain conditions are met.
The CDK Inhibitors patent portfolio also includes one pending U.S. provisional application that relate to among other things, methods of inhibiting CDK using compounds and methods of treating certain cancers. Any patents granted that claim priority to this provisional application could expire as early as 2044, subject to any disclaimers or extensions available under the Hatch-Waxman Act.
The PRT2527 patent portfolio also includes five pending U.S. provisional applications that relate to among other things, methods of inhibiting CDK9 using PRT2527 related compounds and methods of treating certain cancers. Any patents granted that claim priority to these provisional applications could expire as early as 2045, subject to any disclaimers or extensions available under the Hatch-Waxman Act.
We have applied our internal expertise to design PRT2527 as a potent inhibitor of CDK9 that exhibits high kinome selectivity, PK properties and solubility that we believe may broaden the therapeutic window of CDK9 inhibition.
Inhibition of CDK9 is therefore an attractive therapeutic approach to target specifically genomically selected cancers. We have applied our internal expertise to design PRT2527 as a potent inhibitor of CDK9 that exhibits high kinome selectivity, PK properties and solubility that we believe may broaden the therapeutic window of CDK9 inhibition.
The FDA may, on its own initiative or at the request of the applicant, grant deferrals or waivers of some or all of this data, as above. Orphan products are not exempt from this requirement.
The FDA may, on its own initiative or at the request of the applicant, grant deferrals or waivers of some or all of this data, as above.
The FDA adjusts the user fees on an annual basis, and the fees typically increase annually. 15 FDA reviews each submitted NDA before it determines whether to file it, based on the agency’s threshold determination that it is sufficiently complete to permit substantive review, and FDA may request additional information.
FDA reviews each submitted NDA before it determines whether to file it, based on the agency’s threshold determination that it is sufficiently complete to permit substantive review, and FDA may request additional information.
Patent term extension, however, cannot extend the remaining term of a patent beyond a total of 14 years from the product’s approval date. After NDA approval, owners of relevant drug patents may apply for the extension.
Patent term extension, however, only applies to one patent per approved product and cannot extend the total term of a patent beyond 14 years from the product’s approval date. After NDA approval, owners of relevant drug patents may apply for the extension.
FDA may grant full or partial waivers, or deferrals, for submission of data. Unless otherwise required by regulation, PREA does not apply to any drug for an indication for which orphan designation has been granted.
FDA may grant full or partial waivers, or deferrals, for submission of data. Unless otherwise required by regulation, PREA does not apply to any drug for an indication for which orphan designation has been granted. However, compliance may be required if approval is sought for other indications for which the product has not received orphan designation.
Beginning calendar year 2021, manufacturers must collect information regarding payments and other transfers of value to physician assistants, nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists, anesthesiologist assistants and certified nurse- midwives for reporting in 2022. The reported information is made publicly available on a searchable website.
Beginning calendar year 2021, manufacturers must also collect 22 information regarding payments and other transfers of value to physician assistants, nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists, anesthesiologist assistants and certified nurse- midwives for reporting in 2022.
The portfolio further includes seven pending U.S. non-provisional applications, which claim, among other things, genera of compounds that encompass SMARCA2 and/or related degraders, pharmaceutical compositions comprising those degraders, and methods of treating cancer with those degraders.
The portfolio further includes twelve pending U.S. non-provisional applications, which claim, among other things, genera of compounds that encompass SMARCA2 and/or related degraders, pharmaceutical compositions comprising those degraders, and methods of treating cancer with those degraders. Fourteen related PCT applications, including the PCT application corresponding to the issued U.S. patent, have been filed.
For the SMARCA compounds, the one issued patent and patents from other applications, if issued, are expected to expire no earlier than June 2041, subject to any disclaimers or extensions.
For the PRT2527 compound, the patents from these applications, if issued, are expected to expire no earlier than September 2040, subject to any disclaimers or extensions. For the SMARCA2 degrader compound, PRT3789, the one issued patent and patents from other applications, if issued, are expected to expire no earlier than June 2041, subject to any disclaimers or extensions.
The patent portfolio currently comprises of 309 patents and patent applications: (A)(i) 12 issued U.S. patents, (ii) 29 U.S. non-provisional patent applications, and (iii) 40 U.S. provisional patent applications; and (B)(iv) 15 PCT patent applications, (v) 60 issued foreign patents including patents in European jurisdictions, and (vi) 153 foreign patent applications.
The patent portfolio currently comprises of 269 patents and patent applications: (A)(i) 13 issued U.S. patents, (ii) 34 U.S. non-provisional patent applications, and (iii) 44 U.S. provisional patent applications; and (B)(iv) 12 PCT patent applications, (v) 6 issued foreign patents including patents in European jurisdictions, and (vi) 160 foreign patent applications.
The mark “Prelude Therapeutics,” the Prelude logo and all product names are our common law trademarks. All other service marks, trademarks and trade names appearing in this Annual Report on Form 10-K are the property of their respective owners.
All other service marks, trademarks and trade names appearing in this Annual Report on Form 10-K are the property of their respective owners.
Drug manufacturers and certain of their subcontractors are required to register their establishments with FDA and certain state agencies and list the drugs produced. The information that must be submitted to FDA regarding manufactured products was expanded through the Coronavirus Aid, Relief, and Economic Security, or CARES Act to include the volume of drugs produced during the prior year.
The information that must be submitted to FDA regarding manufactured products was expanded through the Coronavirus Aid, Relief, and Economic Security, or CARES Act to include the volume of drugs produced during the prior year.
For each interim patent extension granted, the post-approval patent extension is reduced by one year. The director of the USPTO must determine that approval of the drug covered by the patent for which a patent extension is being sought is likely. Interim patent extensions are not available for a drug for which an NDA has not been submitted.
For each interim patent extension granted, the post-approval patent extension is reduced by an equal duration (e.g., one year per interim patent extension). The director of the USPTO must determine that approval of the drug covered by the patent for which a patent extension is being sought is likely.
We intend to complete the dose escalation portion of the Phase 1 clinical trial of PRT3645 this year and following its completion, to explore continued clinical development with external partners. 4 Prelude Discovery and Development Approach We carefully evaluate and select our targets based on three key pillars, which provide a framework for optimizing our drug discovery and development efforts. • Identify target mechanisms with a compelling biological rationale o Current target mechanisms of focus include transcriptional regulation, deoxyribonucleic acid, or DNA, repair pathway, cell cycle regulation, exploitation of synthetic lethality and brain penetrant molecules. • Leverage our advanced medicinal chemistry capabilities to create better product candidates o We view all target classes equally and strive to invent clinical candidates that meet our desired target product profiles.
We believe we can best address these diseases by developing therapies that target primary and secondary resistance mechanisms. 2 The following table summarizes our product candidate pipeline: Prelude Discovery and Development Approach We carefully evaluate and select our targets based on three key pillars, which provide a framework for optimizing our drug discovery and development efforts. • Identify target mechanisms with a compelling biological rationale o Current target mechanisms of focus include transcriptional regulation, deoxyribonucleic acid, or DNA, repair pathway, cell cycle regulation, exploitation of synthetic lethality and brain penetrant molecules. • Leverage our advanced medicinal chemistry capabilities to create better product candidates o We view all target classes equally and strive to invent clinical candidates that meet our desired target product profiles.
Clinical trials to support NDAs for marketing approval are typically conducted in three sequential phases, but the phases may overlap, be divided, or be combined.
Subjects participating in clinical trials must also provide their informed consent on the IRB approved form. Clinical trials to support NDAs for marketing approval are typically conducted in three sequential phases, but the phases may overlap, be divided, or be combined.
An NDA supplement for a new indication typically requires clinical data similar to that in the original application, and FDA uses the same procedures and actions in reviewing NDA supplements as it does in reviewing NDAs. 16 Disclosure of Clinical Trial Information Sponsors of clinical trials of FDA regulated products, including drugs, are required to register and disclose certain clinical trial information.
An NDA supplement for a new indication typically requires clinical data similar to that in the original application, and FDA uses the same procedures and actions in reviewing NDA supplements as it does in reviewing NDAs.
For instance, FDA recently approved a plan that was submitted by Florida to import drugs from Canada. Quality control and manufacturing procedures must continue to conform to cGMP after approval, including quality control and quality assurance and maintenance of records and documentation. Changes to the product manufacturing process often require prior FDA approval or notification before being implemented.
For instance, FDA approved a plan that was submitted by Florida to import drugs from Canada. Changes to the product manufacturing process often require prior FDA approval or notification before being implemented.
Any patents granted that claim priority to this provisional application could expire as early as 2044, subject to any disclaimers or extensions available under the Hatch-Waxman Act. PRT3645 and Other CDK Inhibitors Our PRT3645 patent portfolio is wholly owned by us.
Any patents granted that claim priority to this provisional application could expire as early as 2045, subject to any disclaimers or extensions available under the Hatch-Waxman Act. Antibody Drug Conjugates (ADCs) Our ADC patent portfolio is wholly owned by us. The portfolio includes one pending U.S. non-provisional patent application and one pending PCT application.
Iterative synthesis and testing of over 600 compounds allowed for the identification of PRT2527, which has improved potency and kinase selectivity compared to AZ4573, the most advanced CDK9-selective inhibitor currently in development. The PK and physical properties of PRT2527 are suitable for IV or subcutaneous dosing.
Iterative synthesis and testing of over 600 compounds allowed for the identification of PRT2527, which we believe has improved potency and kinase selectivity compared to another CDK9-selective inhibitor currently in development.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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As a result, you may not be able to resell your shares of common stock at or above the purchase price. • The market price of our common stock has been and is likely to be highly volatile, which could result in substantial losses for purchasers of our common stock. • Our principal stockholders and management own a significant percentage of our stock and are able to exert significant control over matters subject to stockholder approval. • We are an “emerging growth company” and a “smaller reporting company” and we cannot be certain if the reduced reporting requirements applicable to emerging growth companies or smaller reporting companies will make our common stock less attractive to investors. • We will continue to incur increased costs as a result of operating as a public company, and our management will be required to devote substantial time to new compliance initiatives and corporate governance practices. 28 Risks Related to Our Financial Position and Need for Capital We have incurred significant operating losses since our inception.
As a result, you may not be able to resell your shares of common stock at or above the purchase price. • The market price of our common stock has been and is likely to continue to be highly volatile, which could result in substantial losses for purchasers of our common stock. • Our principal stockholders and management own a significant percentage of our stock and are able to exert significant control over matters subject to stockholder approval. • We are an “emerging growth company” and a “smaller reporting company” and we cannot be certain if the reduced reporting requirements applicable to emerging growth companies or smaller reporting companies will make our common stock less attractive to investors. • We will continue to incur increased costs as a result of operating as a public company, and our management will be required to devote substantial time to new compliance initiatives and corporate governance practices. 28 Risks Related to Our Financial Position and Need for Capital We have incurred significant operating losses since our inception.
Our future capital requirements will depend on many factors, including: • the progress, timing and results of preclinical studies and clinical trials for our current or any future product candidates; • the extent to which we develop, in-license or acquire other pipeline product candidates or technologies; • the number and development requirements of other product candidates that we may pursue, and other indications for our current product candidates that we may pursue; 30 • the costs, timing and outcome of obtaining regulatory approvals of our current or future product candidates and any companion diagnostics we may pursue; • the scope and costs of making arrangements with third-party manufacturers, or establishing manufacturing capabilities, for both clinical and commercial supplies of our current or future product candidates; • the costs involved in growing our organization to the size needed to allow for the research, development and potential commercialization of our current or future product candidates; • the cost associated with commercializing any approved product candidates, including establishing sales, marketing and distribution capabilities; • the cost associated with completing any post-marketing studies or trials required by the FDA or other regulatory authorities; • the revenue, if any, received from commercial sales of our product candidates that receive marketing approval; • the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims that we may become subject to, including any litigation costs and the outcome of such litigation; • the costs associated with potential product liability claims, including the costs associated with obtaining insurance against such claims and with defending against such claims; and • to the extent we pursue strategic collaborations, including collaborations to commercialize our product candidates, our ability to establish and maintain collaborations on favorable terms, if at all, as well as the timing and amount of any milestone or royalty payments we are required to make or are eligible to receive under such collaborations, if any.
Our future capital requirements will depend on many factors, including: • the progress, timing and results of preclinical studies and clinical trials for our current or any future product candidates; • the extent to which we develop, in-license or acquire other pipeline product candidates or technologies; 30 • the number and development requirements of other product candidates that we may pursue, and other indications for our current product candidates that we may pursue; • the costs, timing and outcome of obtaining regulatory approvals of our current or future product candidates and any companion diagnostics we may pursue; • the scope and costs of making arrangements with third-party manufacturers, or establishing manufacturing capabilities, for both clinical and commercial supplies of our current or future product candidates; • the costs involved in growing our organization to the size needed to allow for the research, development and potential commercialization of our current or future product candidates; • the cost associated with commercializing any approved product candidates, including establishing sales, marketing and distribution capabilities; • the cost associated with completing any post-marketing studies or trials required by the FDA or other regulatory authorities; • the revenue, if any, received from commercial sales of our product candidates that receive marketing approval; • the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims that we may become subject to, including any litigation costs and the outcome of such litigation; • the costs associated with potential product liability claims, including the costs associated with obtaining insurance against such claims and with defending against such claims; and • to the extent we pursue strategic collaborations, including collaborations to commercialize our product candidates, our ability to establish and maintain collaborations on favorable terms, if at all, as well as the timing and amount of any milestone or royalty payments we are required to make or are eligible to receive under such collaborations, if any.
If we elect or are required to delay, suspend or terminate any clinical trial, the commercial prospects of our product candidates will be harmed and our ability to generate 35 product revenues from this product candidate will be delayed or eliminated.
If we elect or are required to delay, suspend or 35 terminate any clinical trial, the commercial prospects of our product candidates will be harmed and our ability to generate product revenues from this product candidate will be delayed or eliminated.
We also make assumptions, estimations, calculations and conclusions as part of our analyses of data, and we may not have received or had the 36 opportunity to fully and carefully evaluate all data.
We also make assumptions, 36 estimations, calculations and conclusions as part of our analyses of data, and we may not have received or had the opportunity to fully and carefully evaluate all data.
There is no assurance that any such product will successfully advance through its confirmatory clinical trial(s). Therefore, even if a product candidate receives accelerated approval from the FDA, such approval may be withdrawn at a later date.
There is no assurance that any such product candidate will successfully advance through its confirmatory clinical trial(s). Therefore, even if a product candidate receives accelerated approval from the FDA, such approval may be withdrawn at a later date.
Our failure to comply with all regulatory requirements either before or after approval, and later discovery of previously unknown adverse events or other problems with our products, manufacturers or manufacturing processes, may yield various results, including: • litigation involving patients taking our products; • restrictions on such products, manufacturers or manufacturing processes; • restrictions on the labeling or marketing of a product; • restrictions on product distribution or use; • requirements to conduct post-marketing studies or clinical trials; • warning or untitled letters; • withdrawal of the products from the market; • refusal to approve pending applications or supplements to approved applications that we submit; • recall of products; • fines, restitution or disgorgement of profits or revenues; • suspension or withdrawal of marketing approvals; • damage to relationships with any potential collaborators; • unfavorable press coverage and damage to our reputation; • refusal to permit the import or export of our products; • debarment or exclusion; • product seizure; or • injunctions or the imposition of civil or criminal penalties.
Our failure to comply with all regulatory requirements either before or after approval, and later discovery of previously unknown adverse events or other problems with our products, manufacturers or manufacturing processes, may yield various adverse results, including: • litigation involving patients taking our products; • restrictions on such products, manufacturers or manufacturing processes; • restrictions on the labeling or marketing of a product; • restrictions on product distribution or use; • requirements to conduct post-marketing studies or clinical trials; • warning or untitled letters; • withdrawal of the products from the market; • refusal to approve pending applications or supplements to approved applications that we submit; • recall of products; • fines, restitution or disgorgement of profits or revenues; • suspension or withdrawal of marketing approvals or clinical trials; • damage to relationships with any potential collaborators; • unfavorable press coverage and damage to our reputation; • refusal to permit the import or export of our products; • debarment or exclusion; • product seizure; or • injunctions or the imposition of civil or criminal penalties.
We and any potential collaborators may be subject to federal, state and foreign data protection laws and regulations (i.e., laws and regulations that address privacy and data security).
We and any potential collaborators may be subject to federal, state and foreign data protection laws and regulations (i.e., laws and regulations that address data protection, privacy and data security).
For example: • others may be able to make products similar to any product candidates we may develop or utilize similarly related technologies that are not covered by the claims of the patents that we may license or may own in the future; • we, or any future license partners or current or future collaborators, might not have been the first to make the inventions covered by the issued patent or pending patent application that we license or may own in the future; • we, or any future license partners or current or future collaborators, might not have been the first to file patent applications covering certain of our or their inventions; • others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing, misappropriating or otherwise violating any of our owned or licensed intellectual property rights; • it is possible that our pending patent applications or those that we may own in the future will not lead to issued patents; • issued patents that we hold rights to may be held invalid or unenforceable, including as a result of legal challenges by our competitors or other third parties; • our competitors or other third parties 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; • the patents of others may harm our business; and 68 • we may choose not to file a patent in order to maintain certain trade secrets or know how, and a third party may subsequently file a patent covering such intellectual property.
For example: • others may be able to make products similar to any product candidates we may develop or utilize similarly related technologies that are not covered by the claims of the patents that we may license or may own in the future; • we, or any future license partners or current or future collaborators, might not have been the first to make the inventions covered by the issued patent or pending patent application that we license or may own in the future; • we, or any future license partners or current or future collaborators, might not have been the first to file patent applications covering certain of our or their inventions; • others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing, misappropriating or otherwise violating any of our owned or licensed intellectual property rights; • it is possible that our pending patent applications or those that we may own in the future will not lead to issued patents; • issued patents that we hold rights to may be held invalid or unenforceable, including as a result of legal challenges by our competitors or other third parties; • our competitors or other third parties 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; • the patents of others may harm our business; and • we may choose not to file a patent in order to maintain certain trade secrets or know how, and a third party may subsequently file a patent covering such intellectual property.
Even if we are able to establish agreements with third-party manufacturers, reliance on third-party manufacturers entails additional risks, including: • reliance on the third party for regulatory, compliance and quality assurance; • reliance on the third party for product development, analytical testing, and data generation to support regulatory applications; • operations of our third-party manufacturers or suppliers could be disrupted by conditions unrelated to our business or operations, including the bankruptcy of the manufacturer or supplier, the issuance of an FDA Form 483 notice or warning letter, or other enforcement action by FDA or other regulatory authority; • the possible breach of the manufacturing agreement by the third party; • the possible misappropriation of our proprietary information, including our trade secrets and know-how; • the possible termination or nonrenewal of the agreement by the third party at a time that is costly or inconvenient for us; • carrier disruptions or increased costs that are beyond our control; and • failure to deliver our drugs under specified storage conditions and in a timely manner.
Even if we are able to establish agreements with third-party manufacturers, reliance on third-party manufacturers entails additional risks, including: • reliance on the third party for regulatory, compliance and quality assurance; • reliance on the third party for product development, analytical testing, and data generation to support regulatory applications; • operations of our third-party manufacturers or suppliers could be disrupted by conditions unrelated to our business or operations, including the bankruptcy of the manufacturer or supplier, the issuance of an FDA Form 483 notice or warning letter, or other enforcement action by FDA or other regulatory authority; • the possible breach of the manufacturing agreement by the third party; • the possible misappropriation of our proprietary information, including our trade secrets and know-how; 49 • the possible termination or nonrenewal of the agreement by the third party at a time that is costly or inconvenient for us; • carrier disruptions or increased costs that are beyond our control; and • failure to deliver our drugs under specified storage conditions and in a timely manner.
For example, these transactions may entail numerous operational and financial risks, including: • exposure to unknown liabilities; • disruption of our business and diversion of our management’s time and attention in order to develop acquired products, product candidates or technologies; • incurrence of substantial debt or dilutive issuances of equity securities to pay for acquisitions; • higher than expected acquisition and integration costs; • write-downs of assets or goodwill or impairment charges; • increased amortization expenses; • difficulty and cost in combining the operations, systems and personnel of any acquired businesses with our operations, systems and personnel; • impairment of relationships with key suppliers or customers of any acquired businesses due to changes in management and ownership; and • inability to retain key employees of any acquired businesses.
For example, these transactions may entail numerous operational and financial risks, including: • exposure to unknown liabilities; 61 • disruption of our business and diversion of our management’s time and attention in order to develop acquired products, product candidates or technologies; • incurrence of substantial debt or dilutive issuances of equity securities to pay for acquisitions; • higher than expected acquisition and integration costs; • write-downs of assets or goodwill or impairment charges; • increased amortization expenses; • difficulty and cost in combining the operations, systems and personnel of any acquired businesses with our operations, systems and personnel; • impairment of relationships with key suppliers or customers of any acquired businesses due to changes in management and ownership; and • inability to retain key employees of any acquired businesses.
Even after we no longer qualify as an emerging growth company, we may still qualify as a “smaller reporting company,” which would allow us to take advantage of many of the same exemptions from disclosure requirements, including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, if our revenues remain less than $100.0 million, and reduced disclosure obligations regarding executive compensation in this Annual Report on Form 10-K as well as our periodic reports and proxy statements.
However, even after we no longer qualify as an emerging growth company, we may still qualify as a “smaller reporting company,” which would allow us to take advantage of many of the same exemptions from disclosure requirements, including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, if our revenues remain less than $100.0 million, and reduced disclosure obligations regarding executive compensation in this Annual Report on Form 10-K as well as our periodic reports and proxy statements.
Misconduct by these parties could include intentional, reckless and/or negligent conduct or disclosure of unauthorized activities to us that violates: (i) FDA regulations or those of comparable foreign regulatory authorities, including those laws that require the reporting of true, complete and accurate information, (ii) manufacturing standards, (iii) federal and state health and data privacy, security, fraud and abuse, government price reporting, transparency reporting requirements, and other healthcare laws and regulations in the United States and abroad, (iv) sexual harassment and other workplace misconduct laws, or (v) laws that require the true, complete and accurate reporting of financial information or data.
Misconduct by these parties could include intentional, reckless and/or negligent conduct or disclosure of unauthorized activities to us that violates: (i) FDA regulations or those of comparable foreign regulatory authorities, including those laws that require the reporting of true, complete and accurate information, (ii) manufacturing standards, (iii) federal and state health and data privacy, security, fraud and abuse, government price reporting, transparency reporting requirements, and other healthcare laws and regulations in the United States and abroad, (iv) sexual harassment and other workplace misconduct laws, or (v) laws that require the true, complete 57 and accurate reporting of financial information or data.
Regardless of merit or eventual outcome, liability claims may result in: • decreased demand for any product candidates or products that we may develop; • injury to our reputation and significant negative media attention; • initiation of investigations by regulators; • withdrawal of clinical trial participants; • significant time and costs to defend the related litigation; 54 • diversion of management and scientific resources from our business operations; • substantial monetary awards to trial participants or patients; • loss of revenue; • reduced resources of our management to pursue our business strategy; and • the inability to commercialize any products that we may develop.
Regardless of merit or eventual outcome, liability claims may result in: • decreased demand for any product candidates or products that we may develop; • injury to our reputation and significant negative media attention; • initiation of investigations by regulators; • withdrawal of clinical trial participants; • significant time and costs to defend the related litigation; • diversion of management and scientific resources from our business operations; • substantial monetary awards to trial participants or patients; • loss of revenue; • reduced resources of our management to pursue our business strategy; and • the inability to commercialize any products that we may develop.
Moreover, the FDA may withdraw approval of our product candidate approved under the accelerated approval pathway if, for example: • the trial or trials required to verify the predicted clinical benefit of our product candidate fail to verify such benefit or do not demonstrate sufficient clinical benefit to justify the risks associated with the drug; 39 • other evidence demonstrates that our product candidate is not shown to be safe or effective under the conditions of use; • we fail to conduct any required post-approval trial of our product candidate with due diligence; or • we disseminate false or misleading promotional materials relating to the relevant product candidate.
Moreover, the FDA may withdraw approval of our product candidate approved under the accelerated approval pathway if, for example: • the trial or trials required to verify the predicted clinical benefit of our product candidate fail to verify such benefit or do not demonstrate sufficient clinical benefit to justify the risks associated with the drug; • other evidence demonstrates that our product candidate is not shown to be safe or effective under the conditions of use; • we fail to conduct any required post-approval trial of our product candidate with due diligence; or • we disseminate false or misleading promotional materials relating to the relevant product candidate.
State and non-U.S. laws that also govern the privacy and security of health information in some circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts. Efforts to ensure that our business arrangements with third parties will comply with applicable healthcare laws and regulations will involve substantial costs.
Various state and non-U.S. laws also govern the privacy and security of health information in some circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts. Efforts to ensure that our business arrangements with third parties will comply with applicable healthcare laws and regulations will involve substantial costs.
Any performance failure on the part of our existing or future manufacturers could delay clinical development or marketing approval. We do not currently have arrangements in place for redundant supply or a second source for bulk drug substance. If our current CMOs for preclinical and clinical testing cannot perform as agreed, we may be required to replace such CMOs.
Any performance failure on the part of our existing or future manufacturers could delay clinical development or marketing approval. We do not currently have arrangements in place for redundant supply or a second source for bulk drug substance. If our current CMOs for preclinical and clinical testing cannot perform as agreed, we may be required to replace 50 such CMOs.
Even if we are successful in prosecuting or defending against such claims, litigation could result in substantial costs and be a distraction to our senior management and scientific personnel, which would have a material adverse effect on our business, financial condition, results of operations and prospects. 66 Rights to improvements to our product candidates may be held by third parties.
Even if we are successful in prosecuting or defending against such claims, litigation could result in substantial costs and be a distraction to our senior management and scientific personnel, which would have a material adverse effect on our business, financial condition, results of operations and prospects. Rights to improvements to our product candidates may be held by third parties.
In addition, exclusive marketing rights in the United States may be limited if we seek approval for an indication broader than 40 the orphan-designated indication or may be lost if the FDA later determines that the request for orphan designation was materially defective or if the manufacturer is unable to assure sufficient quantities of the product to meet the needs of patients with the rare disease or condition.
In addition, exclusive marketing rights in the United States may be limited if we seek approval for an indication broader than the orphan-designated indication or may be lost if the FDA later determines that the request for orphan designation was materially defective or if the manufacturer is unable to assure sufficient quantities of the product to meet the needs of patients with the rare disease or condition.
As a result, even if we attain profitability, we may be unable to use all or a material portion of our net operating losses and other tax attributes, which could adversely affect our future cash flows. 59 We may engage in strategic transactions that could impact our liquidity, increase our expenses and present significant distractions to our management.
As a result, even if we attain profitability, we may be unable to use all or a material portion of our net operating losses and other tax attributes, which could adversely affect our future cash flows. We may engage in strategic transactions that could impact our liquidity, increase our expenses and present significant distractions to our management.
In these countries, the patent owner may have limited remedies, which could materially diminish the value of such patent. If we are forced to grant a license to third parties with respect to any patents relevant to our business, 64 our competitive position may be impaired, and our business, financial condition, results of operations, and prospects may be adversely affected.
In these countries, the patent owner may have limited remedies, which could materially diminish the value of such patent. If we are forced to grant a license to third parties with respect to any patents relevant to our business, our competitive position may be impaired, and our business, financial condition, results of operations, and prospects may be adversely affected.
Accordingly, our efforts to protect our intellectual property and proprietary rights in such countries may be inadequate. Further, the complexity and uncertainty of European patent laws have increased in recent years. In Europe, a new unitary patent system was introduced in early 2023, which could significantly impact European patents, including those granted before the introduction of such a system.
Accordingly, our efforts to protect our intellectual property and proprietary rights in such countries may be inadequate. Further, the complexity and uncertainty of European patent laws have increased in recent years. In Europe, the unitary patent system was introduced in early 2023, which could significantly impact European patents, including those granted before the introduction of such a system.
In addition, if we are unable to effectively manage our outsourced activities or if the quality or accuracy of the services provided by our vendors or consultants is compromised for any reason, our clinical trials may be extended, delayed or terminated, and we may not be able to obtain marketing approval of any of our product candidates or otherwise advance our business.
In addition, if we are unable to effectively manage our outsourced activities or if the quality or accuracy of the services provided by our vendors or consultants is compromised for any reason, our clinical trials may be extended, delayed, repeated, or terminated, and we may not be able to obtain marketing approval of any of our product candidates or otherwise advance our business.
Any failure to do so could materially harm our business, results of operations and financial condition. If we decide to pursue a Fast Track Designation by the FDA, it may not lead to a faster development or regulatory review or approval process. We may seek Fast Track Designation for one or more of our product candidates.
Any failure to do so could materially harm our business, results of operations and financial condition. If we decide to pursue a Fast Track Designation by the FDA, it may not lead to a faster development or regulatory review or approval process. 42 We may seek Fast Track Designation for one or more of our product candidates.
Our current and anticipated future dependence upon others for the manufacture of our product candidates or products may adversely affect our future profit margins and our ability to commercialize any products that obtain marketing approval on a timely and competitive basis. 49 We may enter into collaborations with third parties for the further development and commercialization of our product candidates.
Our current and anticipated future dependence upon others for the manufacture of our product candidates or products may adversely affect our future profit margins and our ability to commercialize any products that obtain marketing approval on a timely and competitive basis. We may enter into collaborations with third parties for the further development and commercialization of our product candidates.
However, the Leahy-Smith Act and its implementation could make it more difficult to obtain patent protection for our inventions and increase the uncertainties and costs surrounding the prosecution of our or our future collaboration partners’ patent applications and the enforcement or defense of our or our future collaboration partners’ issued patents, all of which could harm our business, results of operations, financial condition and prospects.
However, the Leahy-Smith Act and its implementation could make it more difficult to obtain patent protection for our inventions and increase the uncertainties and 64 costs surrounding the prosecution of our or our future collaboration partners’ patent applications and the enforcement or defense of our or our future collaboration partners’ issued patents, all of which could harm our business, results of operations, financial condition and prospects.
A patent term extension cannot extend the remaining term of a patent beyond a total of 14 years from the date of product approval, only one patent applicable to an approved drug is eligible for the extension and only those claims covering the approved drug, a method for using it, or a method for manufacturing it may be extended, and the application for the extension must be submitted prior to the expiration of the patent.
A patent term extension cannot extend the total term of a patent beyond 14 years from the date of product approval, only one patent applicable to an approved drug is eligible for the extension, only those claims covering the approved drug, a method for using it, or a method for manufacturing it may be extended, and the application for the extension must be submitted prior to the expiration of the patent.
Should any of these events occur, they could have a material adverse effect on our business, financial condition, results of operations and prospects. Risks Related to Our Common Stock Our principal stockholders and management own a significant percentage of our stock and are able to exert significant control over matters subject to stockholder approval.
Should any of these events occur, they could have a material adverse effect on our business, financial condition, results of operations and prospects. 70 Risks Related to Our Common Stock Our principal stockholders and management own a significant percentage of our stock and are able to exert significant control over matters subject to stockholder approval.
The number of patients in our targeted commercial markets and elsewhere may turn out to be lower than expected, patients may not be otherwise amenable to treatment with our drugs, 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 our targeted commercial markets and elsewhere may turn out to be lower than expected, patients may not be otherwise amenable to treatment with our drugs, 52 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.
We have also filed patent applications in foreign jurisdictions relating to our product candidates. 60 The patent application and approval process is expensive, time-consuming and complex. We may not be able to file, prosecute and maintain all necessary or desirable patent applications at a reasonable cost or in a timely manner or in all jurisdictions.
We have also filed patent applications in foreign jurisdictions relating to our product candidates. The patent application and approval process is expensive, time-consuming and complex. We may not be able to file, prosecute and maintain all necessary or desirable patent applications at a reasonable cost or in a timely manner or in all jurisdictions.
In this case, we could ultimately be forced to cease use of such trademarks. 63 Even if we establish infringement, the court may decide not to grant an injunction against further infringing activity and instead award only monetary damages, which may or may not be an adequate remedy.
In this case, we could ultimately be forced to cease use of such trademarks. Even if we establish infringement, the court may decide not to grant an injunction against further infringing activity and instead award only monetary damages, which may or may not be an adequate remedy.
Any product candidates for which we receive accelerated approval from the FDA are required to undergo one or more confirmatory clinical trials. If such a product candidate fails to meet its safety and efficacy endpoints in such confirmatory clinical trials, the regulatory authority may withdraw its conditional approval.
Any product candidates for which we receive accelerated approval from the FDA are required to undergo one or more confirmatory clinical trials. If such a product candidate fails to meet its safety and efficacy endpoints in such confirmatory clinical trials, the regulatory authority may withdraw its approval.
While an inadvertent lapse can be cured by payment of a late fee or by other means in accordance with the applicable rules, there are situations in which noncompliance can result in abandonment or lapse of the patent or 67 patent application, resulting in partial or complete loss of a patent or patent rights in the relevant jurisdiction.
While an inadvertent lapse can be cured by payment of a late fee or by other means in accordance with the applicable rules, there are situations in which noncompliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of a patent or patent rights in the relevant jurisdiction.
We are highly dependent on the development and management expertise of Kris Vaddi, Ph.D., our founder and Chief Executive Officer, as well as the other principal members of our management, scientific and clinical team. We currently do not maintain key person insurance on these individuals.
We are highly dependent on the development and management expertise of Kris Vaddi, Ph.D., our founder and Chief Executive Officer, as well as the other 56 principal members of our management, scientific and clinical team. We currently do not maintain key person insurance on these individuals.
If a disruption or security breach were to result in a loss of, or damage to, our data or applications, or those of our Third Parties, or inappropriate disclosure of confidential or proprietary information, we could incur liability and reputational damage and the further development and commercialization of our product candidates could be delayed.
If a disruption or security breach were to result in a loss of, or damage to, our data or applications, or those of our Third Parties, or inappropriate disclosure of confidential information, we could incur liability and reputational damage and the further development and commercialization of our product candidates could be delayed.
FDA has also expressed 33 a preference for randomized controlled clinical trials to support accelerated approval, rather than single arm trials with response endpoint; • delays in reaching, or failure to reach, agreement on acceptable clinical trial contracts or clinical trial protocols with prospective contract research organizations, or CROs, and prospective trial sites; • clinical trials for our product candidates that may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional clinical trials, delay or halt clinical trials or abandon product development programs; • lack of adequate funding to continue the clinical trial; • the number of patients required for clinical trials for our product candidates may be larger than we anticipate, enrollment in these clinical trials may be slower than we anticipate or may be lower than we anticipate due to challenges in recruiting and enrolling suitable patients that meet the study criteria, participants may drop out of these clinical trials at a higher rate than we anticipate or the duration of these clinical trials may be longer than we anticipate; • competition for clinical trial participants from investigational and approved therapies may make it more difficult to enroll patients in our clinical trials; • difficulties in maintaining contact with patients after treatment, resulting in incomplete data; • potential failures to obtain regulatory approval of companion diagnostic tests, if required, on a timely basis, or at all; • potential failures by our third-party contractors to meet their contractual obligations to us in a timely manner, or at all, or failure to comply with regulatory requirements; • the suspension or termination of clinical trials for our product candidates for various reasons, including a finding by us or by a Data Monitoring Committee for a trial that the participants are being exposed to unacceptable health risks; • undesirable or unexpected side effects or other unexpected characteristics from our product candidates, causing us or our investigators, regulators or IRBs/ECs to suspend or terminate the trials; • the cost of clinical trials for our product candidates may be greater than we anticipate; • changes to clinical trial protocol; • the supply or quality of our product candidates or other materials necessary to conduct clinical trials for our product candidates may be insufficient or inadequate and result in delays or suspension of our clinical trials; and • the impact recent COVID-19 pandemic, or another widespread outbreak of any other communicable disease, which may slow potential enrollment, reduce the number of eligible patients for clinical trials, or reduce the number of patients that remain in our trials.
FDA has also expressed 33 a preference for randomized controlled clinical trials to support accelerated approval, rather than single arm trials with response endpoint; • delays in reaching, or failure to reach, agreement on acceptable clinical trial contracts or clinical trial protocols with prospective contract research organizations, or CROs, and prospective trial sites; • clinical trials for our product candidates that may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional clinical trials, delay or halt clinical trials or abandon product development programs; • lack of adequate funding to continue the clinical trial; • the number of patients required for clinical trials for our product candidates may be larger than we anticipate, enrollment in these clinical trials may be slower than we anticipate or may be lower than we anticipate due to challenges in recruiting and enrolling suitable patients that meet the study criteria, participants may drop out of these clinical trials at a higher rate than we anticipate or the duration of these clinical trials may be longer than we anticipate; • competition for clinical trial participants from investigational and approved therapies may make it more difficult to enroll patients in our clinical trials; • difficulties in maintaining contact with patients after treatment, resulting in incomplete data; • potential failures to obtain regulatory approval of companion diagnostic tests, if required, on a timely basis, or at all; • potential failures by our third-party contractors to meet their contractual obligations to us in a timely manner, or at all, or failure to comply with regulatory requirements; • the suspension or termination of clinical trials for our product candidates for various reasons, including a finding by us or by a Data Monitoring Committee for a trial that the participants are being exposed to unacceptable health risks; • undesirable or unexpected side effects or other unexpected characteristics from our product candidates, causing us or our investigators, regulators or IRBs/ECs to suspend or terminate the trials; • the cost of clinical trials for our product candidates may be greater than we anticipate; • changes to clinical trial protocol; • the supply or quality of our product candidates or other materials necessary to conduct clinical trials for our product candidates may be insufficient or inadequate and result in delays or suspension of our clinical trials; and • the impact of any widespread outbreak of a communicable disease, which may slow potential enrollment, reduce the number of eligible patients for clinical trials, or reduce the number of patients that remain in our trials.
To achieve commercial success for any product for which we obtain marketing approval, we will 51 need to establish sales, marketing and distribution capabilities, either ourselves or through collaboration or other arrangements with third parties. There are risks involved with establishing our own sales and marketing capabilities.
To achieve commercial success for any product for which we obtain marketing approval, we will need to establish sales, marketing and distribution capabilities, either ourselves or through collaboration or other arrangements with third parties. There are risks involved with establishing our own sales and marketing capabilities.
In addition, if we obtain marketing approval for any of our product candidates, we will incur significant sales, marketing and outsourced manufacturing expenses in connection with the commercialization. As a result, we expect to continue to incur significant and increasing operating losses for the foreseeable future.
In addition, if we obtain marketing approval for any of our product candidates, we will incur significant sales, marketing and outsourced manufacturing expenses in connection with the commercialization. As a result, we expect to continue to incur significant operating losses for the foreseeable future.
In any event, the receipt of a Breakthrough Therapy Designation for a drug may not result in a faster development process, review, or approval compared to drugs considered for approval under conventional FDA procedures and it would not assure ultimate approval by the FDA.
In any event, the receipt of a Breakthrough Therapy Designation for a drug may not result in a 41 faster development process, review, or approval compared to drugs considered for approval under conventional FDA procedures and it would not assure ultimate approval by the FDA.
Collaborations with future collaborators involving our product candidates would pose numerous risks to us, including the following: • collaborators have significant discretion in determining the efforts and resources that they will apply to these collaborations and may not perform their obligations as expected; • collaborators may de-emphasize or not pursue development and commercialization of our product candidates or may elect not to continue or renew development or commercialization programs based on clinical trial results, changes in the collaborators’ strategic focus, including as a result of a sale or disposition of a business unit or development function, or available funding or external factors such as an acquisition that diverts resources or creates competing priorities; • collaborators may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial or abandon a product candidate, repeat or conduct new clinical trials or require a new formulation of a product candidate for clinical testing; • collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our products or product candidates if the collaborators believe that competitive products are more likely to be successfully developed or can be commercialized under terms that are more economically attractive than ours; • a collaborator with marketing and distribution rights to multiple products may not commit sufficient resources to the marketing and distribution of our product relative to other products; • collaborators may not properly obtain, maintain, defend or enforce our intellectual property rights or may use our proprietary information and intellectual property in such a way as to invite litigation or other intellectual property related proceedings that could jeopardize or invalidate our proprietary information and intellectual property or expose us to potential litigation or other intellectual property related proceedings; • disputes may arise between the collaborators and us that result in the delay or termination of the research, development or commercialization of our products or product candidates or that result in costly litigation or arbitration that diverts management attention and resources; • collaborations may be terminated and, if terminated, may result in a need for additional capital to pursue further development or commercialization of the applicable product candidates; • collaboration agreements may not lead to development or commercialization of product candidates in the most efficient manner or at all; and • if a future collaborator of ours were to be involved in a business combination, the continued pursuit and emphasis on our product development or commercialization program could be delayed, diminished or terminated.
Collaborations with future collaborators involving our product candidates would pose numerous risks to us, including the following: • collaborators have significant discretion in determining the efforts and resources that they will apply to these collaborations and may not perform their obligations as expected; • collaborators may de-emphasize or not pursue development and commercialization of our product candidates or may elect not to continue or renew development or commercialization programs based on clinical trial results, changes in the collaborators’ strategic focus, including as a result of a sale or disposition of a business unit or development function, or available funding or external factors such as an acquisition that diverts resources or creates competing priorities; • collaborators may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial or abandon a product candidate, repeat or conduct new clinical trials or require a new formulation of a product candidate for clinical testing; • collaborators may not comply with the applicable legal and regulatory requirements; • collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our products or product candidates if the collaborators believe that competitive products are more likely to be successfully developed or can be commercialized under terms that are more economically attractive than ours; • a collaborator with marketing and distribution rights to multiple products may not commit sufficient resources to the marketing and distribution of our product relative to other products; • collaborators may not properly obtain, maintain, defend or enforce our intellectual property rights or may use our proprietary information and intellectual property in such a way as to invite litigation or other intellectual property related proceedings that could jeopardize or invalidate our proprietary information and intellectual property or expose us to potential litigation or other intellectual property related proceedings; 51 • disputes may arise between the collaborators and us that result in the delay or termination of the research, development or commercialization of our products or product candidates or that result in costly litigation or arbitration that diverts management attention and resources; • collaborations may be terminated and, if terminated, may result in a need for additional capital to pursue further development or commercialization of the applicable product candidates; • collaboration agreements may not lead to development or commercialization of product candidates in the most efficient manner or at all; and • if a future collaborator of ours were to be involved in a business combination, the continued pursuit and emphasis on our product development or commercialization program could be delayed, diminished or terminated.
Following California’s lead, other states have adopted similar comprehensive consumer privacy laws, all of which may impact our business activities and exemplifies the vulnerability of our business to the evolving regulatory environment related to personal data and protected health information.
Following California’s lead, other states have adopted similar comprehensive consumer privacy laws, all of 59 which may impact our business activities and exemplifies the vulnerability of our business to the evolving regulatory environment related to personal data and protected health information.
Furthermore, while we intend to protect our intellectual property and proprietary rights in major markets for our products, we cannot ensure that we will be able to initiate or maintain similar efforts in all jurisdictions in which we may wish to market our products.
Furthermore, while we intend to protect our intellectual property and proprietary rights in major markets for our products, we cannot ensure that we will be able to initiate or maintain similar efforts in all jurisdictions in 66 which we may wish to market our products.
The FDA could delay, limit or deny approval of a product candidate for many reasons, including because the FDA: • may not deem our product candidate to be safe and effective; • determines that the product candidate does not have an acceptable benefit-risk profile; • determines, in the case of an NDA seeking accelerated approval, that the NDA does not provide evidence that the product candidate represents a meaningful advantage over available therapies; • determines that the objective response rate, or ORR, and duration of response are not clinically meaningful; • may require that we do additional work to determine the optimal dose; • may not agree that the data collected from preclinical studies and clinical trials are acceptable or sufficient to support the submission of an NDA or other submission or to obtain regulatory approval and may impose requirements for additional preclinical studies or clinical trials; • may determine that adverse events experienced by participants in our clinical trials represent an unacceptable level of risk; • may determine that population studied in the clinical trial may not be sufficiently broad or representative to assure safety in the full population for which we seek approval; • may not accept clinical data from trials, which are conducted at clinical facilities or in countries where the standard of care is potentially different from that of the United States; • may disagree regarding the formulation, labeling and/or the specifications; • may not approve the manufacturing processes associated with our product candidate or may determine that a manufacturing facility does not have an acceptable compliance status; 38 • may change approval policies or adopt new regulations; or • may not file a submission due to, among other reasons, the content or formatting of the submission.
The FDA could delay, limit or deny approval of a product candidate for many reasons, including because the FDA: • may not deem our product candidate to be safe and effective; • determines that the product candidate does not have an acceptable benefit-risk profile; • determines, in the case of an NDA seeking accelerated approval, that the NDA does not provide evidence that the product candidate represents a meaningful advantage over available therapies; • determines that the objective response rate, or ORR, and duration of response are not clinically meaningful; • may require that we do additional work to determine the optimal dose; • may not agree that the data collected from preclinical studies and clinical trials are acceptable or sufficient to support the submission of an NDA or other submission or to obtain regulatory approval and may impose requirements for additional preclinical studies or clinical trials; • may determine that adverse events experienced by participants in our clinical trials represent an unacceptable level of risk; • may determine that population studied in the clinical trial may not be sufficiently broad or representative to assure safety in the full population for which we seek approval; • may not agree with the design of our clinical or preclinical trials, or may not agree with the method of data analysis; • may not accept clinical data from trials, which are conducted at clinical facilities or in countries where the standard of care is potentially different from that of the United States or the population is different than in the United States; • may disagree regarding the formulation, labeling and/or the specifications; 38 • may not approve the manufacturing processes associated with our product candidate or may determine that a manufacturing facility does not have an acceptable compliance status; • may change approval policies or adopt new regulations; or • may not file a submission due to, among other reasons, the content or formatting of the submission.
We cannot assure you that the 55 services of such third-party contract organizations, advisors and consultants will continue to be available to us on a timely basis when needed, or that we can find qualified replacements.
We cannot assure you that the services of such third-party contract organizations, advisors and consultants will continue to be available to us on a timely basis when needed, or that we can find qualified replacements.
While we have not yet developed any companion diagnostic test for our product candidates, if we do, there is significant uncertainty regarding our ability to obtain coverage and adequate reimbursement for the same reasons applicable to our product candidates.
While we have not yet developed any companion diagnostic test for our product candidates, if we do, there is significant 55 uncertainty regarding our ability to obtain coverage and adequate reimbursement for the same reasons applicable to our product candidates.
We are increasingly dependent upon information technology systems, infrastructure and data to operate our business. In the ordinary course of business, we collect, store and transmit confidential information (including but not limited to intellectual property, proprietary business information and personal information).
We are increasingly dependent upon information technology systems and data to operate our business. In the ordinary course of business, we collect, store and transmit confidential information (including but not limited to intellectual property, proprietary business information and personal information).
Therefore, these patents and patent applications may not be prosecuted and enforced in a manner consistent with the best interests of our business. Furthermore, the patent position of biotechnology and pharmaceutical companies generally is highly uncertain.
Therefore, these patents and patent applications may not be prosecuted and enforced in a manner consistent with the best interests of our business. 62 Furthermore, the patent position of biotechnology and pharmaceutical companies generally is highly uncertain.
Failure to obtain a license on commercially reasonable terms or at all, or to obtain an exclusive license, could prevent us from commercializing our product candidates or force us to cease some of our business operations, which could materially harm our business.
Failure to obtain a license on commercially reasonable terms or at all, or to obtain an exclusive 68 license, could prevent us from commercializing our product candidates or force us to cease some of our business operations, which could materially harm our business.
Some of these drugs are branded and subject to patent protection, and others are available on a generic basis. Insurers and other third-party payors may also encourage the use of generic products or specific branded products.
Some of these drugs are branded and subject to patent protection, and others are available on a generic basis. Insurers and other third-party payors may also encourage the use of 54 generic products or specific branded products.
If a prolonged government shutdown occurs, it could significantly impact the ability of the FDA and the SEC to timely review and process our submissions, which could have a material adverse effect on our business.
If a prolonged government 60 shutdown occurs, it could significantly impact the ability of the FDA and the SEC to timely review and process our submissions, which could have a material adverse effect on our business.
Even if we ultimately prevail in such claims, the monetary cost of such litigation and the diversion of the attention of our management and scientific personnel could outweigh any benefit we receive as a result of the proceedings.
Even if we ultimately prevail in such claims, the monetary cost of 65 such litigation and the diversion of the attention of our management and scientific personnel could outweigh any benefit we receive as a result of the proceedings.
However, proving invalidity or unenforceability is difficult. For example, in the United States, proving invalidity requires a showing of 65 clear and convincing evidence to overcome the presumption of validity enjoyed by issued patents.
However, proving invalidity or unenforceability is difficult. For example, in the United States, proving invalidity requires a showing of clear and convincing evidence to overcome the presumption of validity enjoyed by issued patents.
Our operations also produce hazardous waste products. We generally contract with third parties for the disposal of these materials and wastes. We cannot eliminate the risk of contamination or injury from these 46 materials.
Our operations also produce hazardous waste products. We generally contract with third parties for the disposal of these materials and wastes. We cannot eliminate the risk of contamination or injury from these materials.
Section 203 imposes certain restrictions on mergers, business combinations and other transactions between us and holders of 15% or more of our common stock. 72 The exclusive forum provision in our organizational documents may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or any of our directors, officers, or other employees, which may discourage lawsuits with respect to such claims.
Section 203 imposes certain restrictions on mergers, business combinations and other transactions between us and holders of 15% or more of our common stock. 74 The exclusive forum provision in our organizational documents may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or any of our directors, officers, or other employees, which may discourage lawsuits with respect to such claims.
If any of the physicians or other healthcare providers or entities with whom we expect to do business is found to be not in compliance with applicable laws, they may be subject to significant criminal, civil and administrative sanctions, including exclusion from participation in government funded healthcare programs, which could have a material adverse effect on our business, results of operations, financial condition and prospects.
If any of the physicians or other healthcare providers or entities with whom we expect to do business are found to be not in compliance with applicable laws, they may be subject to significant criminal, civil and administrative sanctions, including exclusion from participation in government funded healthcare programs, which could have a material adverse effect on our business, results of operations, financial condition and prospects.
Applicable manufacturers also most report ownership and investment interests held by physicians and their immediate family members; and • analogous state laws and regulations such as state anti-kickback and false claims laws and analogous non-U.S. fraud and abuse laws and regulations, may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers.
Applicable manufacturers also must report ownership and investment interests held by physicians and their immediate family members; and • analogous state laws and regulations, such as state anti-kickback and false claims laws, and analogous non-U.S. fraud and abuse laws and regulations may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers.
Certain of these proposals could limit the prices we are able to charge for our products or the amounts of reimbursement available for our products and could limit the acceptance and availability of our products.
Certain of these proposals could limit the prices we are able to charge for our products or 45 the amounts of reimbursement available for our products and could limit the acceptance and availability of our products.
Our current and future arrangements with healthcare providers, third-party payors and customers may expose us to broadly applicable fraud and abuse and other healthcare laws and regulations that may constrain the business or financial arrangements and relationships through which we research, as well as, market, sell and distribute any products for which we obtain marketing approval.
Our current and future arrangements with healthcare providers, third-party payors and customers may expose us to broadly applicable fraud and abuse and other healthcare laws and regulations that may constrain the business or financial arrangements and relationships through which we research any product candidates, as well as market, sell and distribute any products for which we obtain marketing approval.
Some state laws require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines or the Compliance Program Guidelines for Pharmaceutical Manufacturers published by the U.S.
Some state laws require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines or the Compliance Program Guidance for Pharmaceutical Manufacturers published by the U.S.
For example, the Oncology Center of Excellence, or OCE, within the FDA has recently advanced Project Optimus, which is an initiative to reform the dose optimization and dose selection paradigm in oncology drug development to emphasize selection of an optimal dose, which is a dose or doses that maximizes not only the efficacy of a drug but the safety and tolerability as well.
For example, the Oncology Center of Excellence, or OCE, within the FDA advanced Project Optimus, which is an initiative to reform the dose optimization and dose selection paradigm in oncology drug development to emphasize selection of an optimal dose, which is a dose or doses that maximizes not only the efficacy of a drug but the safety and tolerability as well.
Also, the existing treatment landscape may change, which may necessitate that we conduct additional studies or collect additional data to obtain accelerated approval.
Also, the existing treatment landscape may change, which may necessitate that we conduct 39 additional studies or collect additional data to obtain accelerated approval.
Department of Health & Human Services, Office of Inspector General, implement gift bans, and may require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers, marketing expenditures, or drug pricing, including price increases. Some state and local laws require the registration of pharmaceutical sales representatives.
Department of Health & Human Services, Office of Inspector General; to implement gift bans, and to report information related to payments and other transfers of value to physicians and other healthcare providers, marketing expenditures, or drug pricing, including price increases. Some state and local laws require the registration of pharmaceutical sales representatives.
By the date of approval of an accelerated approval product, FDA must specify the conditions for the required post approval studies, including enrollment targets, the study protocol, milestones, and target completion dates. FDA may also require that the confirmatory Phase 4 studies be commenced prior to FDA granting a product accelerated approval.
By the date of approval of an accelerated approval product, the FDA must specify the conditions for the required post approval studies, including enrollment targets, the study protocol, milestones, and target completion dates. The FDA may also, and frequently does, require that the confirmatory Phase 4 studies be commenced prior to the FDA granting a product accelerated approval.
We may not obtain approvals from regulatory authorities outside the United States on a timely basis, if at all.
We may not obtain approvals from regulatory 40 authorities outside the United States on a timely basis, if at all.
Moreover, these rules and regulations are often subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by 73 regulatory and governing bodies.
Moreover, these rules and regulations are often subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by 75 regulatory and governing bodies.
Our ability to generate revenue depends on a number of factors, including, but not limited to, our ability to: • complete successful Phase 1 clinical trials for our product candidates; • initiate and successfully complete all safety, pharmacokinetic and other studies required to obtain U.S. and foreign marketing approval for our product candidates; • initiate and complete successful later-stage clinical trials that meet their clinical endpoints; • obtain favorable results from our clinical trials and apply for and obtain marketing approval for our product candidates; • establish licenses, collaborations, or strategic partnerships that may increase the value of our programs; • successfully manufacture or contract with others to manufacture our product candidates; • commercialize our product candidates, if approved, by building a sales force or entering into collaborations with third parties; • submit INDs for a kinase inhibitor that is made effective by the FDA; • obtain, maintain, protect and defend our intellectual property portfolio; and • achieve market acceptance of our successful product candidates with the medical community and with third-party payors. 29 To become and remain profitable, we must succeed in designing, developing, and eventually commercializing products that generate significant revenue.
Our ability to generate revenue depends on a number of factors, including, but not limited to, our ability to: • complete successful clinical trials for our product candidates; • initiate and successfully complete all safety, pharmacokinetic and other studies required to obtain U.S. and foreign marketing approval for our product candidates; • initiate and complete successful later-stage clinical trials that meet their clinical endpoints; • obtain favorable results from our clinical trials and apply for and obtain marketing approval for our product candidates; • establish licenses, collaborations, or strategic partnerships that may increase the value of our programs; • successfully manufacture or contract with others to manufacture our product candidates; • commercialize our product candidates, if approved, by building a sales force or entering into collaborations with third parties; • submit INDs that are made effective by the FDA; • obtain, maintain, protect and defend our intellectual property portfolio; and • achieve market acceptance of our successful product candidates with the medical community and with third-party payors. 29 To become and remain profitable, we must succeed in designing, developing, and eventually commercializing products that generate significant revenue.
The negotiated prices, which will first become effective in 2026, will be capped at a statutory ceiling price beginning in October 2023, penalize drug manufacturers that increase prices of Medicare Part B and Part D drugs at a rate greater than the rate of inflation.
The negotiated prices, which will first become effective in 2026 and were capped at a statutory ceiling price beginning in October 2023, penalize drug manufacturers that increase prices of Medicare Part B and Part D drugs at a rate greater than the rate of inflation.
Drug development involves a lengthy and expensive process, and clinical testing is uncertain as to the outcome. We currently have three product candidates in Phase 1 clinical development and additional product candidates in preclinical development, and the risk of failure for each is high.
Drug development involves a lengthy and expensive process, and clinical testing is uncertain as to the outcome. We currently have several product candidates in Phase 1 clinical development and additional product candidates in preclinical development, and the risk of failure for each is high.
In addition, the OCE has announced Project Confirm, which is an initiative to promote the transparency of outcomes related to accelerated approvals for oncology indications and provide a framework to foster discussion, research and innovation in approval and post-marketing processes, with the goal to enhance the balance of access and verification of benefit for therapies available to patients with cancer and hematologic malignancies.
In addition, the OCE implemented Project Confirm, which is an initiative to promote the transparency of outcomes related to accelerated approvals for oncology indications and provide a framework to foster discussion, research and innovation in approval and post-marketing processes, with the goal to enhance the balance of access and verification of benefit for therapies available to patients with cancer and hematologic malignancies.
Furthermore, a possible recession, rising inflation, and the ongoing COVID-19 pandemic has and may continue to adversely affect the financial markets in some or all countries worldwide. Each of these events may cause us to record charges to reduce the carrying value of our investment portfolio or sell investments for less than our acquisition cost.
Furthermore, a possible recession, rising inflation, and the lingering effects of the COVID-19 pandemic has and may continue to adversely affect the financial markets in some or all countries worldwide. Each of these events may cause us to record charges to reduce the carrying value of our investment portfolio or sell investments for less than our acquisition cost.
We expect to incur increasing levels of operating losses for the foreseeable future, particularly as we advance our product candidates through clinical development. Our prior losses, combined with expected future losses, have had and will continue to have an adverse effect on our stockholders’ equity and working capital.
We expect to incur operating losses for the foreseeable future, particularly as we advance our product candidates through clinical development. Our prior losses, combined with expected future losses, have had and will continue to have an adverse effect on our stockholders’ equity and working capital.
Restrictions under applicable federal and state healthcare laws and regulations that may be applicable to our business include the following: • the federal Anti-Kickback Statute prohibits, among other things, persons from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward, or in return for, either the referral of an individual for, or the purchase, order or recommendation of, any good or service, for which payment may be made under a federal healthcare program such as Medicare and Medicaid; • the federal civil and criminal false claims laws, including the federal civil False Claims Act, which can be enforced by individual whistleblowers in “qui tam” actions brought on behalf of the government, and criminal false claims laws and the civil monetary penalties law, prohibit individuals or entities from, among other things, knowingly presenting, or causing to be presented false or fraudulent claims for payment by a federal government program, or making a false statement or record material to payment of a false claim or avoiding, decreasing or concealing an obligation to pay money to the federal government; • the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, prohibits, among other things, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, regardless of the payor ( e.g., public or private), and knowingly and willfully falsifying, concealing or covering up by any trick or device a material fact or making any materially false, fictitious or fraudulent statements in connection with the delivery of, or payment for, healthcare benefits, items or services relating to healthcare matters; • HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, or HITECH, and their implementing regulations, impose requirements on certain covered healthcare providers, health plans, and healthcare clearinghouses as well as their respective business associates and their subcontractors that perform services for them that involve the use, or disclosure of, individually identifiable health information, relating to the privacy, security, and transmission of such individually identifiable health information; • the federal transparency reporting requirements under the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010, collectively referred to as the ACA, which requires certain manufacturers of drugs, devices, biologics and medical supplies to annually report to the Centers for Medicare & Medicaid Services, or CMS, information related to certain payments and other transfers of value provided to teaching hospitals and to U.S.-licensed physicians, (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), physician assistants, nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists and anesthesiologist assistants, and certified nurse-midwives.
Restrictions under applicable federal and state healthcare laws and regulations that may be applicable to our business include the following: • the federal Anti-Kickback Statute prohibits, among other things, persons from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward, or in return for, either the referral of an individual for, or the purchase, order or recommendation of, any good or service, for which payment may be made under a federal healthcare program such as Medicare and Medicaid; 44 • the federal civil and criminal false claims laws, including the federal civil False Claims Act, which can be enforced by individual whistleblowers in “qui tam” actions brought on behalf of the government, and criminal false claims laws and the civil monetary penalties law, prohibit individuals or entities from, among other things, knowingly presenting, or causing to be presented, false or fraudulent claims for payment by a federal government program, or making a false statement or record material to payment of a false claim or avoiding, decreasing or concealing an obligation to pay money to the federal government; • HIPAA, which prohibits, among other things, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, regardless of the payor ( e.g., public or private), and knowingly and willfully falsifying, concealing or covering up by any trick or device a material fact or making any materially false, fictitious or fraudulent statements in connection with the delivery of, or payment for, healthcare benefits, items or services relating to healthcare matters; • HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, or HITECH, and their implementing regulations, impose requirements on certain covered healthcare providers, health plans, and healthcare clearinghouses as well as their respective business associates and their subcontractors that perform services for them that involve the use, or disclosure, of individually identifiable health information, relating to the privacy, security, and transmission of such individually identifiable health information; • The ACA requires certain manufacturers of drugs, devices, biologics and medical supplies to annually report to CMS information related to certain payments and other transfers of value provided to teaching hospitals and to U.S.-licensed physicians, (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), physician assistants, nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists and anesthesiologist assistants, and certified nurse-midwives.
If the FDA determines that our CMOs are not in compliance with FDA laws and regulations, including those governing cGMPs, the FDA may deny a new drug application, or NDA, approval until the deficiencies are corrected or we replace the manufacturer in our application with a manufacturer that is in compliance.
If the FDA determines that our CMOs are not in compliance with FDA laws and regulations, including those governing cGMPs, or if FDA determines that our manufacturing processes are not sufficient, the FDA may deny a new drug application, or NDA, approval until the deficiencies are corrected or we replace the manufacturer in our application with a manufacturer that is in compliance.
If our operations are found to be in violation of any of these laws or any other governmental 44 regulations that may apply to us, we may be subject to significant sanctions, including civil and administrative penalties and damages, criminal fines and confinement, disgorgement, exclusion from participation in government funded healthcare programs, such as Medicare and Medicaid and other federal healthcare programs, suspension and debarment from government procurement and non-procurement programs, refusal of orders under existing government contracts, contractual damages, reputational harm, diminished profits and future earnings, additional integrity reporting and oversight obligations, and the curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and our results of operations.
If our operations or the operations of vendors or third parties working on our behalf are found to be in violation of any of these laws or any other governmental regulations that may apply to us, we may be subject to significant sanctions, including civil and administrative penalties and damages, criminal fines and confinement, disgorgement, exclusion from participation in government funded healthcare programs, such as Medicare and Medicaid and other federal healthcare programs, suspension and debarment from government procurement and non-procurement programs, refusal of orders under existing government contracts, contractual damages, reputational harm, diminished profits and future earnings, additional integrity reporting and oversight obligations, and the curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and our results of operations.
We may not be granted an extension because of, for example, failing to exercise due diligence during the testing phase or regulatory review process, failing to apply within applicable deadlines, failing to apply prior to expiration of relevant patents, or otherwise failing to satisfy applicable requirements.
We may be denied an extension because of, for example, failing to exercise due diligence during the testing phase or regulatory review process, failing to apply within applicable deadlines, failing to apply prior to expiration of relevant patents, or otherwise failing to satisfy applicable requirements.
These policies recently culminated in the enactment of the Inflation Reduction Act, or IRA, in August 2022, which will, among other things, allow the U.S. Department of Health and Human Services, or HHS, to negotiate the selling price of certain drugs and biologics that CMS reimburses under Medicare Part B and Part D.
These policies culminated in the enactment of the Inflation Reduction Act, or IRA, in August 2022, which, among other things, allows the U.S. Department of Health and Human Services, or HHS, to negotiate the selling price of certain drugs and biologics that CMS reimburses under Medicare Part B and Part D.
Factors that may inhibit our efforts to commercialize our products on our own include: • our inability to recruit, train and retain adequate numbers of effective sales and marketing personnel; • our inability to raise financing necessary to build our commercialization infrastructure; • the inability of sales personnel to obtain access to physicians or educate an adequate number of physicians as to the benefits of our products; • unfavorable third-party payor coverage and reimbursement in any geography; • the lack of complementary products to be offered by sales personnel, which may put us at a competitive disadvantage relative to companies with more extensive product lines; and • unforeseen costs and expenses associated with creating an independent sales and marketing organization.
Factors that may inhibit our efforts to commercialize our products on our own include: • our inability to recruit, train and retain adequate numbers of effective sales and marketing personnel; 53 • our inability to raise financing necessary to build our commercialization infrastructure; • the inability of sales personnel to obtain access to physicians or educate an adequate number of physicians as to the benefits of our products; • any sales or marketing personnel’s failure to comply with applicable legal or regulatory requirements; • unfavorable third-party payor coverage and reimbursement in any geography; • the lack of complementary products to be offered by sales personnel, which may put us at a competitive disadvantage relative to companies with more extensive product lines; and • unforeseen costs and expenses associated with creating an independent sales and marketing organization.
We expect our research and development expenses to significantly increase in connection with our additional planned clinical trials for our lead product candidates and the development and subsequent INDs of other future product candidates we may choose to pursue.
We expect to incur research and development expenses in connection with our additional planned clinical trials for our lead product candidates and the development and subsequent INDs of other future product candidates we may choose to pursue.
We may rely on third parties for the design, development, testing, validation and manufacture of companion diagnostic tests for our therapeutic product candidates that 41 require such tests, the application for and receipt of any required regulatory approvals, and the commercial supply of these companion diagnostics.
For companion diagnostics that are not LDTs, we may rely on third parties for the design, development, testing, validation and manufacture of companion diagnostic tests for our therapeutic product candidates that require such tests, the application for and receipt of any required regulatory approvals, and the commercial supply of these companion diagnostics.
Further, our third-party manufacturers may experience manufacturing or shipping difficulties due to resource constraints or as a result of natural disasters, labor disputes, unstable political environments, including the ongoing conflict in Ukraine, or public health epidemics such as the COVID-19 pandemic.
Further, our third-party manufacturers may experience manufacturing or shipping difficulties due to resource constraints or as a result of natural disasters, labor disputes, unstable political environments, including the ongoing conflicts in Ukraine and the Middle East, or public health epidemics such as the COVID-19 pandemic.
The regulation imposes numerous new requirements for the collection, use and disclosure of personal information, including more stringent requirements relating to consent and the information that must be shared with data subjects about how their personal information is used, the obligation to notify regulators and affected individuals of personal data breaches, internal privacy governance obligations and obligations to honor expanded rights of individuals in relation to their personal information ( e.g. , the right to access, correct and delete their data).
The GDPR imposes numerous new requirements for the collection, use and disclosure of personal information and the protection and resiliency of certain network and information systems, including more stringent requirements relating to consent and the information that must be shared with data subjects about how their personal information is used, the obligation to notify regulators and affected individuals of personal data breaches, internal privacy governance obligations and obligations to honor expanded rights of individuals in relation to their personal information ( e.g. , the right to access, correct and delete their data).

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Item 2. Properties

Properties — owned and leased real estate

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The Chestnut Run Lease has an initial term of 162 months with three five-year extension options and certain expansion rights. We believe that our facilities are sufficient to meet our current needs and that suitable additional space will be available as and when needed. 75
The Chestnut Run Lease commenced in December 2023 and has an initial term of 162 months with three five-year extension options and certain expansion rights. We believe that our facilities are sufficient to meet our current needs and that suitable additional space will be available as and when needed. 78
Item 2. Pro perties. In December 2023, we relocated our principal executive offices to Chestnut Run Plaza in Wilmington, Delaware. The facility has approximately 81,000 square feet of office and laboratory space that we use for administrative, research and development and other activities.
Item 2. Pro perties. Our principal executive offices are located at Chestnut Run Plaza in Wilmington, Delaware. The facility has approximately 81,000 square feet of office and laboratory space that we use for administrative, research and development and other activities.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Regardless of outcome, litigation can have an adverse impact on us due to defense and settlement costs, diversion of management resources, negative publicity and reputational harm, and other factors. Item 4. Mine Saf ety Disclosures. Not applicable. 76 PART II
Regardless of outcome, litigation can have an adverse impact on us due to defense and settlement costs, diversion of management resources, negative publicity and reputational harm, and other factors. Item 4. Mine Saf ety Disclosures. Not applicable. 79 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Item 5. Market for Registrant’s Common Equity, Related Stock holder Matters and Issuer Purchases of Equity Securities. Market Information for Common Stock Our common stock has been listed on The Nasdaq Global Market under the symbol “PRLD” since September 25, 2020. Prior to that there was no public trading market for our common stock.
Item 5. Market for Registrant’s Common Equity, Related Stock holder Matters and Issuer Purchases of Equity Securities. Market Information for Common Stock Our common stock has been listed on The Nasdaq Global Select Market ("Nasdaq") under the symbol “PRLD” since September 25, 2020. Prior to that there was no public trading market for our common stock.
Unregistered Sales of Equity Securities During the year ended December 31, 2023, we did not issue or sell any unregistered securities not previously disclosed in a Quarterly Report on Form 10-Q or in a Current Report on Form 8-K. Purchases of Equity Securities by the Issuer and Affiliated Purchasers None. Item 6. [Reserved] 77
Unregistered Sales of Equity Securities During the year ended December 31, 2024, we did not issue or sell any unregistered securities not previously disclosed in a Quarterly Report on Form 10-Q or in a Current Report on Form 8-K. Purchases of Equity Securities by the Issuer and Affiliated Purchasers None. Item 6. [Reserved] 80
Holders of Record As of February 9, 2024, there were approximately 17 stockholders of record of our common stock. The actual number of stockholders is greater than this number of record holders, and includes stockholders who are beneficial owners, but whose shares are held in street name by brokers and other nominees.
Holders of Record As of March 6, 2025, there were approximately 19 stockholders of record of our common stock. The actual number of stockholders is greater than this number of record holders, and includes stockholders who are beneficial owners, but whose shares are held in street name by brokers and other nominees.

Item 7. Management's Discussion & Analysis

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

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Our future funding requirements will depend on many factors, including, but not limited to: • the scope, timing, progress and results of discovery, preclinical development, laboratory testing and clinical trials for our product candidates; • the costs of manufacturing our product candidates for clinical trials and in preparation for marketing approval and commercialization; • the extent to which we enter into collaborations or other arrangements with additional third parties in order to further develop our product candidates; • the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims; • the costs and fees associated with the discovery, acquisition or in-license of additional product candidates or technologies; • expenses needed to attract and retain skilled personnel; • costs associated with being a public company; • the costs required to scale up our clinical, regulatory and manufacturing capabilities; • the costs of future commercialization activities, if any, including establishing sales, marketing, manufacturing and distribution capabilities, for any of our product candidates for which we receive marketing approval; and • revenue, if any, received from commercial sales of our product candidates, should any of our product candidates receive marketing approval.
Our future funding requirements will depend on many factors, including, but not limited to: • the scope, timing, progress and results of discovery, preclinical development, laboratory testing and clinical trials for our product candidates; • the costs of manufacturing our product candidates for clinical trials and in preparation for marketing approval and commercialization; • the extent to which we enter into collaborations or other arrangements with additional third parties in order to further develop our product candidates; • the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims; 86 • the costs and fees associated with the discovery, acquisition or in-license of additional product candidates or technologies; • expenses needed to attract and retain skilled personnel; • costs associated with being a public company; • the costs required to scale up our clinical, regulatory and manufacturing capabilities; • the costs of future commercialization activities, if any, including establishing sales, marketing, manufacturing and distribution capabilities, for any of our product candidates for which we receive marketing approval; and • revenue, if any, received from commercial sales of our product candidates, should any of our product candidates receive marketing approval.
We expense research and development costs as incurred, including: • expenses incurred to conduct the necessary discovery-stage laboratory work, preclinical studies and clinical trials required to obtain regulatory approval; • personnel expenses, including salaries, benefits and stock-based compensation expense for our employees engaged in research and development functions; 80 • costs of funding research performed by third parties, including pursuant to agreements with clinical research organizations, or CROs, that conduct our clinical trials, as well as investigative sites, consultants and CROs that conduct our preclinical and nonclinical studies; • expenses incurred under agreements with contract manufacturing organizations, or CMOs, including manufacturing scale-up expenses and the cost of acquiring and manufacturing preclinical study and clinical trial materials; • fees paid to consultants who assist with research and development activities; • expenses related to regulatory activities, including filing fees paid to regulatory agencies; and • allocated expenses for facility costs, including rent, utilities, depreciation and maintenance.
We expense research and development costs as incurred, including: • expenses incurred to conduct the necessary discovery-stage laboratory work, preclinical studies and clinical trials required to obtain regulatory approval; • personnel expenses, including salaries, benefits and stock-based compensation expense for our employees engaged in research and development functions; • costs of funding research performed by third parties, including pursuant to agreements with clinical research organizations, or CROs, that conduct our clinical trials, as well as investigative sites, consultants and CROs that conduct our preclinical and nonclinical studies; 83 • expenses incurred under agreements with contract manufacturing organizations, or CMOs, including manufacturing scale-up expenses and the cost of acquiring and manufacturing preclinical study and clinical trial materials; • fees paid to consultants who assist with research and development activities; • expenses related to regulatory activities, including filing fees paid to regulatory agencies; and • allocated expenses for facility costs, including rent, utilities, depreciation and maintenance.
Liquidity and Capital Resources Overview Since our inception, we have not recognized any revenue and have incurred operating losses and negative cash flows from our operations. We have not yet commercialized any product and we do not expect to generate revenue from sales of 82 any products for several years, if at all.
Liquidity and Capital Resources Overview Since our inception, we have not recognized any product revenue and have incurred operating losses and negative cash flows from our operations. We have not yet commercialized any product and we do not expect to generate revenue from sales of any products for several years, if at all.
As a public company we have computed the historical volatility of our own stock price and will continue to use the average volatility for comparable publicly traded biotechnology companies until we have ample trading history of our own stock commensurate with the estimated expected term of our options.
As a public company we have computed the historical volatility of our own stock price and will continue to use the average volatility for comparable publicly traded 89 biotechnology companies until we have ample trading history of our own stock commensurate with the estimated expected term of our options.
Therefore, mutated or deleted SMARCA4 cancers provide a potential biomarker to select those patients most likely to respond to treatment with a highly selective SMARCA2 degrader. PRT3789 is currently in Phase 1 clinical development in biomarker selected SMARCA4 mutant patients.
Therefore, mutated or deleted SMARCA4 cancers provide a potential biomarker to select those patients most likely to respond to treatment with a highly selective SMARCA2 degrader. PRT3789 is currently in Phase 1 clinical development in patients with biomarker selected SMARCA4 mutated cancers.
Our discovery excellence has been validated by our steady progress in creating a wholly-owned, internally developed pipeline. We also began work with our partner AbCellera on an early-stage discovery program involving potent degraders as payloads for novel antibodies targeting tumor specific antigens. Since our inception in 2016, we have received clearance from the U.S.
Our discovery excellence has been supported by our steady progress in creating a wholly-owned, internally developed pipeline. We also began work with our partner AbCellera on an early-stage discovery program involving potent degraders as payloads for novel antibodies targeting tumor specific antigens. Since our inception in 2016, we have received clearance from the U.S.
By leveraging our core competencies in cancer biology and medicinal chemistry, combined with our clinical development capabilities, we have built an efficient, fully-integrated drug discovery engine and the development expertise necessary to identify compelling biological targets and create new chemical entities, or NCEs, that we advance into clinical trials. We believe our approach could result in better targeted cancer therapies.
By leveraging our core competencies in cancer biology and medicinal chemistry, combined with our clinical development capabilities, we have built an efficient, drug discovery engine and the development expertise necessary to identify compelling biological targets and create new chemical entities, or NCEs, that we advance into clinical trials. We believe our approach could result in better targeted cancer therapies.
Under the terms of the agreement, Prelude and AbCellera will jointly discover, develop, and commercialize products emerging from the collaboration. AbCellera will lead manufacturing activities and Prelude will lead clinical development and global commercialization, subject to AbCellera’s option to co-promote any resulting commercial products in the United States.
Under the terms of the agreement, we and AbCellera will jointly discover, develop, and commercialize products emerging from the collaboration. AbCellera will lead manufacturing activities and we will lead clinical development and global commercialization, subject to AbCellera’s option to co-promote any resulting commercial products in the United States.
As one of our first precision ADC programs Prelude and our partner AbCellera began work on an early-stage discovery program involving potent degraders of the SMARCA family of proteins as payloads for novel antibodies targeting tumor specific antigens.
As one of our first precision ADC programs we and our partner AbCellera began work on an early-stage discovery program involving potent degraders of the SMARCA family of proteins as payloads for novel antibodies targeting tumor specific antigens.
Income Taxes Since our inception, we have not recorded any income tax benefits for the net operating losses, or NOLs, we have incurred or for our research and development tax credits, as we believe, based upon the weight of available evidence, that it is more likely than not that all of our NOLs and tax credits will not be realized. 81 Results of Operations Comparison of the Years Ended December 31, 2023 and 2022 The following table sets forth our results of operations for the years ended December 31, 2023 and 2022.
Income Taxes Since our inception, we have not recorded any income tax benefits for the net operating losses, or NOLs, we have incurred or for our research and development tax credits, as we believe, based upon the weight of available evidence, that it is more likely than not that all of our NOLs and tax credits will not be realized. 84 Results of Operations Comparison of the Years Ended December 31, 2024 and 2023 The following table sets forth our results of operations for the years ended December 31, 2024 and 2023.
Components of Results of Operations Revenue To date, we have not recognized any revenue from any sources, including from product sales, and we do not expect to generate any revenue from the sale of products in the foreseeable future.
Components of Results of Operations Revenue To date, we have not recognized any revenue from product sales and we do not expect to generate any revenue from the sale of products in the foreseeable future.
In March 2023, in connecting with filing a prospectus supplement to our Shelf Registration Statement, we entered into an Open Market Sales Agreement SM , or the Sales Agreement, with Jefferies LLC, as the sales agent, pursuant to which we may offer and sell shares of our common stock having an aggregate offering amount of up to $75.0 million.
In March 2023, in connection with filing a prospectus supplement to our 2021 Shelf Registration Statement, we entered into an Open Market Sales Agreement (the "Sales Agreement") with Jefferies LLC, as the sales agent, pursuant to which we may offer and sell shares of our common stock having an aggregate offering amount of up to $75.0 million.
If our development efforts for our product candidates are successful and result in regulatory approval, or license agreements with third parties, we may generate revenue in the future from product sales. However, there can be no assurance as to when we will generate such revenue, if at all.
If our development efforts for our product candidates are successful and result in regulatory approval, or license agreements with third parties, we may generate revenue in the future from product sales. However, there can be no assurance as to when we will generate such revenue, if at all. In May 2024, the Company and Pathos AI, Inc.
Objectives for this first Phase 1 clinical trial are to establish the safety and tolerability profile of PRT3789 as both monotherapy and in 78 combination with docetaxel, evaluate efficacy, pharmacokinetics and pharmacodynamics and determine a dose and potential indications for advancement into a registrational clinical trial.
Objectives for this first Phase 1 clinical trial are to establish the safety and tolerability profile of PRT3789 as both monotherapy and in combination with docetaxel, evaluate activity, pharmacokinetics and pharmacodynamics and determine a dose and potential indications for advancement into a future trial.
Included in research and development expenses for the year ended December 31, 2023, was $12.6 million of non-cash expense related to stock-based compensation expense, including employee stock options, compared to $11.5 million for the year ended December 31, 2022.
Included in research and development expenses for the year ended December 31, 2024, was $12.1 million of non-cash expense related to stock-based compensation expense, including employee stock options, compared to $12.6 million for the year ended December 31, 2023.
We incurred offering costs of $2.6 million, of which $0.3 million were previously paid and deferred, which resulted in net proceeds of $110.4 million. The purchase price per share of each pre-funded warrant represents the per share offering price for the common stock, minus the $0.0001 per share exercise price of such pre-funded warrant.
We incurred offering costs of $2.6 million which resulted in net proceeds of $110.4 million. The purchase price per share of each pre-funded warrant represents the per share offering price for the common stock, minus the $0.0001 per share exercise price of such pre-funded warrant.
We expect our existing cash, cash equivalents and marketable securities will enable us to fund our operating expense and capital expenditures into 2026.
We expect our existing cash, cash equivalents, and marketable securities will enable us to fund our operating expense and capital expenditures into the second quarter of 2026.
Additionally, we anticipate increased costs associated with being a public company, including expenses related to services associated with maintaining compliance with the requirements of Nasdaq and the Securities and Exchange Commission, or SEC, insurance and investor relations costs.
The costs associated with being a public company include expenses related to services associated with maintaining compliance with the requirements of Nasdaq and the Securities and Exchange Commission, or SEC, insurance and investor relations costs.
We expect our research and development expenses to increase significantly over the next several years as we increase personnel costs, including stock-based compensation, conduct our clinical trials, including later-stage clinical trials, for current and future product candidates and prepare regulatory filings for our product candidates.
We expect to continue to incur research and development expenses over the next several years related to personnel costs, including stock-based compensation, our clinical trials, including later-stage clinical trials, for current and future product candidates and regulatory filings for our product candidates.
Until such time as we can generate significant revenue from product sales, if ever, we plan to finance our operations through the sale of equity, debt financings or other capital sources, which may include collaborations with other companies or other strategic transactions.
We will need to raise substantial additional capital to support our continuing operations and pursue our growth strategy. Until such time as we can generate significant revenue from product sales, if ever, we plan to finance our operations through the sale of equity, debt financings or other capital sources, which may include collaborations with other companies or other strategic transactions.
Since our inception, we have funded our operations through the sale of convertible preferred stock and common stock. As of December 31, 2023, we had $232.9 million in cash, cash equivalents, and marketable securities and had an accumulated deficit of $456.4 million.
Since our inception, we have funded our operations through the sale of convertible preferred stock and common stock. As of December 31, 2024, we had $133.6 million in cash, cash equivalents, and marketable securities and had an accumulated deficit of $583.6 million.
We believe we can best address these diseases by developing therapies that target primary and secondary resistance mechanisms. We have several drug candidates in clinical development and our objective is to generate proof-of-concept clinical data to guide our future regulatory pathways to approval. Our SMARCA2 molecule is a unique, first-in-class protein degrader, targeting specific patient populations.
We believe we can best address these diseases by developing therapies that target primary and secondary resistance mechanisms. We have several drug candidates in clinical development and our objective is to generate proof-of-concept clinical data to guide our future regulatory pathways to approval.
Included in the general and administrative expenses for the year ended December 31, 2023, was $13.0 million of non-cash expense related to stock-based compensation expense, including employee stock options, as compared to $13.6 million for the same period in 2022. The decrease in general and administrative expense was primarily due to our continued management of general and administrative expenses.
Included in the general and administrative expenses for the year ended December 31, 2024 was $9.2 million of non-cash expense related to stock-based compensation expense, including employee stock options, as compared to $13.0 million for the same period in 2023.
While our significant accounting policies are described in more detail in Note 3 (Summary of Significant Accounting Policies) to our audited financial statements included elsewhere in this Annual Report on Form 10-K, we believe the following accounting policies are the most critical to the judgments and estimates used in the preparation of our financial statements.
While our significant accounting policies are described in more detail in Note 3 (Summary of Significant Accounting Policies) to our audited financial statements included elsewhere in this Annual Report on Form 10-K, we believe the following accounting policies are the most critical to the judgments and estimates used in the preparation of our financial statements. 88 Revenue Recognition The Company recognizes revenue under Accounting Standard Codification 606 – Revenue from Contracts with Customers.
If we are unable to secure adequate additional funding, we may have to significantly delay, scale back or discontinue the development and commercialization of one or more product candidates or delay our pursuit of potential in-licenses or acquisitions. As of December 31, 2023, we had $232.9 million in cash, cash equivalents, and marketable securities.
If we are unable to secure adequate additional funding, we may have to significantly delay, scale back or discontinue the development and commercialization of one or more product candidates or delay our pursuit of potential in-licenses or acquisitions.
Cash used in operating activities reflected our net loss of $121.8 million along with a $10.5 million net increase in our operating assets and liabilities offset by noncash charges of $25.2 million, which consisted of $25.6 million in stock-based compensation. The primary use of cash was to fund our operations related to the development of our product candidates.
Cash used in operating activities reflected our net loss of $127.2 million offset by noncash charges of $20.1 million, which consisted primarily of $21.3 million in stock-based compensation, along with a $4.2 million net decrease in our operating assets and liabilities. The primary use of cash was to fund our operations related to the development of our product candidates.
The primary use of cash was to fund our operations related to the development of our product candidates. Investing Activities During the year ended December 31, 2023 we used $34.6 million of cash in investing activities primarily due to net purchases of marketable securities of $31.1 million.
During the year ended December 31, 2023 we used $34.6 million of cash in investing activities primarily due to net purchases of marketable securities of $31.1 million.
Cash Flows The following table shows a summary of our cash flows for the periods indicated: Years ended December 31, (in thousands) 2023 2022 Net cash used in operating activities $ (107,063 ) $ (83,729 ) Net cash provided by (used in) investing activities (34,646 ) 81,691 Net cash provided by financing activities 136,395 815 Net decrease in cash and cash equivalents $ (5,314 ) $ (1,223 ) Operating Activities During the year ended December 31, 2023, we used $107.1 million of cash in operating activities.
Cash Flows The following table shows a summary of our cash flows for the periods indicated: Years ended December 31, (in thousands) 2024 2023 Net cash used in operating activities $ (102,888 ) $ (107,063 ) Net cash provided by (used in) investing activities 90,191 (34,646 ) Net cash (used in) provided by financing activities (120 ) 136,395 Net decrease in cash and cash equivalents $ (12,817 ) $ (5,314 ) 87 Operating Activities During the year ended December 31, 2024, we used $102.9 million of cash in operating activities.
Our leased facility includes approximately 81,000 rentable square feet and has an initial term of 162 months with 3 five-year extension options and certain expansion rights. The gross obligation for our operating lease over the next twelve months is $1.6 million and we expect to make the total lease payments of $43.2 million through May 2037.
Our leased facility includes approximately 81,000 rentable square feet and has approximately 12 years remaining along with three five-year extension options and certain expansion rights. The gross obligation for our operating lease over the next twelve months is $2.7 million, and we expect to make total lease payments of $38.7 million from January 2025 through May 2037.
We expect that our general and administrative expense will increase in the future to support our continued research and development activities, potential commercialization efforts and increased costs of operating as a public company. These increases will likely include increased costs related to the hiring of additional personnel and fees to outside consultants, legal support and accountants, among other expenses.
We expect to continue to incur general and administrative expense in the future to support our continued research and development activities and potential commercialization efforts. These expenses will likely include costs related to personnel and fees to outside consultants and legal support, among other expenses.
We estimate the grant date fair value of stock options, and the resulting stock-based compensation, using the Black-Scholes option-pricing model. The grant date fair value of the stock-based awards is recognized on a straight-line basis over the requisite service period, which is generally the vesting period of the respective awards.
The grant date fair value of the stock-based awards is recognized on a straight-line basis over the requisite service period, which is generally the vesting period of the respective awards.
JOBS Act Accounting Election We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies.
Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies.
Research and Development Expenses Research and development expenses consist primarily of costs incurred in connection with the development of our product candidates. We expense research and development costs as incurred. We accrue an expense for preclinical studies and clinical trial activities performed by our CROs and vendors based upon estimates of the proportion of work completed.
We accrue an expense for preclinical studies and clinical trial activities performed by our CROs and vendors based upon estimates of the proportion of work completed.
We believe a selective SMARCA2 degrader has the potential to be of benefit in up to 10% of Non-Small Cell Lung cancer, or NSCLC, patients in the United States including many other tumor types with the SMARCA4 mutation. Patients with SMARCA4 mutations or deletions have poor clinical outcomes and limited treatment options.
We believe a selective SMARCA2 degrader has the potential to be of benefit in up to 10% of non-small cell lung cancer ("NSCLC") patients in the United States including many other tumor types with the SMARCA4 mutation. Patients with SMARCA4 mutated cancer have a poor prognosis. We believe this represents an area of high unmet medical need.
Because of the numerous risks and uncertainties associated with the development and commercialization of our product candidates, we are unable to estimate the amounts of increased capital outlays and operating expenditures associated with our current and anticipated clinical studies. 83 In March 2023, we filed a prospectus supplement to our existing shelf registration statement on Form S-3, or the Shelf Registration Statement.
Because of the numerous risks and uncertainties associated with the development and commercialization of our product candidates, we are unable to estimate the amounts of increased capital outlays and operating expenditures associated with our current and anticipated clinical studies.
Nonrefundable advance payments for goods and services, including fees for clinical trial expenses, process development or manufacturing and distribution of clinical supplies that will be used in future research and development activities, are deferred and recognized as expense in the period that the related goods are consumed or services are performed. 85 Share-Based Compensation We recognize compensation costs related to share-based awards granted to employees and directors, including stock options and vesting restricted stock, based on the estimated fair value of the awards on the date of grant.
Nonrefundable advance payments for goods and services, including fees for clinical trial expenses, process development or manufacturing and distribution of clinical supplies that will be used in future research and development activities, are deferred and recognized as expense in the period that the related goods are consumed or services are performed.
If any of our current or future product candidates obtains U.S. regulatory approval, we expect that we would incur significantly increased expenses associated with building a sales and marketing team. Other Income, Net Other income, net consists primarily of interest earned on our cash equivalents and marketable securities and grant income received from the State of Delaware.
If any of our current or future product candidates obtains U.S. regulatory approval, we expect that we would incur significantly increased expenses associated with building a sales and marketing team.
During the year ended December 31, 2022 investing activities provided $81.7 million of cash primarily due to net maturities of marketable securities of $84.7 million. 84 Financing Activities During the year ended December 31, 2023, financing activities provided $136.4 million which was primarily the result of $135.7 million in proceeds received from the sale of common stock and pre-funded warrants, net of issuance costs.
During the year ended December 31, 2023, financing activities provided cash of $136.4 million which was primarily the result of $135.7 million in proceeds received from the sale of common stock and pre-funded warrants, net of issuance costs. Contractual obligations and other commitments We have one operating lease for office and lab space.
We will pay Jefferies LLC a commission rate of up to 3.0% of the gross proceeds from the sale of any shares of common stock pursuant to the Sales Agreement. We have $75.0 million remaining under the Sales Agreement.
We will pay Jefferies LLC a commission rate of up to 3.0% of the aggregate gross proceeds from the sale of any shares of common stock pursuant to the Sales Agreement. In November 2024, the 2021 Shelf Registration Statement expired with respect to the shares to be sold under the Sales Agreement.
Our primary use of cash is to fund operating expenses, which consist primarily of research and development expenditures, and to a lesser extent, general and administrative expenditures. Our ability to generate product revenue sufficient to achieve profitability will depend heavily on the successful development and eventual commercialization of one or more of our current or future product candidates.
Our ability to 82 generate product revenue sufficient to achieve profitability will depend heavily on the successful development and eventual commercialization of one or more of our current or future product candidates.
Since inception, we have devoted substantially all of our resources to developing product and technology rights, conducting research and development, organizing and staffing our company, business planning and raising capital. We have incurred recurring losses, the majority of which are attributable to research and development activities, and negative cash flows from operations.
Since inception, we have devoted substantially all of our resources to developing product and technology rights, conducting research and development, organizing and staffing our company, business planning and raising capital. We have funded our operations primarily through the sale of convertible preferred stock and common stock.
Recent Accounting Pronouncements See Note 3 to our financial statements included elsewhere in this Annual Report on Form 10-K for a description of recent accounting pronouncements applicable to our financial statements. Emerging Growth Company and Smaller Reporting Company Status In April 2012, the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, was enacted.
Recent Accounting Pronouncements See Note 3 to our financial statements included elsewhere in this Annual Report on Form 10-K for a description of recent accounting pronouncements applicable to our financial statements.
PRT3789 has been shown to be efficacious and well tolerated in multiple preclinical models of SMARCA4 deleted/mutated cancers as monotherapy and in combination with standards of care therapies.
Cancer cells with SMARCA4 mutations are dependent on SMARCA2 for their growth and survival and selectively degrading SMARCA2 induces cell death in cancer cells while sparing normal cells in preclinical models. PRT3789 has been shown to be efficacious and well tolerated in multiple preclinical models of SMARCA4 deleted/mutated cancers as monotherapy and in combination with standards of care therapies.
We anticipate re-applying for the grant from the State of Delaware from time to time as long as we maintain qualifying headcount levels in the State of Delaware. We expect our interest income, net to increase due to our investment of cash received from the sale of common stock.
Other Income, Net Other income, net consists primarily of interest earned on our cash equivalents and marketable securities, research and development tax credits, and grant income received from the State of Delaware. We anticipate re-applying for the grant from the State of Delaware from time to time as long as we maintain qualifying headcount levels in the State of Delaware.
We have funded our operations primarily through the sale of convertible preferred stock and common stock. Our net loss was $121.8 million and $115.4 million for the years ended December 31, 2023 and 2022, respectively. As of December 31, 2023, we had an accumulated deficit of $456.4 million.
Our net loss was $127.2 million and $121.8 million for the years ended December 31, 2024 and 2023, respectively. As of December 31, 2024, we had an accumulated deficit of $583.6 million.
Operating Expenses Research and Development Expenses Research and development expenses consist primarily of costs incurred in connection with the discovery and development of our product candidates.
During the year ended December 31, 2024, the Company satisfied both performance obligations identified and recognized revenue of $7.0 million. Operating Expenses Research and Development Expenses Research and development expenses consist primarily of costs incurred in connection with the discovery and development of our product candidates.
In 2023 we also announced a global partnership with AbCellera Biologics Incorporated ("AbCellera") that will allow us to combine our small molecules and degraders expertise with their antibody expertise to develop precision antibody drug conjugates. We also intend to explore continued clinical development with external partners for our CDK4/6.
Our novel, first-in-class SMARCA2 degrader compounds represent our best opportunities for demonstrating clinical proof-of-concept in 2025 and advancing into potential Phase 2/3 registration studies. In 2023, we announced a global partnership with AbCellera Biologics Incorporated ("AbCellera") that will allow us to combine our small molecules and degraders expertise with their antibody expertise to develop precision antibody drug conjugates.
Other Income, net Other income, net increased by $2.3 million to $10.4 million for the year ended December 31, 2023 from $8.1 million for the year ended December 31, 2022, primarily due to interest earned on the investment of our cash proceeds as a result of higher interest rates and higher investment balances as well as the receipt and recognition of research and development tax credits from the State of Delaware during 2023.
The decrease in general and administrative expense was primarily due to a decrease in stock-based compensation, offset by an increase in professional fees incurred to support our research and development efforts. 85 Other Income, net Other income, net increased by $2.1 million to $12.5 million for the year ended December 31, 2024 from $10.4 million for the year ended December 31, 2023, primarily due to the receipt and recognition of research and development tax credits from the State of Delaware of $2.4 million in 2024 compared to $1.3 million in 2023.
The increase in research and development expense was due to the timing of our clinical development programs along with an increase in non-cash stock-based compensation expense. Research and development expenses may fluctuate from period to period depending upon the stage of certain projects and the level of preclinical and clinical trial-related activities.
Research and development expenses may fluctuate from period to period depending upon the stage of certain projects and the level of preclinical and clinical trial-related activities. Research and development expenses by program are summarized in the table below. Expenses for programs that have been discontinued are included in Other.
Cash used in operating activities reflected our net loss of $115.4 million, offset by a $0.9 million net decrease in our operating assets and liabilities and noncash charges of $30.8 million, which consisted of $25.1 million in stock-based compensation, $2.6 million in amortization of premiums and discounts on marketable securities, $1.7 million noncash lease expense, and $1.3 million in depreciation.
During the year ended December 31, 2023, we used $107.1 million of cash in operating activities. Cash used in operating activities reflected our net loss of $121.8 million along with a $10.5 million net increase in our operating assets and liabilities offset by noncash charges of $25.2 million, which consisted primarily of $25.6 million in stock-based compensation.
Our net losses may fluctuate significantly from quarter-to-quarter and year-to-year, depending on the timing of our clinical trials and our expenditures on other research and development activities. We will need to raise substantial additional capital to support our continuing operations and pursue our growth strategy.
In addition, if we obtain marketing approval for any of our product candidates, we expect to incur significant commercialization expenses related to product manufacturing, marketing, sales and distribution. Our net losses may fluctuate significantly from quarter-to-quarter and year-to-year, depending on the timing of our clinical trials and our expenditures on other research and development activities.
Year ended December 31, (in thousands) 2023 2022 Change Operating expenses: Research and development $ 103,393 $ 92,889 $ 10,504 General and administrative 28,884 30,651 (1,767 ) Total operating expenses 132,277 123,540 8,737 Loss from operations (132,277 ) (123,540 ) (8,737 ) Other income, net 10,445 8,102 2,343 Net loss $ (121,832 ) $ (115,438 ) $ (6,394 ) Research and Development Expenses Research and development expenses increased by $10.5 million to $103.4 million for the year ended December 31, 2023 from $92.9 million for the year ended December 31, 2022.
Year ended December 31, (in thousands) 2024 2023 Change Revenue from license agreement $ 7,000 $ — $ 7,000 Operating expenses: Research and development 117,995 103,393 14,602 General and administrative 28,719 28,884 (165 ) Total operating expenses 146,714 132,277 14,437 Loss from operations (139,714 ) (132,277 ) (7,437 ) Other income, net 12,541 10,445 2,096 Net loss $ (127,173 ) $ (121,832 ) $ (5,341 ) Revenue Revenue for the year ended December 31, 2024 related solely to our license agreement.
The Shelf Registration Statement permits the offering of up to $400.0 million aggregate dollar amount of shares of our common stock or preferred stock, debt securities, warrants to purchase our common stock, preferred stock or debt securities, subscription rights to purchase our common stock, preferred stock or debt securities and/or units consisting of some or all of these securities, in one or more offerings and in any combination.
In May 2024, the Company filed a shelf registration statement (the "2024 Shelf Registration Statement") with the SEC for the issuance of common stock, preferred stock, debt securities, warrants, subscription rights and units up to an aggregate amount of $400.0 million. The 2024 Shelf Registration statement was declared effective on June 10, 2024.
Research and development expenses by program are summarized in the table below: Year ended December 31, (in thousands) 2023 2022 PRT3789 $ 9,738 $ - PRT2527 7,573 4,030 PRT1419 (Oral and IV) 8,356 7,709 PRT3645 4,809 — PRMT5 (PRT543 and PRT811) (243 ) 13,275 Discovery programs 20,917 25,150 Internal costs, including personnel related 52,243 42,725 $ 103,393 $ 92,889 General and Administrative Expenses General and administrative expenses decreased by $1.8 million to $28.9 million for the year ended December 31, 2023 from $30.7 million for the year ended December 31, 2022.
Year ended December 31, (in thousands) 2024 2023 PRT3789 $ 20,173 $ 9,738 PRT2527 11,594 7,573 PRT7732 9,195 — Discovery programs 13,856 12,387 Other 1,346 12,922 General costs, including personnel related 61,831 60,773 $ 117,995 $ 103,393 General and Administrative Expenses General and administrative expenses decreased by $0.2 million to $28.7 million for the year ended December 31, 2024 from $28.9 million for the year ended December 31, 2023.
PRT3789 is a first-in-class, highly selective degrader of SMARCA2 protein, which along with SMARCA4 controls gene regulation through chromatin remodeling. Cancer cells with SMARCA4 mutations are dependent on SMARCA2 for their growth and survival and selectively degrading SMARCA2 induces cell death in cancer cells while sparing normal cells in preclinical models.
We also intend to explore continued clinical development with external partners for our CDK4/6 inhibitor. PRT3789 is a first-in-class, highly selective degrader of SMARCA2 protein, which along with SMARCA4 controls gene regulation through chromatin remodeling.
We expect our existing cash, cash equivalents, and marketable securities will enable us to fund our operating expense and capital expenditures into 2026. We have based these estimates on assumptions that may prove to be imprecise, and we could utilize our available capital resources sooner than we expect.
As of December 31, 2024, we had $133.6 million in cash, cash equivalents, and marketable securities. We expect our existing cash, cash equivalents and marketable securities will enable us to fund our operating expense and capital expenditures into the second quarter of 2026.
Removed
Our CDK9 inhibitor is selective and potent, with a potentially superior safety profile over first-generation CDK9 inhibitors. Our next generation CDK4/6 inhibitor is specifically designed to be brain and tissue penetrant.
Added
We presented Phase 1 trial data updates at the 2025 Japanese Society of Medical Oncology Annual Meeting on March 8, 2025. As reported by investigators, PRT3789 was generally safe and well-tolerated at doses tested to date.
Removed
Our novel, first-in-class SMARCA2 degrader compounds and our potent, highly selective and potentially best-in-class CDK9 inhibitor represent our best opportunities for demonstrating clinical proof-of-concept in 2024 and advancing into potential Phase 2/3 registration studies.
Added
Of the 32 advanced NSCLC, esophageal or gastric patients in monotherapy with Class 1 (loss of function) mutations who were evaluable for efficacy as of the November 30, 2024 data cutoff, RECIST confirmed partial responses (PRs) were observed in 5 patients (2 esophageal, 2 NSCLC, 1 gastric).
Removed
To date PRT3789 has completed the fifth dose escalation cohort and demonstrated selective, potent and dose dependent degradation of SMARCA2 with an acceptable safety profile. Based on PK/PD and safety data to date, the Company expects to conclude monotherapy dose escalation in the middle of 2024 and identify recommended phase 2 doses.
Added
Of the 13 patients with Class 1 mutations treated at doses of 283 mg or higher, three had RECIST confirmed partial responses (2 NSCLC, 1 gastric).
Removed
In addition, enrollment of patients into back-fill cohorts enriched for NSCLC and SMARCA4 loss-of-function mutations has been initiated.
Added
Tumor shrinkage was observed in patients with both Class 1 and Class 2 SMARCA4 mutations. 81 Additional patients on-study demonstrated clinical benefit as measured by prolonged SD, including one advanced NSCLC patient on study for more than a year.
Removed
We expect to present initial data in the second half of 2024 from patients currently enrolled in the Phase 1 trial. Our discovery team has identified a series of highly selective and orally bioavailable SMARCA2 degraders.
Added
Initial observations of safety from evaluable patients in the PRT3789 plus docetaxel combination dose escalation arm of the trial were also presented. To date, PRT3789 in combination with docetaxel has demonstrated an acceptable safety profile.
Removed
The lead oral molecule, PRT7732, is currently in IND enabling studies and on track to enter Phase 1 clinical development in the second half of 2024. PRT7732 is structurally distinct from PRT3789 and in addition, may provide clinically meaningful differences, more patient-friendly dosing and may have utility in earlier lines of therapy.
Added
The Company is nearing conclusion of monotherapy dose escalation, which is now at the 665mg once weekly IV dose and identifying dose(s) for advancement to any potential future trials. In addition, enrollment of patients in dose escalation in the combination of PRT3789 with docetaxel is ongoing.
Removed
Our CDK9 candidate, PRT2527, is designed to be a potent and selective CDK9 inhibitor. We believe PRT2527 has the potential to avoid off-target toxicities, achieve substantial clinical activity and to become the best-in-class CDK9 inhibitor for hematologic malignancies.
Added
The Company also initiated a Phase 2 clinical trial evaluating PRT3789 in combination with KEYTRUDA (pembrolizumab) in patients with SMARCA4-mutated cancers, per the previously announced collaboration with Merck & Co., Inc. PRT3789 has been shown to increase antigen processing and presentation of unique MHC class I peptides, and increased T-cell activity and IFN-γ production in SMARCA4-mutated cancer cells.
Removed
In preclinical studies, PRT2527 was shown to reduce MCL1 and MYC protein levels and was highly active in preclinical models at well-tolerated doses. Our preclinical studies suggest that PRT2527 demonstrates high kinase selectivity and potency, providing opportunity for a wider therapeutic index compared to less selective CDK9 inhibitors, allowing for rapid development in combinations.
Added
SMARCA2 degradation by PRT3789 promoted the effects of anti-PD1 therapy in SMARCA4-deficient mouse models, and PRT3789 combined with pembrolizumab, promoted cell death of SMARCA4-deficient NSCLC cells.
Removed
Preclinical data demonstrated that treatment with PRT2527 depleted oncogenic drivers with short half-lives, such as MYC and MCL1, and effectively induced apoptosis. PRT2527 treatment demonstrated robust efficacy in both hematological malignancies and solid tumor models with MYC dysregulation.
Added
While inhibitors targeting the PD-1/PD-L1 axis have shown clinical activity across a broad range of tumor types, some patients demonstrated an inadequate response and disease progression consistent with the natural disease course that may be tied to innate resistance mechanisms. Other patients progressed after a period of disease control, which may be associated with acquired resistance mechanisms.
Removed
Dose dependent increases in exposure and target engagement were observed as evidenced by MYC and MCL1 depletion to levels associated with tumor regression in preclinical models. PRT2527 has completed a Phase 1 multi-dose escalation study (NCT05159518) in patients with solid tumors.
Added
It is believed that PRT3789 plus pembrolizumab may re-sensitize resistant cancers to subsequent anti–PD(L)-1 therapy. Our discovery team has identified a series of potent, selective and orally bioavailable SMARCA2 degraders. In July 2024, we received IND clearance for the lead oral molecule, PRT7732. PRT7732 is >1000-fold selective for SMARCA2 vs.
Removed
In this study, PRT2527 was shown to achieve high levels of target inhibition and the potential to be better tolerated than existing CDK9 inhibitors, specifically, managing neutropenia and an absence of meaningful gastrointestinal events or hepatotoxicity.
Added
SMARCA4 and demonstrates robust activity in SMARCA4 deficient cancer models both as monotherapy and in combination with docetaxel at well-tolerated doses. PRT7732 demonstrates good oral bioavailability and half suitable for once daily oral dosing. The Company initiated and enrolled our first patients in a phase 1 multi-dose escalation trial of PRT7732 (NCT06560645) in biomarker selected SMARCA4 mutated cancers.
Removed
The observed dose-dependent downregulation of MYC and MCL1 mRNA expression, CDK9 transcriptional targets, was consistent with the degree of target engagement required for preclinical efficacy. As predicted by the preclinical models, 12 mg/m2 QW dosing showed optimal target inhibition and has been selected as the optimal dose.
Added
Outside of the AbCellera collaboration, the Company has discovered and optimized a number of pre-clinical precision payloads. We disclosed first data at the 36th EORTC-NCI-AACR Symposium describing preclinical proof-of-concept using a novel, potent SMARCA2/4 dual degrader as a “Precision Payload” conjugated to multiple antibodies.

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