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What changed in RAPT Therapeutics, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of RAPT Therapeutics, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+368 added−336 removedSource: 10-K (2024-03-07) vs 10-K (2023-03-14)

Top changes in RAPT Therapeutics, Inc.'s 2023 10-K

368 paragraphs added · 336 removed · 289 edited across 4 sections

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

224 edited+55 added−29 removed357 unchanged
Biggest changeSimilar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation; • HIPAA, as amended by the HITECH, and its implementing regulations, including the Final Omnibus Rule published in January 2013, which impose obligations on certain covered entity healthcare providers, health plans and healthcare clearinghouses as well as their business associates and subcontractors that perform certain services involving the use or disclosure of individually identifiable health information, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information, and require notification to affected individuals and regulatory authorities of certain breaches of security of individually identifiable health information; • the federal false statements statute, which prohibits knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement in connection with the delivery of or payment for healthcare benefits, items or services; • the federal transparency requirements known as the federal Physician Payments Sunshine Act, created as part of ACA, which requires certain manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program to report annually to the Centers for Medicare & Medicaid Services (“CMS”) information related to payments and other transfers of value made by that entity to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), other healthcare professionals (such as physicians assistants and nurse practitioners) and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members; and 81 • analogous local, state and foreign laws and regulations, such as state anti-kickback and false claims laws that may apply to healthcare items or services reimbursed by third-party payors, including private insurers; local, state and foreign transparency laws that require manufacturers to report information related to payments and transfers of value to other healthcare providers and healthcare entities, marketing expenditures or drug pricing; state laws that require pharmaceutical companies to register certain employees engaged in marketing activities in the location and comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government; and state and foreign laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts.
Biggest changeAs amended by the Health Information Technology for Economic and Clinical Health Act (“HITECH”), HIPAA also imposes obligations on certain covered entity healthcare providers, health plans and healthcare clearinghouses as well as their business associates and subcontractors that perform certain services involving the use or disclosure of individually identifiable health information, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information, and require notification to affected individuals and regulatory authorities of certain breaches of security of individually identifiable health information; • the federal false statements statute, which prohibits knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement in connection with the delivery of or payment for healthcare benefits, items or services; • the federal transparency requirements known as the federal Physician Payments Sunshine Act, created as part of ACA, which requires certain manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program to report annually to the CMS information related to payments and other transfers of value made by that entity to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), other healthcare professionals (such as physicians assistants and nurse practitioners) and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members; and • analogous local, state and foreign laws and regulations, such as state anti-kickback and false claims laws that may apply to healthcare items or services reimbursed by third-party payors, including private insurers; local, state and foreign transparency laws that require manufacturers to report information related to payments and transfers of value to other healthcare providers and healthcare entities, marketing expenditures or drug pricing; state laws that require pharmaceutical companies to register certain employees engaged in marketing activities in the location and comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government; and state and foreign laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts. 83 Ensuring that our future business arrangements with third parties comply with applicable healthcare laws and regulations could involve substantial costs.
In March 2013, under the Leahy-Smith Act, the United States transitioned to a first inventor to file system in which, assuming that the other statutory requirements are met, the first inventor to file a patent application would be entitled to the patent on an invention regardless of whether a third-party was the first to invent the claimed invention.
In March 2013, under the Leahy-Smith Act, the United States transitioned to a first-to-file system in which, assuming that the other statutory requirements are met, the first inventor to file a patent application would be entitled to the patent on an invention regardless of whether a third-party was the first to invent the claimed invention.
Competitors or other third parties may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products and, further, may export infringing products to territories where we have patent protection or licenses, but enforcement is not as strong as that in the United States.
Competitors or other third parties may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products and, further, may export infringing products to territories where we have patent protection or licenses, but where enforcement is not as strong as that in the United States.
If we are unable to successfully settle future claims on terms acceptable to us, we may be required to engage in or to continue costly, unpredictable and time-consuming litigation and may be prevented from or experience substantial delays in marketing our drug candidates.
If we are unable to successfully settle future claims on terms acceptable to us, we may be required to engage in or to continue costly, unpredictable and time-consuming litigation and may be prevented from or experience substantial delays in marketing our drug candidates.
The following examples are illustrative: • others may be able to make small molecule drugs, inhibitors or formulations that are similar to our drug candidates, but that are not covered by the claims of any patents that we own, license or control; • we or any strategic partners might not have been the first to make the inventions covered by the patent rights that we own, license or control; • we or our licensors might not have been the first to file patent applications covering certain of our owned and in-licensed inventions; • others may independently develop the same, similar or alternative technologies without infringing, misappropriating or violating our intellectual property rights; • it is possible that our pending patent applications will not lead to issued patents; • issued patents that we may own, in-license or control may not provide us with any competitive advantages, or may be narrowed or held invalid or unenforceable, including as a result of legal challenges; • our competitors might conduct research and development activities in the United States and other countries that provide a safe harbor from patent infringement claims for certain research and development activities, as well as in countries where we do not have patent rights, and may then use the information learned from such activities to develop competitive products for sale in our major commercial markets; • 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 trade secrets or know-how; and • the patents of others may have an adverse effect on our business.
The following examples are illustrative: • others may be able to make small molecule drugs, inhibitors or formulations that are similar to our drug candidates, but that are not covered by the claims of any patents that we own, license or control; • we or any strategic partners might not have been the first to make the inventions covered by the patent rights that we own, license or control; 76 • we or our licensors might not have been the first to file patent applications covering certain of our owned and in-licensed inventions; • others may independently develop the same, similar or alternative technologies without infringing, misappropriating or violating our intellectual property rights; • it is possible that our pending patent applications will not lead to issued patents; • issued patents that we may own, in-license or control may not provide us with any competitive advantages, or may be narrowed or held invalid or unenforceable, including as a result of legal challenges; • our competitors might conduct research and development activities in the United States and other countries that provide a safe harbor from patent infringement claims for certain research and development activities, as well as in countries where we do not have patent rights, and may then use the information learned from such activities to develop competitive products for sale in our major commercial markets; • 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 trade secrets or know-how; and • the patents of others may have an adverse effect on our business.
Our development programs may be delayed for a variety of reasons, including delays related to: • the FDA or other regulatory authorities requiring us to submit additional data or imposing other requirements before permitting us to initiate a clinical trial; • obtaining regulatory approval to commence a clinical trial; • reaching agreement on acceptable terms with prospective CROs and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and clinical trial sites; • obtaining institutional review board (“IRB”) approval at each clinical trial site; • recruiting suitable patients to participate in a clinical trial; • having patients complete a clinical trial or return for post-treatment follow-up; • clinical trial sites deviating from trial protocol or dropping out of a trial; • adding new clinical trial sites; or • manufacturing sufficient quantities of our drug candidates for use in clinical trials.
Our development programs may be delayed for a variety of reasons, including delays related to: • the FDA or other regulatory authorities requiring us to submit additional data or imposing other requirements before permitting us to initiate or continue a clinical trial; • obtaining regulatory approval to commence a clinical trial; • reaching agreement on acceptable terms with prospective CROs and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and clinical trial sites; • obtaining institutional review board (“IRB”) approval at each clinical trial site; • recruiting suitable patients to participate in a clinical trial; • having patients complete a clinical trial or return for post-treatment follow-up; • clinical trial sites deviating from trial protocol or dropping out of a trial; • adding new clinical trial sites; or • manufacturing sufficient quantities of our drug candidates for use in clinical trials.
Market acceptance of our current and potential future drug candidates will depend on, among other factors: • the timing of our receipt of any marketing and commercialization approvals; • the terms of any approvals and the countries in which approvals are obtained; • the safety and efficacy of our drug candidates; • the prevalence and severity of any adverse side effects associated with our drug candidates; • limitations or warnings contained in any labeling approved by the FDA or other regulatory authority; • relative convenience and ease of administration of our drug candidates; • the extent to which physicians recommend our products to their patients; • the availability of coverage and adequate government and third-party payor reimbursement; • the pricing of our products, particularly as compared to alternative treatments; and • the availability of alternative effective treatments for the disease indications our drug candidates are intended to treat and the relative risks, benefits and costs of those treatments.
Market acceptance of our current and potential future drug candidates will depend on, among other factors: • the timing of our receipt of any marketing and commercialization approvals; • the terms of any approvals and the countries in which approvals are obtained; • the safety and efficacy of our drug candidates; • the prevalence and severity of any adverse side effects associated with our drug candidates; • limitations or warnings contained in any labeling approved by the FDA or other regulatory authority; • relative convenience and ease of administration of our drug candidates; • the extent to which physicians recommend our products to their patients; 54 • the availability of coverage and adequate government and third-party payor reimbursement; • the pricing of our products, particularly as compared to alternative treatments; and • the availability of alternative effective treatments for the disease indications our drug candidates are intended to treat and the relative risks, benefits and costs of those treatments.
These transactions would 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 manage a collaboration or develop acquired products, drug candidates or technologies; • incurrence of substantial debt or dilutive issuances of equity securities to pay transaction consideration or costs; • higher-than-expected collaboration, acquisition or integration costs, write-downs of assets or goodwill or impairment charges or increased amortization expenses; 57 • difficulty and cost in facilitating the collaboration or combining the operations and personnel of any acquired business; • impairment of relationships with key suppliers, manufacturers or customers of any acquired business due to changes in management and ownership; and • the inability to retain key employees of any acquired business.
These transactions would 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 manage a collaboration or develop acquired products, drug candidates or technologies; • incurrence of substantial debt or dilutive issuances of equity securities to pay transaction consideration or costs; • higher-than-expected collaboration, acquisition or integration costs, write-downs of assets or goodwill or impairment charges or increased amortization expenses; • difficulty and cost in facilitating the collaboration or combining the operations and personnel of any acquired business; • impairment of relationships with key suppliers, manufacturers or customers of any acquired business due to changes in management and ownership; and • the inability to retain key employees of any acquired business.
Restrictions under applicable federal and state healthcare laws and regulations, include the following: • the federal Anti-Kickback Statute, which prohibits, among other things, a person or entity from knowingly and willfully soliciting, offering, paying, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward either the referral of an individual for, or the purchase, lease order, arranging for or recommendation of, any good, facility, item or service, for which payment may be made, in whole or in part, by a federal healthcare program, such as Medicare or Medicaid.
Restrictions under applicable federal and state healthcare laws and regulations, include the following: • the federal Anti-Kickback Statute, which prohibits, among other things, a person or entity from knowingly and willfully soliciting, offering, paying, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward either the referral of an individual for, or the purchase, 82 lease order, arranging for or recommendation of, any good, facility, item or service, for which payment may be made, in whole or in part, by a federal healthcare program, such as Medicare or Medicaid.
Our or a third party’s failure to execute on our manufacturing requirements and comply with cGMP could adversely affect our business in a number of ways, including: • an inability to initiate or continue clinical trials of drug candidates under development; • delay in submitting regulatory applications, or receiving regulatory approvals, for drug candidates; • loss of the cooperation of a potential future partner; • subjecting third-party manufacturing facilities or our potential future manufacturing facilities to additional inspections by regulatory authorities; 60 • requirements to cease distribution or to recall batches of drug candidates; and • in the event of approval to market and commercialize a drug candidate, an inability to meet commercial demands for our products.
Our or a third party’s failure to execute on our manufacturing requirements and comply with cGMP could adversely affect our business in a number of ways, including: • an inability to initiate or continue clinical trials of drug candidates under development; • delay in submitting regulatory applications, or receiving regulatory approvals, for drug candidates; • loss of the cooperation of a potential future partner; • subjecting third-party manufacturing facilities or our potential future manufacturing facilities to additional inspections by regulatory authorities; • requirements to cease distribution or to recall batches of drug candidates; and • in the event of approval to market and commercialize a drug candidate, an inability to meet commercial demands for our products.
Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware is the exclusive forum for the following types of actions or proceedings under Delaware statutory or common law: (1) any derivative action or proceeding brought on our behalf; (2) any action asserting a breach of fiduciary duty owed by any of our directors, officers, employees or agents to us or our stockholders; (3) any action asserting a claim against us or any of our directors, officers or other employees arising under any provisions of the Delaware General Corporation Law, our amended and restated certificate of incorporation or our amended and restated bylaws; or (4) any action asserting a claim against us or any of our directors, officers or other employees governed by the internal affairs doctrine.
Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware is the exclusive forum for the following types of actions or proceedings under Delaware statutory or common law: (1) any derivative action or proceeding brought on our behalf; (2) any action asserting a breach of fiduciary duty owed by any of our directors, officers, employees or agents to us or our stockholders; 97 (3) any action asserting a claim against us or any of our directors, officers or other employees arising under any provisions of the Delaware General Corporation Law, our amended and restated certificate of incorporation or our amended and restated bylaws; or (4) any action asserting a claim against us or any of our directors, officers or other employees governed by the internal affairs doctrine.
Our net loss and other operating results will be affected by numerous factors, including: • variations in the level of expense related to the ongoing development of our drug candidates or future development programs; • results of clinical trials, or the addition or termination of clinical trials or funding support by us or potential future partners; • our execution of any collaboration, licensing or similar arrangements, and the timing of payments we may make or receive under potential future arrangements or the termination or modification of any such potential future arrangements; • any intellectual property infringement, misappropriation or violation lawsuit or opposition, interference or cancellation proceeding in which we may become involved; • additions and departures of key personnel; • strategic decisions by us or our competitors, such as acquisitions, divestitures, spin-offs, joint ventures, strategic investments or changes in business strategy; • if any of our drug candidates receives regulatory approval, the terms of such approval and market acceptance and demand for such drug candidates; • regulatory developments affecting our drug candidates or those of our competitors; and • changes in general market and economic conditions.
Our net loss and other operating results will be affected by numerous factors, including: • variations in the level of expense related to the ongoing development of our drug candidates or future development programs; • results of clinical trials, or the addition, delay or termination of clinical trials or funding support by us or potential future partners; • our execution of any collaboration, licensing or similar arrangements, and the timing of payments we may make or receive under potential future arrangements or the termination or modification of any such potential future arrangements; • any intellectual property infringement, misappropriation or violation lawsuit or opposition, interference or cancellation proceeding in which we may become involved; • additions and departures of key personnel; • strategic decisions by us or our competitors, such as acquisitions, divestitures, spin-offs, joint ventures, strategic investments or changes in business strategy; 92 • if any of our drug candidates receives regulatory approval, the terms of such approval and market acceptance and demand for such drug candidates; • regulatory developments affecting our drug candidates or those of our competitors; and • changes in general market and economic conditions.
If we or our existing or future partners, manufacturers or service providers fail to comply with applicable continuing regulatory requirements in the U.S. or foreign jurisdictions in which we seek to market our products, we or they may be subject to, among other things, fines, warning letters, holds on clinical trials, delay of approval or refusal by the FDA to approve pending applications or supplements to approved applications, suspension or withdrawal of regulatory approval, product recalls and seizures, administrative detention of products, refusal to permit the import or export of products, operating restrictions, injunction, civil penalties and criminal prosecution. 82 Even if we are able to commercialize any drug candidate, such drug candidate may become subject to unfavorable pricing regulations or third-party coverage and reimbursement policies, which would harm our business.
If we or our existing or future partners, manufacturers or service providers fail to comply with applicable continuing regulatory requirements in the U.S. or foreign jurisdictions in which we seek to market our products, we or they may be subject to, among other things, fines, warning letters, holds on clinical trials, delay of approval or refusal by the FDA to approve pending applications or supplements to approved applications, suspension or withdrawal of regulatory approval, product recalls and seizures, administrative detention of products, refusal to permit the import or export of products, operating restrictions, injunction, civil penalties and criminal prosecution. 84 Even if we are able to commercialize any drug candidate, such drug candidate may become subject to unfavorable pricing regulations or third-party coverage and reimbursement policies, which would harm our business.
Security incidents and attendant consequences may negatively impact our ability to grow and operate our business. Our contracts may not contain limitations of liability, and even where they do, there can be no assurance that limitations of liability in our contracts are sufficient to protect us from liabilities, damages, or claims related to our data privacy and security obligations.
Security incidents and attendant consequences may negatively impact our ability to grow and operate our business. 91 Our contracts may not contain limitations of liability, and even where they do, there can be no assurance that limitations of liability in our contracts are sufficient to protect us from liabilities, damages, or claims related to our data privacy and security obligations.
Therefore, even if we successfully develop and commercialize products, we may be unable to achieve or maintain profitability. 68 Patent terms may not be able to protect our competitive position for an adequate period of time with respect to our current or future technologies or drug candidates. Patents have a limited lifespan.
Therefore, even if we successfully develop and commercialize products, we may be unable to achieve or maintain profitability. Patent terms may not be able to protect our competitive position for an adequate period of time with respect to our current or future technologies or drug candidates. Patents have a limited lifespan.
We currently intend to retain all of our future earnings, if any, to finance the growth and development of our business. As a result, capital appreciation, if any, of our common stock will be your sole source of gain for the foreseeable future. We may incur significant costs from class action litigation due to the volatility of our stock.
We currently intend to retain all of our future earnings, if any, to finance the growth and development of our business. As a result, capital appreciation, if any, of our common stock will be your sole source of gain for the foreseeable future. 96 We may incur significant costs from class action litigation due to the volatility of our stock.
Should any of these events occur, they could have a material adverse impact on our business and financial condition. 76 Legal and Regulatory Risks Clinical development includes a lengthy and expensive process with an uncertain outcome, and results of earlier studies and trials may not be predictive of future trial results.
Should any of these events occur, they could have a material adverse impact on our business and financial condition. Legal and Regulatory Risks Clinical development includes a lengthy and expensive process with an uncertain outcome, and results of earlier studies and trials may not be predictive of future trial results.
Some European regulators have ordered certain companies to suspend or permanently cease certain transfers of personal information out of Europe for allegedly violating the GDPR’s cross-border data transfer limitations. In addition to data privacy and security laws, we are contractually subject to data privacy and security obligations and may become subject to such obligations in the future.
Some European regulators have ordered certain companies to suspend or permanently cease certain transfers of personal data out of Europe for allegedly violating the GDPR’s cross-border data transfer limitations. In addition to data privacy and security laws, we are contractually subject to data privacy and security obligations and may become subject to such obligations in the future.
In particular, changes in corporate tax rates, the realization of our net deferred tax assets, the taxation of foreign earnings and the deductibility of expenses under the Tax Act, as amended by the CARES Act or any future tax reform legislation, could have a material impact on the value of our deferred tax assets, result in significant one-time charges and increase our future tax expenses.
Changes in corporate tax rates, the realization of our net deferred tax assets, the taxation of foreign earnings and the deductibility of expenses under the Tax Act, as amended by the CARES Act or any future tax reform legislation, could have a material impact on the value of our deferred tax assets, result in significant one-time charges and increase our future tax expenses.
We cannot provide assurance that we will be able to hire or retain adequate staffing levels to develop our current and potential future drug candidates or to run our operations or to accomplish all of our objectives. 62 We may experience difficulties in managing our growth and expanding our operations. We have limited experience in product development.
We cannot provide assurance that we will be able to hire or retain adequate staffing levels to develop our current and potential future drug candidates or to run our operations or to accomplish all of our objectives. We may experience difficulties in managing our growth and expanding our operations. We have limited experience in product development.
For example, there have been several recent Congressional inquiries, Presidential executive orders and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to drug pricing, review the relationship between pricing and manufacturer patient programs and reform government program reimbursement methodologies for drug products.
For example, there have been several Congressional inquiries, Presidential executive orders and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to drug pricing, review the relationship between pricing and manufacturer patient programs and reform government program reimbursement methodologies for drug products.
We believe that quarterly comparisons of our financial results are not necessarily meaningful and should not be relied upon as an indication of our future performance. 89 Our stock price may be volatile and purchasers of our common stock could incur substantial losses. Our stock price has been and is likely to continue to be highly volatile.
We believe that quarterly comparisons of our financial results are not necessarily meaningful and should not be relied upon as an indication of our future performance. Our stock price may be volatile and purchasers of our common stock could incur substantial losses. Our stock price has been and is likely to continue to be highly volatile.
In such case, the market price of our common stock could decline and you may lose all or part of your original investment. This Annual Report on Form 10-K also contains forward-looking statements and estimates that involve risks and uncertainties.
In such a case, the market price of our common stock could decline and you may lose all or part of your original investment. This Annual Report on Form 10-K also contains forward-looking statements and estimates that involve risks and uncertainties.
The time and cost associated with developing a companion diagnostic may not prove to have been necessary in order to successfully market the product. 53 The market may not be receptive to our current or potential future drug candidates, and we may not generate any revenue from the sale or licensing of our drug candidates.
The time and cost associated with developing a companion diagnostic may not prove to have been necessary in order to successfully market the product. The market may not be receptive to our current or potential future drug candidates, and we may not generate any revenue from the sale or licensing of our drug candidates.
These investigators, CROs and consultants will not be our employees and we will have limited control over the amount of time and resources that they dedicate to our programs. These third parties may have contractual relationships with other entities, some of which may be our competitors, which may draw time and resources from our programs.
These investigators, CROs, CDMOs and consultants will not be our employees and we will have limited control over the amount of time and resources that they dedicate to our programs. These third parties may have contractual relationships with other entities, some of which may be our competitors, which may draw time and resources from our programs.
Despite these efforts, we may not obtain these agreements in all circumstances and we cannot guarantee that we have entered into such agreements with each party that may have or have had access to our trade secrets or proprietary information. 74 Moreover, individuals with whom we have such agreements may not comply with their terms.
Despite these efforts, we may not obtain these agreements in all circumstances and we cannot guarantee that we have entered into such agreements with each party that may have or have had access to our trade secrets or proprietary information. Moreover, individuals with whom we have such agreements may not comply with their terms.
We expect to compete with small molecule, biologics and other therapeutic platforms and development companies, including, but not limited to, companies such as Agenus/Gilead, ChemoCentryx/Amgen and Tusk/Roche for oncology, and AnaptysBio and Dermira/Lilly for inflammatory diseases.
We expect to compete with small molecule, biologics and other therapeutic platforms and development companies, including, but not limited to, companies such as Agenus/Gilead, Amgen and Tusk/Roche for oncology, and AnaptysBio and Dermira/Lilly for inflammatory diseases.
Furthermore, we expect to rely on our CROs and clinical trial sites to ensure the proper and timely conduct of our clinical trials and, while we expect to enter into agreements governing their committed activities, we have limited influence over their actual performance. 77 We could encounter delays if prescribing physicians encounter unresolved ethical issues associated with enrolling patients in clinical trials of our current or potential future drug candidates in lieu of prescribing existing treatments that have established safety and efficacy profiles.
Furthermore, we expect to rely on our CROs and clinical trial sites to ensure the proper and timely conduct of our clinical trials and, while we expect to enter into agreements governing their committed activities, we have limited influence over their actual performance. 78 We could encounter delays if prescribing physicians encounter unresolved ethical issues associated with enrolling patients in clinical trials of our current or potential future drug candidates in lieu of prescribing existing treatments that have established safety and efficacy profiles.
For example, in March 2020 we temporarily paused enrollment for a few months in the Phase 1b portion of our Phase 1a/1b trial to evaluate RPT193 in patients with AD due to circumstances and uncertainties created by the COVID-19 pandemic, including vulnerability of our studied patient populations, site staff shortages, clinical trial site suspensions, reallocation of medical resources and the challenges of working remotely due to shelter-in-place and similar government orders and guidelines, among other factors.
For example, in March 2020, we temporarily paused enrollment for a few months in the Phase 1b portion of our Phase 1a/1b trial to evaluate zelnecirnon in patients with AD due to circumstances and uncertainties created by the COVID-19 pandemic, including vulnerability of our studied patient populations, site staff shortages, clinical trial site suspensions, reallocation of medical resources and the challenges of working remotely due to shelter-in-place and similar government orders and guidelines, among other factors.
As a result, our partners or we may be unable to obtain sufficient insurance at a reasonable cost to protect us against losses caused by product liability claims that could have a material and adverse effect on our business, financial condition, results of operations and prospects. 84 Our employees, principal investigators, consultants and commercial partners may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements.
As a result, our partners or we may be unable to obtain sufficient insurance at a reasonable cost to protect us against losses caused by product liability claims that could have a material and adverse effect on our business, financial condition, results of operations and prospects. 86 Our employees, principal investigators, consultants and commercial partners may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements.
For example, although RPT193 has exhibited encouraging results in preclinical models of AD and allergic asthma and showed improvement compared to placebo in a common measure of disease severity in a small number of patients with AD, it may not demonstrate the same properties in larger numbers of humans and may interact with human biological systems in unforeseen, ineffective or harmful ways.
For example, although zelnecirnon has exhibited encouraging results in preclinical models of AD and allergic asthma and showed improvement compared to placebo in a common measure of disease severity in a small number of patients with AD, it may not demonstrate the same properties in larger numbers of humans and may interact with human biological systems in unforeseen, ineffective or harmful ways.
Preparing for and complying with these obligations requires us to devote significant resources and may necessitate changes to our services, information technologies, systems and practices and to those of any third parties that process personal information on our behalf. 86 We may at times fail (or be perceived to have failed) in our efforts to comply with our data privacy and security obligations.
Preparing for and complying with these obligations requires us to devote significant resources and may necessitate changes to our services, information technologies, systems and practices and to those of any third parties that process personal data on our behalf. 89 We may at times fail, or be perceived to have failed, in our efforts to comply with our data privacy and security obligations.
We rely on third-party clinical investigators, CROs, clinical data management organizations and consultants to design, conduct, supervise and monitor certain preclinical studies and any clinical trials.
We rely on third-party clinical investigators, CROs, clinical data management organizations ( “CDMOs” ) and consultants to design, conduct, supervise and monitor certain preclinical studies and any clinical trials.
At the federal level, in July 2021, the Biden administration released an executive order that included multiple provisions aimed at prescription drugs. In response to President Biden’s executive order, on September 9, 2021, the U.S. Department of Health and Human Services ("HHS") released a Comprehensive Plan for Addressing High Drug Prices that outlines principles for drug pricing reform.
At the federal level, in July 2021, the Biden administration released an executive order that included multiple provisions aimed at prescription drugs. In response to President Biden’s executive order, in September 2021, the U.S. Department of Health and Human Services ("HHS") released a Comprehensive Plan for Addressing High Drug Prices that outlines principles for drug pricing reform.
Adverse pricing limitations may hinder our ability to recoup our investment in one or more drug candidates, even if our drug candidates obtain regulatory approval. 83 We are subject to U.S. and foreign anti-corruption and anti-money laundering laws with respect to our operations and non-compliance with such laws can subject us to criminal or civil liability and harm our business.
Adverse pricing limitations may hinder our ability to recoup our investment in one or more drug candidates, even if our drug candidates obtain regulatory approval. 85 We are subject to U.S. and foreign anti-corruption and anti-money laundering laws with respect to our operations and non-compliance with such laws can subject us to criminal or civil liability and harm our business.
For our current and future sole source third-party manufacturing and supply partners, we may be unable to negotiate binding agreements with them or find replacement manufacturers to support our preclinical and current and future clinical activities at commercially reasonable terms in the event that their services to us becomes interrupted for any reason.
For our current and future sole source third-party manufacturing and supply partners, we may be unable to negotiate binding agreements with them or find replacement manufacturers to support our preclinical and current and future clinical activities at commercially reasonable terms in the event that their services to us are interrupted for any reason.
Disease outbreaks, epidemics and pandemics may have negative impacts on our ability to initiate new clinical trial sites, enroll new patients and to maintain existing patients who are participating in clinical trials, which may include increased clinical trial costs, longer timelines and delay in our ability to obtain regulatory approvals of our product candidates, if at all.
Disease outbreaks, epidemics and pandemics may have negative impacts on our ability to initiate new clinical trial sites, enroll new patients and to maintain existing patients who are participating in clinical trials, which may result in increased clinical trial costs, longer timelines and delay in our ability to obtain regulatory approvals of our product candidates, if at all.
You should consider and read carefully all of the risks and uncertainties described below, as well as other information included in this Annual Report on Form 10-K, including our consolidated financial statements and related notes, our ‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations,” as well as our other public filings.
You should consider and read carefully all of the risks and uncertainties described below, as well as other information included in this Annual Report on Form 10-K, including our consolidated financial statements and related notes, our “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” as well as our other public filings.
Further, success in research and preclinical studies or early clinical trial results may not be indicative of results obtained in later trials. Likewise, preliminary, initial or interim data from clinical trials may be materially different from final data. We have completed a Phase 1a/1b trial of RPT193 in healthy volunteers and in patients with AD.
Further, success in research and preclinical studies or early clinical trial results may not be indicative of results obtained in later trials. Likewise, preliminary, initial or interim data from clinical trials may be materially different from final data. We have completed a Phase 1a/1b trial of zelnecirnon in healthy volunteers and in patients with AD.
For example, clinical trial subjects about whom we or any of our potential collaborators obtain information, as well as the providers who share this information with us, may contractually limit our ability to use and disclose the information. We publish privacy policies and other statements regarding data privacy and security.
For example, clinical trial subjects about whom we or any of our potential collaborators obtain information, as well as the providers who share this information with us, may contractually limit our ability to use and disclose the information. We publish privacy policies, marketing materials and other statements regarding data privacy and security.
Were Merck to terminate our collaboration agreement, we would be required to purchase pembrolizumab to continue our current and planned clinical trials or to introduce another anti-PD-1 therapy for co-administration with FLX475 in place of pembrolizumab, which may require us to restart preclinical studies or clinical trials.
Were Merck to terminate our collaboration agreement, we would be required to purchase pembrolizumab to continue our current and planned clinical trials or to introduce another anti-PD-1 therapy for co-administration with tivumecirnon in place of pembrolizumab, which may require us to restart preclinical studies or clinical trials.
This could result in a change to our business plan and materially harm our business, financial condition, or results of operations and prospects. In addition, if FLX475 is approved as a treatment in combination with pembrolizumab, then the future availability of pembrolizumab for administration with FLX475 would affect our ability to commercialize FLX475.
This could result in a change to our business plan and materially harm our business, financial condition, or results of operations and prospects. In addition, if tivumecirnon is approved as a treatment in combination with pembrolizumab, then the future availability of pembrolizumab for administration with tivumecirnon would affect our ability to commercialize tivumecirnon.
Our actual results could differ materially from those anticipated in the forward-looking statements as a result of specific factors, including the risks and uncertainties described below. Risks Related to Our Business We are a clinical stage biopharmaceutical company with a history of losses.
Our actual results could differ materially from those anticipated in the forward-looking statements as a result of specific factors, including the risks and uncertainties described below. Risks Related to Our Business We are a clinical stage therapeutics company with a history of losses.
Such threats are prevalent and continue to increase, are increasingly difficult to detect and come from a variety of sources, including traditional computer “hackers,” threat actors, “hacktivists,” organized criminal threat actors, personnel (such as through theft or misuse), sophisticated nation states and nation-state-supported actors.
Such threats are prevalent and continue to rise, are increasingly difficult to detect and come from a variety of sources, including traditional computer “hackers,” threat actors, “hacktivists,” organized criminal threat actors, personnel (such as through theft or misuse), sophisticated nation states and nation-state-supported actors.
For example, we entered a Collaboration and License Agreement with Hanmi in December 2019, pursuant to which we granted Hanmi the exclusive rights to develop, manufacture and commercialize FLX475 in the Hanmi Territory. The competition for partners is intense, and the negotiation process may be time-consuming and complex.
For example, we entered a Collaboration and License Agreement with Hanmi in December 2019, pursuant to which we granted Hanmi the exclusive rights to develop, manufacture and commercialize tivumecirnon in the Hanmi Territory. The competition for partners is intense, and the negotiation process may be time-consuming and complex.
If the disruptions and slowdown deepen or persist, we may not be able to access additional capital on favorable terms, or at all, which could in the future negatively affect our financial condition and our ability to pursue our business strategy.
In any event, if the disruptions and slowdown deepen or persist, we may not be able to access additional capital on favorable terms, or at all, which could in the future negatively affect our financial condition and our ability to pursue our business strategy.
If there is no lawful manner for us to transfer personal information from the EEA, the UK or other jurisdictions to the United States, or if the requirements for a legally-compliant transfer are too onerous, we could face significant adverse consequences, including the interruption or degradation of our operations, the need to relocate part of or all of our business or data processing activities to other jurisdictions at significant expense, increased exposure to regulatory actions, substantial fines and penalties, the inability to transfer data and work with partners, vendors and other third parties and injunctions against our processing or transferring of personal information necessary to operate our business.
If there is no lawful manner for us to transfer personal data from the EEA, the UK or other jurisdictions to the United States, or if the requirements for a legally compliant transfer are too onerous, we could face significant adverse consequences, including the interruption or degradation of our operations, the need to relocate part of or all of our business or data processing activities to other jurisdictions (such as Europe) at significant expense, increased exposure to regulatory actions, substantial fines and penalties, the inability to transfer data and work with partners, vendors and other third parties and injunctions against our processing or transferring of personal data necessary to operate our business.
For example, in March 2020 we temporarily paused enrollment for a few months in the Phase 1b portion of our Phase 1a/1b trial to evaluate RPT193 in patients with AD due to circumstances and uncertainties created by the COVID-19 pandemic.
For example, in March 2020 we temporarily paused enrollment for a few months in the Phase 1b portion of our Phase 1a/1b trial to evaluate zelnecirnon in patients with AD due to circumstances and uncertainties created by the COVID-19 pandemic.
Doing business internationally involves a number of risks, including but not limited to: • multiple, conflicting and changing laws and regulations such as privacy regulations, tax laws, export and import restrictions, employment laws, regulatory requirements and other governmental approvals, permits and licenses; • failure by us to obtain and maintain regulatory approvals for the use of our products in various countries; • rejection or qualification of foreign clinical trial data by the competent authorities of other countries; • additional potentially relevant third-party patent and other intellectual property rights that may be necessary to develop and commercialize our products and drug candidates; 63 • complexities and difficulties in obtaining, maintaining, enforcing and defending our patent and other intellectual property rights; • difficulties in staffing and managing foreign operations; • complexities associated with managing multiple payor reimbursement regimes, government payors or patient self-pay systems; • limits in our ability to penetrate international markets; • financial risks, such as longer payment cycles, difficulty collecting accounts receivable, the impact of local and regional financial crises on demand and payment for our products and exposure to foreign currency exchange rate fluctuations; • natural disasters, political and economic instability, including wars, terrorism and political unrest, including as a result of the conflict between Russia and Ukraine, outbreak of disease, boycotts, curtailment of trade and other business restrictions and implementation of tariffs; • certain expenses, including, among others, expenses for travel, translation and insurance; and • regulatory and compliance risks that relate to anti-corruption compliance and record-keeping that may fall within the purview of the U.S.
Doing business internationally involves a number of risks, including but not limited to: • multiple, conflicting and changing laws and regulations such as privacy regulations, tax laws, export and import restrictions, employment laws, regulatory requirements and other governmental approvals, permits and licenses; • failure by us to obtain and maintain regulatory approvals for the use of our products in various countries; • rejection or qualification of foreign clinical trial data by the competent authorities of other countries; • additional potentially relevant third-party patent and other intellectual property rights that may be necessary to develop and commercialize our products and drug candidates; • complexities and difficulties in obtaining, maintaining, enforcing and defending our patent and other intellectual property rights; • difficulties in staffing and managing foreign operations; • complexities associated with managing multiple payor reimbursement regimes, government payors or patient self-pay systems; • limits in our ability to penetrate international markets; • financial risks, such as longer payment cycles, difficulty collecting accounts receivable, the impact of local and regional financial crises on demand and payment for our products and exposure to foreign currency exchange rate fluctuations; • natural disasters; political and economic instability, including wars, terrorism and political unrest, including as a result of ongoing overseas conflicts; outbreak of disease; boycotts, curtailment of trade and other business restrictions and implementation of tariffs; 64 • certain expenses, including among others, expenses for travel, translation and insurance; and • regulatory and compliance risks that relate to anti-corruption compliance and record-keeping that may fall within the purview of the U.S.
It is possible that no further responses will be observed in other patients or that the observed responses in patients who received FLX475 and pembrolizumab were caused solely by the pembrolizumab administered to the patient and not by FLX475, or that the responses were spontaneous and unrelated to either FLX475 or pembrolizumab.
It is possible that no further responses will be observed in other patients or that the observed responses in patients who received tivumecirnon and pembrolizumab were caused solely by the pembrolizumab administered to the patient and not by tivumecirnon, or that the responses were spontaneous and unrelated to either tivumecirnon or pembrolizumab.
The market price for our common stock may be influenced by many factors, including the other risks described in this “Risk Factors” section and the following: • our ability to advance RPT193, FLX475 or other potential future drug candidates through clinical development; • results of our preclinical studies, non-clinical studies and clinical trials for our current and future drug candidates or those of our competitors or potential future partners; • regulatory or legal developments in the United States and other countries, especially changes in laws or regulations applicable to our products; • the success of competitive products or technologies; • introductions and announcements of new products by us, our future commercialization partners or our competitors, and the timing of these introductions or announcements; • actions taken by regulatory agencies with respect to our products, clinical trials, manufacturing process or sales and marketing terms; • actual or anticipated variations in our financial results or those of companies that are perceived to be similar to us; • the success of our efforts to acquire or in-license additional technologies, products or drug candidates; • developments concerning any future collaborations, including, but not limited to, those with our sources of manufacturing supply and our commercialization partners; • market conditions in the pharmaceutical and biotechnology sectors; • announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments; • developments, disputes or litigation matters concerning patents or other intellectual property rights, and our ability to obtain and maintain patent protection for our products; • our ability or inability to raise additional capital and the terms on which we raise it; • the recruitment or departure of key personnel; • changes in the structure of healthcare payment systems; • actual or anticipated changes in earnings estimates or changes in securities analyst recommendations regarding our common stock, other comparable companies or our industry generally; • our failure or the failure of our competitors to meet securities analysts’ projections or guidance that we or our competitors may give to the market; • fluctuations in the valuation of companies perceived by investors to be comparable to us; • announcement and expectation of additional financing efforts; • speculation in the press or investment community; • trading volume of our common stock; • sales of our common stock by us or our stockholders, including after the expiration of the lockup agreements entered into in connection with our public offerings; • the concentrated ownership of our common stock; • changes in accounting principles; 90 • terrorist acts, acts of war or periods of widespread civil unrest, including as a result of the conflict between Russia and Ukraine; • natural disasters, medical epidemics, pandemics and other calamities; and • general economic, industry and market conditions.
The market price for our common stock may be influenced by many factors, including the other risks described in this “Risk Factors” section and the following: • our ability to advance zelnecirnon, tivumecirnon or other potential future drug candidates through clinical development; • results of our preclinical studies, non-clinical studies and clinical trials for our current and future drug candidates or those of our competitors or potential future partners; • regulatory or legal developments in the United States and other countries, especially changes in laws or regulations applicable to our products; • the success of competitive products or technologies; • introductions and announcements of new products by us, our future commercialization partners or our competitors, and the timing of these introductions or announcements; • actions taken by regulatory agencies with respect to our products, clinical trials, manufacturing process or sales and marketing terms; • actual or anticipated variations in our financial results or those of companies that are perceived to be similar to us; • the success of our efforts to acquire or in-license additional technologies, products or drug candidates; • developments concerning any future collaborations, including, but not limited to, those with our sources of manufacturing supply and our commercialization partners; • market conditions in the pharmaceutical and biotechnology sectors; • announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments; • developments, disputes or litigation matters concerning patents or other intellectual property rights, and our ability to obtain and maintain patent protection for our products; • our ability or inability to raise additional capital and the terms on which we raise it; • the recruitment or departure of key personnel; • changes in the structure of healthcare payment systems; • actual or anticipated changes in earnings estimates or changes in securities analyst recommendations regarding our common stock, other comparable companies or our industry generally; • our failure or the failure of our competitors to meet securities analysts’ projections or guidance that we or our competitors may give to the market; • fluctuations in the valuation of companies perceived by investors to be comparable to us; 93 • announcement and expectation of additional financing efforts; • speculation in the press or investment community; • trading volume of our common stock; • sales of our common stock by us or our stockholders, including after the expiration of the lockup agreements entered into in connection with our public offerings; • the concentrated ownership of our common stock; • changes in accounting principles; • terrorist acts, acts of war or periods of widespread civil unrest, including as a result of ongoing overseas conflicts; • natural disasters, medical epidemics, pandemics and other calamities; and • general economic, industry and market conditions.
If we or a third party upon whom we rely experience a security incident or are perceived to have experienced a security incident, we may experience adverse consequences, such as government enforcement actions (for example, investigations, fines, penalties, audits and inspections); additional reporting requirements and/or oversight; restrictions on processing sensitive data (including personal data); litigation (including class claims); indemnification obligations; negative publicity; reputational harm; disputes with physicians, patients and our partners ; monetary fund diversions; interruptions in our operations (including availability of data and interruptions and delays in our research and development work; financial loss; and other similar harms.
If we or a third party we rely on experiences a security incident or is perceived to have experienced a security incident, we may experience adverse consequences such as: government enforcement actions (for example, investigations, fines, penalties, audits and inspections); additional reporting requirements and/or oversight; restrictions on processing sensitive data (including personal data); litigation (including class claims); indemnification obligations; negative publicity; reputational harm; disputes with physicians, patients and our partners; monetary fund diversions; interruptions in our operations (including availability of data and interruptions and delays in our research and development work; financial loss and other similar harms.
Part of our drug development strategy is to clinically test and seek regulatory approval for our drug candidates in indications in which we believe there is the most evidence that we will be able to quickly generate PoC data. We then intend to expand clinical testing and seek regulatory approvals in other indications within oncology and inflammatory diseases.
Part of our drug development strategy is to clinically test and seek regulatory approval for our drug candidates in indications in which we believe there is the most evidence that we will be able to quickly generate proof of concept data. We then intend to expand clinical testing and seek regulatory approvals in other indications within oncology and inflammatory diseases.
Any of the previously identified or similar threats could cause a security incident or other interruption that could result in unauthorized, unlawful or accidental acquisition, modification, destruction, loss, alteration, encryption, disclosure of, or access to, our sensitive data or our information technology systems or those of the third parties upon whom we rely.
Any of the previously identified or similar threats could cause a security incident or other interruption that could result in unauthorized, unlawful or accidental acquisition, modification, destruction, loss, alteration, encryption, disclosure of, or access to, our sensitive data or our information technology systems or those of the third parties we rely on.
Additionally, companies that transfer personal information out of the EEA and UK to other jurisdictions, particularly to the United States, are subject to increased scrutiny from regulators, individual litigants and activities groups.
Additionally, companies that transfer personal data out of the EEA and UK to other jurisdictions, particularly to the United States, are subject to increased scrutiny from regulators, individual litigants and activities groups.
Furthermore, inflation rates, particularly in the United States and the U.K., have increased recently to levels not seen in decades. Increased inflation may result in increased operating costs (including labor costs) and may affect our operating budgets. In addition, the U.S. Federal Reserve has raised, and is expected to further raise, interest rates in response to concerns about inflation.
Furthermore, inflation rates, particularly in the United States and the U.K., have increased to levels not seen in decades. Increased inflation may result in increased operating costs (including labor costs) and may affect our operating budgets. In addition, the U.S. Federal Reserve has raised, and may further raise, interest rates in response to concerns about inflation.
Any regulatory approvals that we or potential future partners obtain for RPT193, FLX475 or other future drug candidates may also be subject to limitations on the approved indicated uses for which a product may be marketed or to the conditions of approval, or contain requirements for potentially costly post-marketing testing, including “Phase 4” clinical trials, and surveillance to monitor the safety and efficacy of such drug candidate.
Any regulatory approvals that we or potential future partners obtain for zelnecirnon, tivumecirnon or other future drug candidates may also be subject to limitations on the approved indicated uses for which a product may be marketed or to the conditions of approval, or contain requirements for potentially costly post-marketing testing, including “Phase 4” clinical trials, and surveillance to monitor the safety and efficacy of such drug candidate.
We also rely on third-party service providers to provide other products, services, parts or otherwise to operate our business. Our ability to monitor these third parties’ information security practices is limited, and these third parties may not have adequate information security measures in place.
We also rely on third parties to provide other products, services, parts or otherwise to operate our business. Our ability to monitor these third parties’ information security practices is limited, and these third parties may not have adequate information security measures in place.
If our information technology systems or data, or those of third parties upon which we rely, are or were compromised, we could experience adverse consequences resulting from such compromise, including but not limited to regulatory investigations or actions; litigation; fines and penalties; disruptions of our business operations; reputational harm; loss of revenue or profits; and other adverse consequences.
If our information technology systems (or those of the third parties we rely on) or our data are or were compromised, we could experience adverse consequences resulting from such compromise, including but not limited to regulatory investigations or actions, litigation, fines and penalties, disruptions of our business operations, reputational harm, loss of revenue or profits and other adverse consequences.
In the ordinary course of business, we and the third parties upon whom we rely process sensitive data, and, as a result, we and the third parties upon whom we rely face a variety of evolving threats, including but not limited to ransomware attacks, which could cause security incidents.
In the ordinary course of business, we and the third parties we rely on process sensitive data. As a result, we and the third parties we rely on face a variety of evolving threats, including but not limited to ransomware attacks, which could cause security incidents.
If these policies or statements are found to be deceptive, unfair, deficient, lacking in transparency or misrepresentative of our practices, we may be subject to investigation, enforcement actions by regulators or other adverse consequences. Obligations related to data privacy and security are quickly changing, becoming increasingly stringent and creating regulatory uncertainty.
If these policies, materials or statements are found to be deceptive, unfair, deficient, lacking in transparency or misrepresentative of our practices, we may be subject to investigation, enforcement actions by regulators or other adverse consequences. Obligations related to data privacy and security (and consumers’ data privacy expectations) are quickly changing, becoming increasingly stringent and creating uncertainty.
Accordingly, you should consider our prospects in light of the costs, uncertainties, delays and difficulties frequently encountered by clinical and preclinical stage biopharmaceutical companies such as ours. FLX475 is currently undergoing clinical development and testing as a single agent and in combination with pembrolizumab (supplied by Merck under our existing collaboration agreement).
Accordingly, you should consider our prospects in light of the costs, uncertainties, delays and difficulties frequently encountered by clinical and preclinical stage therapeutics companies such as ours. Tivumecirnon is currently undergoing clinical development and testing as a single agent and in combination with pembrolizumab (supplied by Merck under our existing collaboration agreement).
We may be unable to prevent competitors from entering the market with a product that is similar to or the same as RPT193, FLX475 or other future drug candidates that emerge from our discovery program. The filing of a patent application or the issuance of a patent is not conclusive as to its ownership, inventorship, scope, patentability, validity or enforceability.
We may be unable to prevent competitors from entering the market with a product that is similar to or the same as zelnecirnon, tivumecirnon or other future drug candidates that emerge from our discovery program. The filing of a patent application or the issuance of a patent is not conclusive as to its ownership, inventorship, scope, patentability, validity or enforceability.
On January 2, 2013, the American Taxpayer Relief Act of 2012 was signed into law, which, among other things, further reduced Medicare payments to several types of providers. Additionally, there has been heightened governmental scrutiny recently over the manner in which manufacturers set prices for their marketed products.
In January 2013, the American Taxpayer Relief Act of 2012 was signed into law which, among other things, further reduced Medicare payments to several types of providers. 81 Additionally, there has been heightened governmental scrutiny over the manner in which manufacturers set prices for their marketed products.
We are subject to stringent and evolving U.S. and foreign laws, regulations, rules, policies and contractual and other obligations related to data privacy and security.
We are subject to stringent and evolving U.S. and foreign laws, regulations and rules, contractual obligations, industry standards, policies and other obligations related to data privacy and security.
Because we have limited financial and managerial resources, we intend to prioritize our efforts on specific research and development programs, including clinical development of RPT193, FLX475 or other future drug candidates. As a result, we may forgo or delay pursuit of other opportunities, including with potential future drug candidates that later prove to have greater commercial potential.
Because we have limited financial and managerial resources, we intend to prioritize our efforts on specific research and development programs, including clinical development of zelnecirnon, tivumecirnon or other future drug candidates. As a result, we may forgo or delay pursuit of other opportunities, including with potential future drug candidates that later prove to have greater commercial potential.
Our understanding of the number of people who suffer from certain types of inflammatory disease and cancers that RPT193 and FLX475, respectively, may have the potential to treat is based on estimates. These estimates may prove to be incorrect, and new studies may demonstrate or suggest a lower estimated incidence or prevalence of these diseases.
Our understanding of the number of people who suffer from certain types of inflammatory disease and cancers that zelnecirnon and tivumecirnon, respectively, may have the potential to treat is based on estimates. These estimates may prove to be incorrect, and new studies may demonstrate or suggest a lower estimated incidence or prevalence of these diseases.
RPT193 and FLX475 are in clinical development, which may fail or suffer delays that materially and adversely affect their commercial viability. We have no products on the market or that have gained regulatory approval. Other than RPT193 and FLX475, none of our drug candidates has ever been tested in humans.
Zelnecirnon and tivumecirnon are in clinical development, which may fail or suffer delays that materially and adversely affect their commercial viability. We have no products on the market or that have gained regulatory approval. Other than zelnecirnon and tivumecirnon, none of our drug candidates has ever been tested in humans.
In addition, the government may assert that a claim including items and services resulting from a referral made in violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the False Claims Act; • HIPAA, which imposes criminal and civil liability for executing a scheme to defraud any healthcare benefit program, or knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement in connection with the delivery of, or payment for, healthcare benefits, items or services.
In addition, the government may assert that a claim including items and services resulting from a referral made in violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the False Claims Act; • the Health Insurance Portability and Accountability Act (“HIPAA”) which imposes criminal and civil liability for executing a scheme to defraud any healthcare benefit program, or knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement in connection with the delivery of, or payment for, healthcare benefits, items or services.
Cyber-attacks, malicious internet-based activity, online and offline fraud and other similar activities threaten the confidentiality, integrity and availability of our sensitive data and information technology systems, and those of the third parties upon whom we rely.
Cyber-attacks, malicious internet-based activity, online and offline fraud and other similar activities threaten the confidentiality, integrity and availability of our sensitive data and information technology systems, and those of the third parties we rely on.
The significant concentration of stock ownership may adversely affect the trading price of our common stock due to investors’ perception that conflicts of interest may exist or arise. We are an “emerging growth company” and our election of reduced reporting requirements applicable to emerging growth companies may make our common stock less attractive to investors.
The significant concentration of stock ownership may adversely affect the trading price of our common stock due to investors’ perception that conflicts of interest may exist or arise. We are an “emerging growth company” and a “smaller reporting company” and our election of reduced reporting requirements applicable to such companies may make our common stock less attractive to investors.
We rely on third-party service providers and technologies to operate critical business systems to process sensitive data in a variety of contexts, including, without limitation, cloud-based infrastructure, data center facilities, clinical trials, drug discovery and development, encryption and authentication technology, employee email and other functions.
We rely on third parties and technologies to operate critical business systems to process sensitive data in a variety of contexts, including, without limitation, cloud-based infrastructure, data center facilities, clinical trials, drug discovery and development, encryption and authentication technology, employee email and other functions.
The timing and amount of our operating expenditures will depend largely on: • the timing and progress of preclinical and clinical development activities; • the timing and progress of the advancement of our drug discovery and development engine; • the price and pricing structure that we are able to obtain from our third-party contract manufacturers to manufacture our preclinical study and clinical trial materials and supplies; 55 • the number and scope of preclinical and clinical programs we decide to pursue; • our ability to maintain our current licenses, collaboration and research and development programs, including the continued agreement of Merck to supply pembrolizumab to us for use in our clinical trials; • our ability to establish new collaborations; • the progress of the development efforts of parties with whom we may in the future enter into collaboration and research and development agreements; • the costs involved in obtaining, maintaining, enforcing and defending patents and other intellectual property rights; • the cost and timing of regulatory approvals; and • our efforts to enhance operational systems, secure sufficient laboratory space and hire additional personnel, including personnel to support development of our drug candidates and satisfy our obligations as a public company.
The timing and amount of our operating expenditures will depend largely on: • the timing and progress of preclinical and clinical development activities; • the timing and progress of the advancement of our drug discovery and development engine, including our ability to address the issues resulting in the clinical hold in a timely manner or at all; • the price and pricing structure that we are able to obtain from our third-party contract manufacturers to manufacture our preclinical study and clinical trial materials and supplies; • the number and scope of preclinical and clinical programs we decide to pursue; • our ability to maintain our current licenses, collaboration and research and development programs, including the continued agreement of Merck to supply pembrolizumab to us for use in our clinical trials; • our ability to establish new collaborations; • the progress of the development efforts of parties with whom we may in the future enter into collaboration and research and development agreements; • the costs involved in obtaining, maintaining, enforcing and defending patents and other intellectual property rights; 56 • the cost and timing of regulatory approvals; and • our efforts to enhance operational systems, secure sufficient laboratory space and hire additional personnel, including personnel to support development of our drug candidates and satisfy our obligations as a public company.
In addition, if the FDA or other regulatory authority approves RPT193, FLX475 or other future drug candidates, the manufacturing processes, labeling, packaging, distribution, adverse event reporting, storage, import, export, advertising, promotion and recordkeeping for such product will be subject to extensive and ongoing regulatory requirements.
In addition, if the FDA or other regulatory authority approves zelnecirnon, tivumecirnon or other future drug candidates, the manufacturing processes, labeling, packaging, distribution, adverse event reporting, storage, import, export, advertising, promotion and recordkeeping for such product will be subject to extensive and ongoing regulatory requirements.
RPT193, FLX475 and other future drug candidates are and will be subject to extensive governmental regulations relating to, among other things, research, testing, development, manufacturing, safety, efficacy, approval, recordkeeping, reporting, labeling, storage, packaging, advertising and promotion, pricing, marketing and distribution of drugs and therapeutic biologics.
Zelnecirnon, tivumecirnon and other future drug candidates are and will be subject to extensive governmental regulations relating to, among other things, research, testing, development, manufacturing, safety, efficacy, approval, recordkeeping, reporting, labeling, storage, packaging, advertising and promotion, pricing, marketing and distribution of drugs and therapeutic biologics.
Under the Tax Act, as modified by the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), signed into law on March 27, 2020, federal NOLs arising in tax years beginning after December 31, 2017 may be carried forward indefinitely, but the deductibility of such federal NOLs may be limited to 80% of current year taxable income.
Under the Tax Cuts and Jobs Act (the “Tax Act”), as modified by the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) signed into law in March 2020, federal NOLs arising in tax years beginning after December 31, 2017 may be carried forward indefinitely, but the deductibility of such federal NOLs may be limited to 80% of current year taxable income.
If RPT193, FLX475 or any other future drug candidate is eventually approved, it will compete with a range of treatments that are either in development or currently marketed. Many of our competitors have significantly greater financial, technical, manufacturing, marketing, sales and supply resources or experience than we do.
If zelnecirnon, tivumecirnon or any other future drug candidate is eventually approved, it will compete with a range of treatments that are either in development or currently marketed. 62 Many of our competitors have significantly greater financial, technical, manufacturing, marketing, sales and supply resources or experience than we do.
Although we (i) have successfully completed preclinical studies for RPT193 and FLX475, (ii) have successfully completed a Phase 1a/1b trial of RPT193 in healthy volunteers and patients with AD and a Phase 1 clinical trial with healthy volunteers for FLX475 and (iii) are conducting a Phase 2b trial of RPT193 in patients with AD and a Phase 1/2 clinical trial investigating FLX475 as a single agent and in combination with pembrolizumab in a broad range of tumors, more clinical trials are needed and there is no guarantee that the FDA will permit us to conduct additional clinical trials for RPT193, FLX475 or any other potential drug candidates.
Although we (i) have successfully completed preclinical studies for zelnecirnon and tivumecirnon, (ii) have successfully completed a Phase 1a/1b trial of zelnecirnon in healthy volunteers and patients with AD and a Phase 1 clinical trial with healthy volunteers for tivumecirnon and (iii) are conducting a Phase 2b trial of zelnecirnon in patients with AD, a Phase 2a trial of zelnecirnon in patients with asthma and a Phase 1/2 clinical trial investigating tivumecirnon as a single agent and in combination with pembrolizumab in a range of tumors, more clinical trials are needed and there is no guarantee that the FDA will permit us to conduct additional clinical trials for zelnecirnon, tivumecirnon or any other potential drug candidates.
Further, we cannot be certain of the timely completion or outcome of our clinical trials and cannot predict if the FDA or other regulatory authorities will accept our proposed clinical programs, or if the outcome of our preclinical studies or clinical trials will ultimately support the further development of RPT193, FLX475 or any other potential drug candidates.
Further, we cannot be certain of the timely completion or outcome of our clinical trials and cannot predict if the FDA or other regulatory authorities will accept our proposed clinical programs, or if the outcome of our preclinical studies or clinical trials will ultimately support the further development of zelnecirnon, tivumecirnon or any other potential drug candidates.
Undesirable side effects caused by RPT193, FLX475 or any other potential future drug candidate could cause regulatory authorities to interrupt, delay or halt clinical trials and could result in a more restrictive label or the delay or denial of regulatory approval by the FDA or other regulatory authorities.
Undesirable side effects caused by zelnecirnon, tivumecirnon or any other potential future drug candidate could cause regulatory authorities to interrupt, delay or halt clinical trials and could result in a more restrictive label or the delay or denial of regulatory approval by the FDA or other regulatory authorities.

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Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeMine Saf ety Disclosures. Not applicable. 100 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeItem 5. Market for Registrant’s Common Equity, Related Stoc kholder Matters and Issuer Purchases of Equity Securities. Market Information Our common stock began trading on the Nasdaq Global Market under the symbol “RAPT” on October 31, 2019. Holders of Record As of the close of business on March 8, 2023, there were 35 stockholders of record of our common stock.
Biggest changeItem 5. Market for Registrant’s Common Equity, Related Stoc kholder Matters and Issuer Purchases of Equity Securities. Market Information Our common stock began trading on the Nasdaq Global Market under the symbol “RAPT” on October 31, 2019. Holders of Record As of the close of business on March 4, 2024, there were 33 stockholders of record of our common stock.
Issuer Purchases of Equity Securities None. 96 Ite m 6. [Reserved] 97
Issuer Purchases of Equity Securities None. 101 Ite m 6. [Reserved] 102

Item 7. Management's Discussion & Analysis

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

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Biggest changeRecent Accounting Pronouncements See Note 2 to our consolidated financial statements included in Part II, Item 8, “Financial Statements and Supplementary Data,” of this Annual Report on Form 10-K for a description of recent accounting pronouncements applicable to our business. 103 Results of Operations Comparison of the Years Ended December 31, 2022 and 2021 The following table summarizes our results of operations for the periods indicated (in thousands): Year Ended December 31, 2022 2021 $ Change % Change Revenue $ 1,527 $ 3,813 $ (2,286 ) (60 )% Operating expenses: Research and development 67,082 56,985 10,097 18 % General and administrative 20,240 16,037 4,203 26 % Total operating expenses 87,322 73,022 14,300 20 % Loss from operations (85,795 ) (69,209 ) (16,586 ) 24 % Other income, net 1,957 5 1,952 * Net loss $ (83,838 ) $ (69,204 ) $ (14,634 ) 21 % *: Percentage not meaningful Revenue Revenue for the year ended December 31, 2022 and 2021 was $1.5 million and $3.8 million, respectively, and was entirely related to revenue recognized pursuant to the Hanmi Agreement.
Biggest changeResults of Operations Comparison of the Years Ended December 31, 2023 and 2022 The following table summarizes our results of operations for the periods indicated (in thousands): Year Ended December 31, 2023 2022 $ Change % Change Revenue $ — $ 1,527 $ (1,527 ) (100 )% Operating expenses: Research and development 101,002 67,082 33,920 51 % General and administrative 26,060 20,240 5,820 29 % Total operating expenses 127,062 87,322 39,740 46 % Loss from operations (127,062 ) (85,795 ) (41,267 ) 48 % Other income, net 10,264 1,957 8,307 424 % Net loss $ (116,798 ) $ (83,838 ) $ (32,960 ) 39 % Revenue We did not recognize any revenue for the year ended December 31, 2023 and recognized $1.5 million for the year ended December 31, 2022, pursuant to the Hanmi Agreement as the performance obligations were substantially completed during the second quarter of 2022.
Investing Activities Cash used in investing activities was $45.5 million for the year ended December 31, 2022, primarily for the purchase of marketable securities for $190.9 million and purchase of property and equipment of $0.8 million, offset by the proceeds from maturities of marketable securities of $146.2 million.
Cash used in investing activities was $45.5 million for the year ended December 31, 2022, primarily for the purchase of marketable securities for $190.9 million and purchase of property and equipment of $0.8 million, offset by the proceeds from maturities of marketable securities of $146.2 million.
We do not expect to generate product revenue unless and until we obtain approval for the commercialization of a drug candidate, and we cannot assure you that we will ever generate significant product revenue or profits. 98 Since inception, we have financed our operations primarily through the sale of equity securities.
We do not expect to generate product revenue unless and until we obtain approval for the commercialization of a drug candidate, and we cannot assure you that we will ever generate significant product revenue or profits. Since inception, we have financed our operations primarily through the sale of equity securities.
We believe our current cash and cash equivalents and marketable securities will be sufficient to fund our anticipated level of operations through at least the next 12 months following the filing date of this report. 105 We will continue to require additional capital to develop our drug candidates and fund operations for the foreseeable future.
We believe our current cash and cash equivalents and marketable securities will be sufficient to fund our anticipated level of operations through at least the next 12 months following the filing date of this report. We will continue to require additional capital to develop our drug candidates and fund operations for the foreseeable future.
The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, as well as the reported expenses 100 incurred during the reporting periods.
The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, as well as the reported expenses incurred during the reporting periods.
Overview We are a clinical-stage immunology-based biopharmaceutical company focused on discovering, developing and commercializing oral small molecule therapies for patients with significant unmet needs in inflammatory diseases and oncology. Utilizing our proprietary drug discovery and development engine, we are developing highly selective small molecules designed to modulate the critical immune responses underlying these diseases.
Overview We are a clinical stage immunology-based therapeutics company focused on discovering, developing and commercializing oral small molecule therapies for patients with significant unmet needs in inflammatory diseases and oncology. Utilizing our proprietary drug discovery and development engine, we are developing highly selective small molecules designed to modulate the critical immune responses underlying these diseases.
We use information we receive from internal personnel and outside service providers to estimate the progress of services performed and the associated clinical trial costs incurred, which have inherent uncertainties and involve significant judgement. Stock-Based Compensation Expense We account for stock-based compensation arrangements with employees and non-employees in accordance with Accounting Standards Codification (“ASC”) 718, Stock Compensation .
We use information we receive from internal personnel and outside service providers to estimate the progress of services performed and the associated clinical trial costs incurred, which have inherent uncertainties and involve significant judgment. Stock-Based Compensation Expense We account for stock-based compensation arrangements with employees and non-employees in accordance with Accounting Standards Codification (“ASC”) 718, Stock Compensation .
We account for non-refundable advance payments for goods or services that will be used in future research and development activities as expenses when the goods have been received or when the service have been performed rather than when the payment is made. 99 Clinical trial costs are a component of research and development expenses.
We account for non-refundable advance payments for goods or services that will be used in future research and development activities as expenses when the goods have been received or when the service has been performed rather than when the payment is made. Clinical trial costs are a component of research and development expenses.
We use information received from internal personnel and outside service providers to estimate the clinical trial costs incurred.
We use information received from our personnel and outside service providers to estimate the clinical trial costs incurred.
We expect our research and development expenses to increase substantially during the next few years as we seek to complete existing and initiate additional clinical trials, pursue regulatory approval of RPT193 and FLX475 and advance other programs into clinical development.
We expect our research and development expenses to increase substantially during the next few years as we seek to complete existing and initiate additional clinical trials, pursue regulatory approval of zelnecirnon and tivumecirnon and advance other programs into clinical development.
We expect our research and development expenses to increase substantially during the next few years as we seek to complete existing and initiate additional clinical trials, pursue regulatory approval of RPT193 and FLX475 and advance other programs into the clinic.
We expect our research and development expenses to increase 109 substantially during the next few years as we seek to complete existing and initiate additional clinical trials, pursue regulatory approval of zelnecirnon and tivumecirnon and advance other programs into the clinic.
However, we do not track our internal research and development costs by drug candidate, as the related efforts and their costs are typically spread across multiple drug candidates.
We track the external research and development costs incurred for each of our drug candidates. However, we do not track our internal research and development costs by drug candidate, as the related efforts and their costs are typically spread across multiple drug candidates.
These inputs are subjective and generally require significant analysis and judgment to develop. These inputs are: Expected term – The expected term represents the period that our stock-based awards granted is expected to be outstanding and is determined using the simplified method (based on the mid-point between the vesting date and the end of the contractual term).
These inputs are: Expected term – The expected term represents the period that our stock-based awards granted is expected to be outstanding and is determined using the simplified method (based on the mid-point between the vesting date and the end of the contractual term).
JOBS Act Accounting Election The Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), permits an “emerging growth company” such as us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies.
Emerging Growth Company Status and Smaller Reporting Company Status The Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), permits an “emerging growth company” such as us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies.
The increase in research and development expenses was primarily due to an increase of $6.4 million in development expenses relating to RPT193, an increase of $1.0 million in development expenses relating to other early stage programs, an increase of $3.8 million in personnel and other costs and an increase of $0.4 million in laboratory supplies and other expenses, partially offset by a decrease of $1.4 million in development expenses relating to FLX475, a decrease of $0.1 million in facilities costs and a decrease of $0.1 million in stock-based compensation expense.
The increase in research and development expenses was primarily due to an increase of $23.6 million in development expenses relating to zelnecirnon, an increase of $7.0 million in personnel and other costs, an increase of $2.7 million in stock-based compensation expense, an increase of $2.0 million in laboratory supplies and other expenses, an increase of $1.8 million in facilities costs and an increase of $1.4 million in consulting expenses, partially offset by a decrease of $4.1 million in development expenses relating to tivumecirnon and a decrease of $0.4 million in development expenses relating to other early stage programs.
During the years ended December 31, 2022 and 2021, we sold 209,349 and 214,971 shares of our common stock in “at the market” offerings pursuant to the ATM Sales Agreement, for net proceeds of $5.0 million and $4.7 million, respectively, after deducting commissions and other offering related costs.
During the year ended December 31, 2022, we sold 209,349 shares of our common stock in “at the market” offerings pursuant to the Prior ATM Sales Agreement, for net proceeds of $5.0 million, after deducting commissions and other offering related costs.
If the disruptions and slowdown deepen or persist, we may not be able to access additional capital on favorable terms, or at all, which could in the future negatively affect our ability to pursue our business strategy. See “Risk Factors” for additional risks associated with our substantial capital requirements.
If the disruptions and slowdown deepen or persist, we may not be able to access additional capital on favorable terms, or at all, which could in the future negatively affect our ability to pursue our business strategy.
We may also be required to sell or license to other parties rights to develop or commercialize our drug candidates that we would prefer to retain. Components of Operating Results Revenue Revenue recognized during the periods presented relate to the Collaboration and License Agreement (the “Hanmi Agreement”) that we entered into with Hanmi Pharmaceutical Ltd. (“Hanmi”) in December 2019.
We may also be required to sell or license to other parties rights to develop or commercialize our drug candidates that we would prefer to retain. Components of Operating Results Revenue Revenue recognized during the prior year periods presented relates to the Hanmi Agreement that we entered into with Hanmi in December 2019.
For stock-based awards with performance-based vesting, the fair value of the award is recognized as expense when the achievement of the associated performance criteria becomes probable, using an accelerated attribution method. For both time-based and performance-based stock-based awards, stock-based compensation expense is recognized based on the fair value determined on the date of grant.
For stock-based awards with performance-based vesting, the fair value of the award is recognized as expense when the achievement of the associated performance criteria becomes probable, using an accelerated attribution method.
Financial Overview Since commencing operations in 2015, we have devoted substantially all of our efforts and financial resources to building our research and development capabilities and establishing our corporate infrastructure. As a result, we have incurred net losses since inception. As of December 31, 2022, we had an accumulated deficit of $367.9 million.
Financial Overview Since commencing operations in 2015, we have devoted substantially all of our efforts and financial resources to building our research and development capabilities and establishing our corporate infrastructure. As a result, we have incurred net losses since inception.
We anticipate that we will need to raise substantial additional capital, the requirements of which will depend on many factors, including: • the scope, rate of progress and costs of our drug discovery, preclinical development activities, laboratory testing and clinical trials for our drug candidates; • the number and scope of clinical programs we decide to pursue; • the scope and costs of manufacturing development and commercial manufacturing activities; • the extent to which we acquire or in-license other drug candidates and technologies; • the cost, timing and outcome of regulatory review of our drug candidates; • the cost and timing of establishing sales and marketing capabilities, if any of our drug candidates receive marketing approval; • the costs of preparing, filing and prosecuting patent applications, obtaining, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims; • our ability to establish and maintain collaborations on favorable terms, if at all; • our efforts to enhance operational systems and our ability to attract, hire and retain qualified personnel, including personnel to support the development of our drug candidates; • the costs associated with being a public company; and • the cost associated with commercializing our drug candidates if they receive marketing approval. 106 Additionally, while the long-term economic impact of either the COVID-19 pandemic or the conflict between Russia and Ukraine is difficult to assess or predict, each of these events has caused significant disruptions to the global financial markets and contributed to a general global economic slowdown.
We anticipate that we will need to raise substantial additional capital, the requirements of which will depend on many factors, including: • the scope, rate of progress and costs of our drug discovery, preclinical development activities, laboratory testing and clinical trials for our drug candidates; • the number and scope of clinical programs we decide to pursue; • the scope and costs of manufacturing development and commercial manufacturing activities; • the extent to which we acquire or in-license other drug candidates and technologies; • the cost, timing and outcome of regulatory review of our drug candidates; • the cost and timing of establishing sales and marketing capabilities, if any of our drug candidates receive marketing approval; • the costs of preparing, filing and prosecuting patent applications, obtaining, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims; • our ability to establish and maintain collaborations on favorable terms, if at all; • our efforts to enhance operational systems and our ability to attract, hire and retain qualified personnel, including personnel to support the development of our drug candidates; • the costs associated with being a public company; and • the cost associated with commercializing our drug candidates if they receive marketing approval.
Summary Consolidated Statements of Cash Flows The following table sets forth the primary sources and uses of cash and cash equivalents for each of the periods presented below (in thousands): Year Ended December 31, 2022 2021 Net cash (used in) provided by: Operating activities $ (70,771 ) $ (61,026 ) Investing activities (45,490 ) (81,347 ) Financing activities 131,180 141,482 Net increase (decrease) in cash and cash equivalents $ 14,919 $ (891 ) Operating Activities Net cash used in operating activities was $70.8 million for the year ended December 31, 2022, reflecting a net loss of $83.8 million and net cash used by changes in operating assets and liabilities of $1.4 million partially offset by non-cash charges for primarily depreciation, amortization, stock-based compensation expense and non-cash lease expense totaling $14.4 million.
Summary Consolidated Statements of Cash Flows The following table sets forth the primary sources and uses of cash and cash equivalents for each of the periods presented below (in thousands): Year Ended December 31, 2023 2022 Net cash (used in) provided by: Operating activities $ (97,048 ) $ (70,771 ) Investing activities 104,133 (45,490 ) Financing activities 1,447 131,180 Net increase in cash and cash equivalents $ 8,532 $ 14,919 Operating Activities Net cash used in operating activities was $97.0 million for the year ended December 31, 2023, reflecting a net loss of $116.8 million, partially offset by net cash used by changes in operating assets and liabilities of $5.5 million and non-cash charges for primarily depreciation, amortization, stock-based compensation expense and non-cash lease expense totaling $14.3 million.
If we fail to raise capital or enter into such agreements as and when needed, we may have to significantly delay, scale back or discontinue the development and commercialization of our drug candidates or delay our efforts to expand our product pipeline.
Adequate funding may not be available to us on acceptable terms or at all. If we fail to raise capital or enter into such agreements as and when needed, we may have to significantly delay, scale back or discontinue the development and commercialization of our drug candidates or delay our efforts to expand our product pipeline.
If we raise additional funds by issuing equity securities, our stockholders may experience dilution. Any future debt financing may impose upon us covenants that restrict our operations, including limitations on our ability to incur liens or additional debt, pay dividends, repurchase our common stock, make certain investments and engage in certain merger, consolidation or asset sale transactions.
Any future debt financing may impose upon us covenants that restrict our operations, including limitations on our ability to incur liens or additional debt, pay dividends, repurchase our common stock, make certain investments and engage in certain merger, consolidation or asset sale transactions. Any equity or debt financing may contain terms that are not favorable to us or our stockholders.
The following is a comparison of research and development expenses for the years ended December 31, 2022 and 2021 (in thousands): Year Ended December 31, 2022 2021 External development expenses: FLX475 $ 14,179 $ 15,520 RPT193 14,816 8,393 Other Programs 3,007 2,021 Internal research and development expenses 35,080 31,051 Total research and development expenses $ 67,082 $ 56,985 104 As previously noted, we do not track our own internal research and development costs by drug candidate, as the related efforts and their costs are typically spread across multiple drug candidates and programs.
The following is a comparison of research and development expenses for the years ended December 31, 2023 and 2022 (in thousands): Year Ended December 31, 2023 2022 External development expenses: Zelnecirnon (RPT193) $ 38,410 $ 14,816 Tivumecirnon (FLX475) 10,123 14,179 Other programs 2,575 3,007 Internal research and development expenses 49,894 35,080 Total research and development expenses $ 101,002 $ 67,082 As previously noted, we do not track our own internal research and development costs by drug candidate, as the related efforts and their costs are typically spread across multiple drug candidates and programs.
Net cash used in operating activities was $61.0 million for the year ended December 31, 2021, reflecting a net loss of $69.2 million, net cash used by changes in operating assets and liabilities of $4.3 million partially offset by non-cash charges for primarily depreciation, amortization and stock-based compensation expense totaling $12.5 million.
Net cash used in operating activities was $70.8 million for the year ended December 31, 2022, reflecting a net loss of $83.8 million and net cash used by changes in operating assets and liabilities of $1.4 million partially offset by non-cash charges for primarily depreciation, amortization, stock-based compensation expense and non-cash lease expense totaling $14.4 million.
Milestone payments : If an agreement includes event-based or milestone payments, we evaluate whether the events or milestones are considered likely to be achieved and estimate the amount to be included in the transaction price using the most likely amount method.
We evaluate the measure of progress each reporting period and, if necessary, adjust the measure of performance and related revenue recognition. 106 Milestone payments : If an agreement includes event-based or milestone payments, we evaluate whether the events or milestones are considered likely to be achieved and estimate the amount to be included in the transaction price using the most likely amount method.
Increases in interest rates, especially if coupled with reduced government spending and volatility in financial markets, may further increase economic uncertainty and heighten these risks.
Federal Reserve has raised, and may further raise, interest rates in response to concerns about inflation. Increases in interest rates, especially if coupled with reduced government spending and volatility in financial markets, may further increase economic uncertainty and heighten these risks.
We anticipate that our general and administrative expenses will increase substantially during the next few years as a result of staff expansion and additional occupancy costs, as well as costs associated with being a public company, including higher professional fees for legal, consulting and accounting services, investor relations costs, higher insurance premiums and other compliance costs.
We anticipate that our general and administrative expenses will increase substantially during the next few years as a result of staff expansion and additional occupancy costs, as well as costs associated with being a public company, including higher professional fees for legal, consulting and accounting services, investor relations costs, higher insurance premiums and other compliance costs. 105 Other Income, Net Our cash and cash equivalents and marketable securities are invested in money market funds, corporate debt securities, commercial paper and U.S. government agency securities.
The increase was primarily due to an increase of $1.5 million in higher personnel and other costs, an increase of $1.3 million in stock-based compensation expense, an increase of $0.9 million in facilities costs and an increase of $0.5 million in professional fees.
The increase was primarily due to an increase of $2.8 million in higher personnel and other costs, an increase of $3.0 million in stock-based compensation expense and an increase of $0.3 million in professional fees, partially offset by a decrease of $0.3 million in facilities costs and other expenses.
On a long-term basis, we manage future cash requirements relative to our long-term business plans. Operating costs also relate to our building leases for our office and laboratory facilities expiring in 2025 through 2026 that contain rate escalations and options for us to extend the leases. Our future minimum lease payments as of December 31, 2022 were $10.4 million.
Operating costs also relate to our building leases for our office and laboratory facilities expiring in 2025 through 2026 that contain rate escalations and options for us to extend the leases. Our future minimum lease payments as of December 31, 2023 were $7.7 million.
Research and Development Expenses Research and development expenses increased $10.1 million, or 18%, to $67.1 million for the year ended December 31, 2022 from $57.0 million for the year ended December 31, 2021.
Research and Development Expenses Research and development expenses increased $33.9 million, or 51%, to $101.0 million for the year ended December 31, 2023 from $67.1 million for the year ended December 31, 2022.
General and Administrative Expenses General and administrative expenses increased $4.2 million, or 26%, to $20.2 million for the year ended December 31, 2022 from $16.0 million for the year ended December 31, 2021.
General and Administrative Expenses General and administrative expenses increased $5.8 million, or 29%, to $26.1 million for the year ended December 31, 2023 from $20.2 million for the year ended December 31, 2022.
Estimates of the fair value of stock-based awards as of the grant date using the Black-Scholes option pricing model are affected by assumptions regarding a number of complex variables. Changes in the assumptions can materially affect the fair value and ultimately how much stock-based compensation expense is recognized.
For both time-based and performance-based stock-based awards, stock-based compensation expense is recognized based on the fair value determined on the date of grant. 107 Estimates of the fair value of stock-based awards as of the grant date using the Black-Scholes option pricing model are affected by assumptions regarding a number of complex variables.
Additional capital will be needed to undertake these activities and we intend to raise such capital through the issuance of additional equity or debt, strategic alliances with other companies or other sources of financing.
In addition, we expect to incur substantial additional costs in order to conduct research and development activities necessary to develop and commercialize our drug candidates. Additional capital will be needed to undertake these activities and we intend to raise such capital through the issuance of additional equity or debt, strategic alliances with other companies or other sources of financing.
Until we can generate significant revenue from sales of our drug candidates, if ever, we expect to finance our operations through equity or debt financings or other capital sources, including potential collaborations with other companies, or other strategic transactions. Adequate funding may not be available to us on acceptable terms or at all.
We will need substantial additional funding to support our continuing operations and pursue our development strategy. Until we can generate significant revenue from sales of our drug candidates, if ever, we expect to finance our operations through equity or debt financings or other capital sources, including potential collaborations with other companies, or other strategic transactions.
Critical Accounting Policies, Significant Judgments and Use of Estimates Our consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”).
Other income, net, consists primarily of interest earned on our cash and cash equivalents and marketable securities and remeasurement gains and losses on foreign currency transactions. Critical Accounting Policies, Significant Judgments and Use of Estimates Our consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”).
The comparable companies were chosen based on their similar size, life cycle stage or area of specialty. Risk-Free Interest Rate – The risk-free interest rate is based on the U.S.
The comparable companies were chosen based on their similar size, life cycle stage or area of specialty. Risk-Free Interest Rate – The risk-free interest rate is based on the U.S. Treasury zero coupon issues in effect at the time of grant for periods corresponding with the expected term of the stock-based awards.
Pursuant to the Hanmi Agreement, we granted Hanmi an exclusive license to develop, manufacture and commercialize FLX475 and related compounds and products with respect to human cancers in the Republic of Korea, the Republic of China (Taiwan) and the People’s Republic of China, including the special administrative regions of Macau and Hong Kong (the “Hanmi Territory”), and certain sublicense rights.
Pursuant to the Hanmi Agreement, we granted Hanmi an exclusive license to develop, manufacture and commercialize tivumecirnon and related compounds and products with respect to human cancers in the Hanmi Territory, and certain sublicense rights.
As a result, if factors or expected outcomes change and we use significantly different assumptions or estimates, our equity-based compensation could be materially different. Income Taxes We provide for income taxes under the asset and liability method. Current income tax expense or benefit represents the amount of income taxes expected to be payable or refundable for the current year.
Income Taxes We provide for income taxes under the asset and liability method. Current income tax expense or benefit represents the amount of income taxes expected to be payable or refundable for the current year.
We have incurred net losses of $83.8 million and $69.2 million for the years ended December 31, 2022 and 2021, respectively.
As of December 31, 2023, we had an accumulated deficit of $484.7 million. 103 We have incurred net losses of $116.8 million and $83.8 million for the years ended December 31, 2023 and 2022, respectively.
Our ability to use our remaining NOLs may be further limited if we experience an ownership change as a result of future changes in our stock ownership.
Utilization of NOLs may be limited by the “ownership change” rules, as defined in Section 382 of the Internal Revenue Code. Similar rules may apply under state tax laws. Our ability to use our remaining NOLs may be further limited if we experience an ownership change as a result of future changes in our stock ownership.
Our cash equivalents and marketable securities consist of commercial paper, corporate bonds and U.S. government agency securities. Cash in excess of immediate requirements is invested in accordance with our investment policy, primarily with a view towards liquidity and capital preservation. Since inception, we have incurred net losses and negative cash flows from operations.
Cash in excess of immediate requirements is invested in accordance with our investment policy, primarily with a view towards liquidity and capital preservation. Since inception, we have incurred net losses and negative cash flows from operations. 110 As of December 31, 2023, we had an accumulated deficit of $484.7 million.
As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.
As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates. We may take advantage of these provisions until December 31, 2024. In addition, we are also a smaller reporting company as defined in the Exchange Act.
Cash used in investing activities was $81.3 million for the year ended December 31, 2021, primarily for the purchase of marketable securities for $164.9 million and purchase of property and equipment of $0.8 million, offset by the proceeds from maturities of marketable securities of $84.4 million. 107 Financing Activities Net cash provided by financing activities was $131.2 million for the year ended December 31, 2022, primarily from the $75.0 million in net proceeds from our 2022 Public Offering, $49.8 million from our sale of pre-funded warrants, $5.0 million in net proceeds from the sale of shares under the ATM Sales Agreement and $1.4 million in net proceeds from our employee stock plans.
Net cash provided by financing activities was $131.2 million for the year ended December 31, 2022, primarily from the $75.0 million in net proceeds from our 2022 Public Offering, $49.8 million from our sale of pre-funded warrants, $5.0 million in net proceeds from the sale of shares under the Prior ATM Sales Agreement and $1.4 million in net proceeds from our employee stock plans. 112 Material Cash Requirements Our material cash requirements in the short- and long-term consist of the following operational expenditures, a portion of which contain contractual or other obligations.
Specifically, in the near term, we expect to incur substantial expenses relating to our ongoing and planned clinical trials, the development and validation of our manufacturing processes and other development activities. We will need substantial additional funding to support our continuing operations and pursue our development strategy.
Specifically, in the near term, we expect to incur substantial expenses relating to our ongoing and planned clinical trials, including efforts to resolve the clinical hold on the Phase 2b trial of zelnecirnon in AD and our Phase 2a trial in asthma, the development and validation of our manufacturing processes and other development activities.
As of December 31, 2022 there was no remaining deferred revenue related to the Hanmi Agreement, as the performance obligations were substantially complete as of June 30, 2022. As of December 31, 2021, deferred revenue was $1.5 million on the consolidated balance sheet related to our license and collaboration agreement with Hanmi.
As of December 31, 2023, there was no remaining deferred revenue related to the Hanmi Agreement, as the performance obligations were substantially complete as of June 30, 2022. For the years ended December 31, 2023 and 2022, we recognized no revenue and $1.5 million, respectively. Research and Development Expenses Research and development costs are expensed as incurred.
Any equity or debt financing may contain terms that are not favorable to us or our stockholders. If we are unable to raise additional funds when needed, we may be required to delay, reduce or terminate some or all of our development programs and clinical trials.
If we are unable to raise additional funds when needed, we may be required to delay, reduce or terminate some or all of our development programs and clinical trials. We may also be required to sell or license to other parties rights to develop or commercialize our drug candidates that we would prefer to retain.
No serious adverse events were reported, and all adverse events reported were mild or moderate in intensity. In May 2022, we announced the initiation of our 16-week randomized, double-blind, placebo-controlled Phase 2b clinical trial to further evaluate the efficacy and safety of RPT193 as monotherapy in patients with moderate-to-severe AD.
We are conducting a 16-week randomized, double-blind, placebo-controlled Phase 2b clinical trial to further evaluate the efficacy and safety of zelnecirnon as monotherapy in patients with moderate-to-severe atopic dermatitis (“AD”).
Judgments concerning the recognition and measurement of a tax benefit might change as new information becomes available. As of December 31, 2022, our total deferred tax assets were $80.4 million. Due to our lack of earnings history and uncertainties surrounding our ability to generate future taxable income, the net deferred tax assets have been fully offset by a valuation allowance.
Due to our lack of earnings history and uncertainties surrounding our ability to generate future taxable income, the net deferred tax assets have been fully offset by a valuation allowance. The deferred tax assets were primarily comprised of federal and state tax net operating loss carryforwards (“NOLs”).
Net cash provided by financing activities was $141.5 million for the year ended December 31, 2021, primarily from the $134.8 million in net proceeds from our 2021 Public Offering, $4.7 million in net proceeds from the sale of shares under the ATM Sales Agreement and $2.0 million in net proceeds from our employee stock plans.
Financing Activities Net cash provided by financing activities was $1.4 million for the year ended December 31, 2023, from $1.4 million in net proceeds from our employee stock plans.
The fair value of each purchase under our employee stock purchase plan (“ESPP”) is estimated at the beginning of the offering period using the Black-Scholes option pricing model. Assumptions we used in applying the Black-Scholes option-pricing model to determine the estimated fair value of our stock options granted involve inherent uncertainties and the application of significant judgment.
Expected Dividend – We have never paid dividends on our common stock and have no plans to pay dividends on our common stock. Therefore, we use an expected dividend yield of zero. The fair value of each purchase under our employee stock purchase plan (“ESPP”) is estimated at the beginning of the offering period using the Black-Scholes option pricing model.
Other Income, Net Other income, net increased $2.0 million to $2.0 million for the year ended December 31, 2022 from $5,000 for the year ended December 31, 2021.
Other Income, Net Other income, net increased $8.2 million to $10.2 million for the year ended December 31, 2023 from $2.0 million for the year ended December 31, 2022. The increase was driven primarily by higher interest income due to higher interest rates from invested cash balances for the year ended December 31, 2023.
Our research and development expenses in 2022 were $67.1 million and we expect to increase our investment in research and development expenses in 2023. Our general and administrative expenses were $20.2 million in 2022 and we expect to increase our general and administrative expenses to support our business growth in 2023.
Our general and administrative expenses were $26.1 million in 2023 and we expect to increase our general and administrative expenses to support our business growth in 2024. On a long-term basis, we manage future cash requirements relative to our long-term business plans.
Material Cash Requirements Our material cash requirements in the short- and long-term consist of the following operational expenditures, a portion of which contain contractual or other obligations. Operating expenditures . Our primary uses of cash and operating expenses relate to paying employees and consultants, administering clinical trials and providing technology and facility infrastructure to support our operations.
Operating expenditures . Our primary uses of cash and operating expenses relate to paying employees and consultants, administering clinical trials and providing technology and facility infrastructure to support our operations. Our research and development expenses in 2023 were $101.0 million and we expect to increase our investment in research and development expenses in 2024.
Our two lead drug candidates each target C-C motif chemokine receptor 4 (“CCR4”), a drug target that potentially has broad applicability in inflammatory diseases and oncology. In June 2021, we announced positive topline results from our randomized placebo-controlled Phase 1b clinical trial of RPT193 as monotherapy in 31 patients with moderate-to-severe atopic dermatitis ( “ AD ” ).
Our two lead drug candidates, zelnecirnon (RPT193) and tivumecirnon (FLX475), each target C-C motif chemokine receptor 4 (“CCR4”), a drug target that potentially has broad applicability in inflammatory diseases and oncology.
The increase was driven primarily by higher interest income for the year ended December 31, 2022 partially offset by remeasurement losses related to foreign currency transactions for the year ended December 31, 2022. Liquidity and Capital Resources Since inception, we have financed our operations primarily through the sale of equity securities.
Liquidity and Capital Resources; Plan of Operations Since inception, we have financed our operations primarily through the sale of equity securities.
As of December 31, 2022, there was up to $85.7 million of shares of common stock available for future issuance under the ATM Sales Agreement. As of December 31, 2022, we had cash and cash equivalents and marketable securities of $249.1 million and working capital of $238.5 million.
No shares were sold under the Prior ATM Sales Agreement or the ATM Sales Agreement during the year ended December 31, 2023. As of December 31, 2023, there was up to $150 million in shares of common stock available for future issuance under the ATM Sales Agreement.
As of December 31, 2022, there was up to $85.7 million of shares of common stock available for future issuance under the ATM Sales Agreement. We had cash and cash equivalents and marketable securities of $249.1 million and working capital of $238.5 million as of December 31, 2022.
As of the date of filing of this report there were up to $140.6 million shares of common stock available for future issuance under the ATM Sales Agreement.
In December 2022, we reported data from Stage 1 of a Phase 2 combination cohort in patients with checkpoint inhibitor-naïve non-small cell lung cancer (“NSCLC”).
In November 2023, we announced safety and efficacy data from our Phase 2 trial of tivumecirnon in patients with advanced checkpoint-naïve non-small lung cancer (“NSCLC”). The trial evaluated tivumecirnon in combination with the anti-PD-1 checkpoint inhibitor pembrolizumab. In this cohort of NSCLC patients, 36 patients were evaluable for efficacy, of which 20 were PD-L1 positive (TPS ≥ 1%).
During the years ended December 31, 2022 and 2021, we sold 209,349 and 214,971 shares of common stock in “at the market” offerings pursuant to the Controlled Equity Offering SM Sales Agreement with Cantor Fitzgerald & Co. and Stifel, Nicolaus & Company, Incorporated (the “ATM Sales Agreement”), for net proceeds of $5.0 million and $4.7 million, respectively, after deducting commissions and other offering related costs.
During the period from January 1, 2024, through the date of filing of this Annual Report on Form 10-K, we sold 365,316 shares of common stock in “at the market” offerings pursuant to the ATM Sales Agreement, for net proceeds of $9.2 million, after deducting commissions and other offering related costs.
Research and Development Expenses We expense both internal and external research and development costs as such expenses are incurred. We track the external research and development costs incurred for each of our drug candidates.
We did not have any revenues after the second quarter of 2022, as all performance obligations under the Hanmi Agreement were substantially completed during that period. 104 Research and Development Expenses We expense both internal and external research and development costs as such expenses are incurred.
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After four weeks of treatment, patients who received RPT193 showed a 36.3% improvement from baseline in the Eczema Area and Severity Index ( “ EASI ” ) score, a standard measure of disease severity, compared to 17.0% in the placebo group.
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The Phase 2b study will compare three oral dose levels of zelnecirnon (50, 200 and 400 mg once daily) to placebo with a treatment duration of 16 weeks and will enroll approximately 67 patients in each of the four cohorts (three active and one placebo). That study continued to enroll throughout 2023.
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In the two-week period following the end of treatment, the RPT193 group showed continued improvement and further separation from placebo with a 53.2% improvement in the EASI score at the six-week time point compared to 9.6% in the placebo group. RPT193 was well tolerated in the Phase 1b study.
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In March 2023, we initiated a global 14-week randomized, double-blind, placebo-controlled Phase 2a clinical trial to evaluate the efficacy and safety of zelnecirnon as an oral, once-daily monotherapy in patients with moderate-to-severe asthma.
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A total of 13 patients were enrolled and the data showed a confirmed overall response rate of 31% (4/13 patients), including two responses that were ongoing for over one year as of the time of disclosure.
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The global multicenter Phase 2a trial will assess the efficacy and safety of zelnecirnon in adult patients with moderate-to-severe Type 2-high asthma whose disease is partially controlled by standard medications. The double-blind, placebo-controlled study will compare 400 mg once-daily zelnecirnon to placebo in approximately 100 patients randomized 1:1.
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Of the 13 patients, eight patients had PD-L1 positive tumors (TPS ≥1%), including two with PD-L1 high tumors (TPS ≥50%), four patients had PD-L1 negative tumors (TPS We also announced in late 2022 that we have decided not to move forward with development in nasopharyngeal cancer and checkpoint-naïve head and neck squamous cell carcinoma.
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The primary endpoint is the proportion of patients who meet criteria for a “Loss of Asthma Control” event, defined by changes in lung function, medication usage or significant clinical change indicating a severe exacerbation. On February 16, 2024, the U.S.
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In June 2021, we completed an underwritten public offering (the “2021 Public Offering”) of 4,356,060 shares of common stock at a public offering price of $33.00 per share and received approximately $134.8 million in net proceeds, after deducting underwriting discounts and other offering-related costs.
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Food and Drug Administration (“FDA”) verbally notified us that a clinical hold has been placed on our Phase 2b trial of zelnecirnon in AD and its Phase 2a trial in asthma.
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Other Income, Net Our cash and cash equivalents and marketable securities are invested in money market funds, corporate debt securities, commercial paper and U.S. government agency securities. Other income, net, consists primarily of interest earned on our cash and cash equivalents and marketable securities and remeasurement gains and losses on foreign currency transactions.
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The clinical hold determination was based on a serious adverse event of liver failure in one patient in the AD trial, the cause of which is currently unknown but has been characterized as potentially related to zelnecirnon. Dosing of zelnecirnon has been halted in both clinical trials, as has enrollment of new trial participants.
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We evaluate the measure of progress each reporting period and, if necessary, adjust the measure of performance and related revenue recognition.
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In this PD-L1 positive subset of patients, the combination of tivumecirnon and pembrolizumab showed a 45% (9/20) confirmed overall response rate. In addition, the median PFS for the 20 patients was 6.3 months, with several patients continuing on study. The combination of tivumecirnon and pembrolizumab was generally well tolerated in this Phase 2 NSCLC cohort.
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For the years ended December 31, 2022 and 2021, we recognized revenue of $1.5 million and $3.8 million, respectively. 101 Research and Development Expenses Research and development costs are expensed as incurred.
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Tivumecirnon has now been dosed in more than 300 patients with various advanced cancers and has been generally well tolerated; the combination with pembrolizumab has had no signal of increased immune-related toxicity over that expected with pembrolizumab alone.
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Treasury zero coupon issues in effect at the time of grant for periods corresponding with the expected term of the stock-based awards. 102 Expected Dividend – We have never paid dividends on our common stock and have no plans to pay dividends on our common stock. Therefore, we use an expected dividend yield of zero.
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As of December 31, 2023, we had cash and cash equivalents and marketable securities of $158.9 million and working capital of $139.9 million.

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