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What changed in Avidity Biosciences, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Avidity Biosciences, Inc.'s 2024 and 2025 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 2025 report.

+498 added−404 removedSource: 10-K (2026-02-23) vs 10-K (2025-02-27)

Top changes in Avidity Biosciences, Inc.'s 2025 10-K

498 paragraphs added · 404 removed · 322 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

112 edited+73 added−46 removed252 unchanged
Biggest changeAdditionally, this data demonstrated: ▪ Greater than 50% mean reductions in DUX4 regulated genes across multiple panels for DUX4 regulated gene expression in muscle. ▪ All participants treated with del-brax showed reductions greater than 20% in DUX4 regulated genes. ▪ Mean reductions of 25% or greater in novel circulating biomarker and creatine kinase. ▪ Trends of functional improvements including increased strength in upper and lower limb muscles, and muscle function as measured by reachable workspace (RWS) compared to placebo and the ReSolve natural history study. ▪ Trends of improvement in patient and clinician reported outcomes. ▪ Favorable safety and tolerability with all adverse events (AEs) mild or moderate, no serious adverse events and no discontinuations.
Biggest changeTopline del-brax data, compared to placebo, demonstrated: • Consistent improvement of functional mobility and muscle strength as measured by 10-Meter Walk-Run Test (10MWRT), Timed Up and Go (TUG) and Quantitative Muscle Testing (QMT) • Consistent improvement in multiple measures of quality of life as measured by patient reported outcomes; • Rapid and significant reductions in levels of KHDC1L or cDUX, a DUX4-regulated circulating biomarker, and creatine kinase, a biomarker of muscle damage; and • Favorable long-term safety and tolerability with most adverse events (AEs) mild or moderate, with no related serious or severe adverse events and no discontinuations.
Long-term data from the MARINA-OLE trial showed reversal of disease progression in people living with DM1 across multiple endpoints including video hand opening time (vHOT) as a measure of hand function and myotonia, muscle strength and activities of daily living when compared to END-DM1 natural history data.
Long-term data from the completed MARINA-OLE trial showed reversal of disease progression in people living with DM1 across multiple endpoints including video hand opening time (vHOT) as a measure of hand function and myotonia, muscle strength and activities of daily living when compared to END-DM1 natural history data.
The process required by the FDA before a biological product may be marketed in the United States generally involves the following: • completion of preclinical laboratory tests, animal studies and formulation studies in accordance with GLP regulations and other applicable regulations; • submission to the FDA of an IND, which must become effective before human clinical trials may begin; • approval by an independent institutional review board, or IRB, or ethics committee at each clinical site before each trial may be initiated; • performance of adequate and well-controlled human clinical trials in accordance with Good Clinical Practice, or GCP, requirements to establish the safety, purity and potency of the proposed biologic for its intended use; • submission to the FDA of a biologics license application, or BLA, after completion of all pivotal trials; • satisfactory completion of an FDA advisory committee review, if applicable; • a determination by the FDA within 60 days of its receipt of a BLA to file the application for review; 19 Table of Contents • satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the biological product is produced to assess compliance with cGMP, requirements to assure that the facilities, methods and controls are adequate to preserve the product’s identity, strength, quality and purity, and potential inspection of selected clinical investigation sites and/or the trial sponsor to assess compliance with GCP; and • FDA review and approval of the BLA to permit commercial marketing of the product for particular indications for use in the United States.
The process required by the FDA before a biological product may be marketed in the United States generally involves the following: • completion of preclinical laboratory tests, animal studies and formulation studies in accordance with GLP regulations and other applicable regulations; • submission to the FDA of an IND, which must become effective before human clinical trials may begin; • approval by an independent institutional review board, or IRB, or ethics committee at each clinical site before each trial may be initiated; • performance of adequate and well-controlled human clinical trials in accordance with Good Clinical Practice, or GCP, requirements to establish the safety, purity and potency of the proposed biologic for its intended use; • submission to the FDA of a biologics license application, or BLA, after completion of all pivotal trials; • satisfactory completion of an FDA advisory committee review, if applicable; • a determination by the FDA within 60 days of its receipt of a BLA to file the application for review; • satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the biological product is produced to assess compliance with cGMP, requirements to assure that the facilities, methods and controls are adequate to preserve the product’s identity, strength, quality and purity, and potential inspection of selected clinical investigation sites and/or the trial sponsor to assess compliance with GCP; and • FDA review and approval of the BLA to permit commercial marketing of the product for particular indications for use in the United States.
Similar state and local laws and regulations may also restrict business practices in the pharmaceutical industry, such as state anti-kickback and false claims laws, which may apply to business practices, including but not limited to, research, distribution, sales and marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers, or by patients themselves; state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government, or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; state laws and regulations that require drug manufacturers to file reports relating to pricing and marketing information or which require tracking gifts and other remuneration and items of value provided to physicians, other healthcare providers and entities; and state and local laws that require the registration of pharmaceutical sales representatives.
Similar state and local laws and regulations may also restrict business practices in the pharmaceutical industry, such as state anti-kickback and false claims laws, which may apply to business practices, including but 25 Table of Contents not limited to, research, distribution, sales and marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers, or by patients themselves; state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government, or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; state laws and regulations that require drug manufacturers to file reports relating to pricing and marketing information or which require tracking gifts and other remuneration and items of value provided to physicians, other healthcare providers and entities; and state and local laws that require the registration of pharmaceutical sales representatives.
Our first AOC programs are from our rare neuromuscular disease franchise where we have leveraged our deep experience with oligonucleotide therapeutics, modulation of RNA processes, antibody engineering and conjugation and drug delivery techniques. We now have programs in our early-stage development pipeline through internal efforts and external collaborations that explore utilizing AOCs in additional indications including cardiology and immunology.
Our first AOC programs are from our rare neuromuscular disease franchise where we have leveraged our deep experience with oligonucleotide therapeutics, modulation of RNA processes, antibody engineering and conjugation and drug delivery techniques. We also have programs in our early-stage development pipeline through internal efforts and external collaborations that explore utilizing AOCs in additional indications including cardiology and immunology.
While the IND is active, progress reports summarizing the results of the clinical trials and nonclinical studies performed since the last progress report, among other information, must be submitted at least annually to the FDA, and written IND safety reports must be submitted to the FDA and investigators for serious and unexpected suspected adverse events, findings from other studies suggesting a significant risk to humans exposed to the same or similar drugs, findings from animal or in vitro testing suggesting a significant risk to humans, and any clinically important increased incidence of a serious suspected adverse reaction compared to that listed in the protocol or investigator brochure.
While the IND is active, progress reports summarizing the results of the clinical trials and nonclinical studies performed since the last progress report, among other information, must be submitted at least annually to the FDA, and written IND safety reports must be submitted to the FDA and investigators for serious and unexpected suspected adverse events, findings from other studies suggesting a significant risk to 19 Table of Contents humans exposed to the same or similar drugs, findings from animal or in vitro testing suggesting a significant risk to humans, and any clinically important increased incidence of a serious suspected adverse reaction compared to that listed in the protocol or investigator brochure.
Individual states in the United States have also become increasingly active in implementing regulations designed to control pharmaceutical product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.
Individual states in the United States have also become increasingly active in implementing regulations designed to control pharmaceutical product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access, marketing cost disclosure, drug price reporting and other transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.
These patent rights relate to the del-brax and other FSHD AOC composition of matter, formulations containing del-brax and other the FSHD AOC, methods of manufacturing, and methods of treating diseases, using our FSHD AOC. Any patents issued from these applications are expected to expire in 2041-2042; however, a patent term extension may be available.
These patent rights relate to the del-brax and other FSHD AOC composition of matter, formulations containing del-brax and other the FSHD AOC, methods of manufacturing, and methods of treating diseases, using our FSHD AOC. Any patents issued from these applications are expected to expire in 2041-2046; however, a patent term extension may be available.
With this strategy, our goal is 3 Table of Contents to discover, develop and commercialize novel AOC therapeutics that overcome current barriers to the delivery of oligonucleotides and unlock their potential to treat a wide range of serious diseases currently lacking adequate treatment options.
With this strategy, our goal is to discover, develop and commercialize novel AOC therapeutics that overcome current barriers to the delivery of 4 Table of Contents oligonucleotides and unlock their potential to treat a wide range of serious diseases currently lacking adequate treatment options.
Del-desiran is currently being studied in the global Phase 3 HARBOR trial and in the ongoing MARINA-OLE trial in people with DM1.
Del-desiran is currently being studied in the global Phase 3 HARBOR trial and ongoing HARBOR-OLE trial in people with DM1.
These patent rights relate to del-zota and other DMD AOCs composition of matter, formulations containing del-zota and other DMD AOCs, methods of manufacturing, and methods of treating diseases, using del-zota and other DMD AOCs. Any patents issued from these applications are expected to expire in 2038-2044; however, a patent term extension may be available.
These patent rights relate to del-zota and other DMD AOCs composition of matter, formulations containing del-zota and other DMD AOCs, methods of manufacturing, and methods of treating diseases, using del-zota and other DMD AOCs. Any patents issued from these applications are expected to expire in 2038-2046; however, a patent term extension may be available.
These patent rights relate to the AOC 1086 and other PLN AOC composition of matter, formulations containing AOC 1086 and other the PLN AOC, methods of manufacturing, and methods of treating diseases, using our PLN AOC. Any patents issued from these applications are expected to expire in 2044; however, a patent term extension may be available.
These patent rights relate to the AOC 1086 and other PLN AOC composition of matter, formulations containing AOC 1086 and other the PLN AOC, methods of manufacturing, and methods of treating diseases, using our PLN AOC. Any patents issued from these applications are expected to expire in 2046; however, a patent term extension may be available.
We also have one patent family licensed from GenAhead Bio Inc, which includes 2 pending U.S. applications, 4 granted foreign patents, and 3 pending applications in Europe, China, and Japan. The term of individual patents depends upon the laws of the countries in which they are obtained.
We also have 1 patent family licensed from GenAhead Bio Inc, which includes 2 pending U.S. applications, 4 granted foreign patents, and 3 pending foreign applications in Europe, China, and Japan. The term of individual patents depends upon the laws of the countries in which they are obtained.
BLA Review and Approval Process Assuming successful completion of all required testing in accordance with all applicable regulatory requirements, the results of product development, including from preclinical and other non-clinical studies and clinical trials, along with descriptions of the manufacturing process, analytical tests conducted on the chemistry of the drug, proposed labeling and other relevant information are submitted to the FDA as part of a BLA requesting approval to market the product for one or more indications.
BLA Review and Approval Process Assuming successful completion of all required testing in accordance with all applicable regulatory requirements, the results of product development, including from preclinical and other non-clinical studies and clinical trials, along with descriptions of the manufacturing process, analytical tests conducted on the chemistry of the drug, proposed labeling and other relevant information are submitted to the FDA as part of a BLA 20 Table of Contents requesting approval to market the product for one or more indications.
These studies are designed to test for safety, dosage tolerance, absorption, metabolism, distribution and excretion and, if possible, to gain an early indication of its effectiveness. 20 Table of Contents • Phase 2 : The product candidate is administered to a limited patient population with a specified disease or condition to identify possible adverse effects and safety risks, to preliminarily evaluate the efficacy of the product for specific targeted diseases and to determine dosage tolerance and appropriate dosage.
These studies are designed to test for safety, dosage tolerance, absorption, metabolism, distribution and excretion and, if possible, to gain an early indication of its effectiveness. • Phase 2 : The product candidate is administered to a limited patient population with a specified disease or condition to identify possible adverse effects and safety risks, to preliminarily evaluate the efficacy of the product for specific targeted diseases and to determine dosage tolerance and appropriate dosage.
The federal Anti-Kickback Statute prohibits, among other things, individuals or entities from knowingly and willfully offering, paying, soliciting or receiving remuneration, directly or indirectly, overtly or covertly, in cash 25 Table of Contents or in kind to induce or in return for purchasing, leasing, ordering or arranging for or recommending the purchase, lease or order of any item or service reimbursable under Medicare, Medicaid or other federal healthcare programs.
The federal Anti-Kickback Statute prohibits, among other things, individuals or entities from knowingly and willfully offering, paying, soliciting or receiving remuneration, directly or indirectly, overtly or covertly, in cash or in kind to induce or in return for purchasing, leasing, ordering or arranging for or recommending the purchase, lease or order of any item or service reimbursable under Medicare, Medicaid or other federal healthcare programs.
Once the MA is obtained in all EU member states and study results are included in the product information, even when negative, the product is eligible for six months’ supplementary protection certificate extension (if any is in effect at the time of approval) or, in the case of orphan medicinal products, a two year extension of the orphan market exclusivity is granted.
Once the MA is obtained in all EU member states and study results are included in the product information, even when negative, the product is eligible for six months’ supplementary protection 30 Table of Contents certificate extension (if any is in effect at the time of approval) or, in the case of orphan medicinal products, a two year extension of the orphan market exclusivity is granted.
With respect to both licensed and company-owned intellectual property, we cannot be sure that patents will be granted with respect to any of our pending patent applications or with respect to any patent applications filed by us in the future, nor can we be sure that any of our existing patents or any patents that may be granted to us in the future will be commercially useful in protecting our platform and product candidates and the methods used to manufacture them.
With respect to both licensed and company-owned intellectual property, we cannot be sure that patents will be granted with respect to any of our pending patent applications or with respect to any patent applications filed by us in the future, nor can we be sure that any of our existing patents or any patents that may be granted to us in the future will be commercially useful in protecting our platform and product candidates and the methods used 16 Table of Contents to manufacture them.
During this 12-year period of exclusivity, another company may still market a competing version of the reference product if the FDA approves a full BLA for the competing product containing that applicant’s own preclinical data and data from adequate and well-controlled clinical trials to demonstrate the safety, purity and potency of its product.
During this 12-year period of exclusivity, another company may still market a competing version of the reference product if the FDA approves a full BLA for the competing product containing that applicant’s own preclinical data and data from adequate and well-controlled clinical trials to demonstrate the 24 Table of Contents safety, purity and potency of its product.
AOCs are designed to do the following: • Combine the proven technologies of approved mAbs and oligonucleotides; • Deliver to tissues previously untreatable with RNA therapeutics, starting with muscle and broadening to other tissues and cell types; and 4 Table of Contents • Scale with experienced manufacturers who are able to utilize well-established and scalable methods for manufacturing mAbs and oligonucleotides.
AOCs are designed to do the following: • Combine the proven technologies of approved mAbs and oligonucleotides; • Deliver to tissues previously untreatable with RNA therapeutics, starting with muscle and broadening to other tissues and cell types; and • Scale with experienced manufacturers who are able to utilize well-established and scalable methods for manufacturing mAbs and oligonucleotides.
These patent rights relate to the AOC 1072 and other PRKAG2 AOC composition of matter, formulations containing AOC 1072 and other the PRKAG2 AOC, methods of manufacturing, and methods of treating diseases, using our PRKAG2 AOC. Any patents issued from these applications are expected to expire in 2044-2045; however, a patent term extension may be available.
These patent rights relate to the AOC 1072 and other PRKAG2 AOC composition of matter, formulations containing AOC 1072 and other the PRKAG2 AOC, methods 15 Table of Contents of manufacturing, and methods of treating diseases, using our PRKAG2 AOC. Any patents issued from these applications are expected to expire in 2044-2045; however, a patent term extension may be available.
If patents are issued on our pending patent applications, the resulting patents are projected to expire on dates ranging from 2037 to 2045, unless we receive patent term extension or patent term adjustment, or both.
If patents are issued on our pending patent applications, the resulting patents are projected to expire on dates ranging from 2037 to 2046, unless we receive patent term extension or patent term adjustment, or both.
Sales in the United States will depend, in part, on the availability of sufficient coverage and adequate reimbursement from third-party payors, which include government health programs such as Medicare, Medicaid, TRICARE and the Veterans Health Administration, as well as managed 26 Table of Contents care organizations and private health insurers.
Sales in the United States will depend, in part, on the availability of sufficient coverage and adequate reimbursement from third-party payors, which include government health programs such as Medicare, Medicaid, TRICARE and the Veterans Health Administration, as well as managed care organizations and private health insurers.
If granted, the data exclusivity period prevents generic or biosimilar applicants from relying on the pre-clinical and clinical trial data contained in the dossier of the reference product when applying for a generic or biosimilar MA in the EU during a period of eight years from the date on which the reference product was first authorized in the EU.
If granted, the data exclusivity period prevents generic or biosimilar applicants from relying on the pre-clinical and clinical trial data contained in the dossier of the reference product when applying for a generic or biosimilar MA in the EU during a period of 29 Table of Contents eight years from the date on which the reference product was first authorized in the EU.
We, along with third-party contractors, will be required to navigate the various preclinical, clinical and commercial approval requirements of the governing regulatory agencies of the countries in which we wish to conduct studies or seek approval or licensure of our product candidates. U.S.
We, along with third-party contractors, will be required to navigate the various preclinical, clinical and commercial approval requirements of the governing regulatory agencies of the countries in which we wish to conduct studies or seek approval or licensure of our product candidates. 18 Table of Contents U.S.
Post-Approval Requirements Any products manufactured or distributed pursuant to FDA approvals are subject to pervasive and continuing regulation by the FDA, including, among other things, requirements relating to record-keeping, reporting of adverse experiences, periodic reporting, product sampling and distribution, and advertising and 23 Table of Contents promotion of the product.
Post-Approval Requirements Any products manufactured or distributed pursuant to FDA approvals are subject to pervasive and continuing regulation by the FDA, including, among other things, requirements relating to record-keeping, reporting of adverse experiences, periodic reporting, product sampling and distribution, and advertising and promotion of the product.
In addition, on March 27 Table of Contents 11, 2021, the American Rescue Plan Act of 2021 was signed into law, which eliminated the statutory Medicaid drug rebate cap, as of January 1, 2024. The rebate was previously capped at 100% of a drug’s average manufacturer price.
In addition, on March 11, 2021, the American Rescue Plan Act of 2021 was signed into law, which eliminated the statutory Medicaid drug rebate cap, as of January 1, 2024. The rebate was previously capped at 100% of a drug’s average manufacturer price.
DMD causes a lack of functional dystrophin that leads to stress and tears of muscle cell membranes, resulting in muscle cell death and the progressive loss of muscle function. People living with DMD suffer from progressive muscle weakness that typically starts at a very young age.
DMD causes a lack of functional dystrophin that leads to stress and tears of muscle cell membranes, resulting in 10 Table of Contents muscle cell death and the progressive loss of muscle function. People living with DMD suffer from progressive muscle weakness that typically starts at a very young age.
In addition, the FDA closely regulates the marketing, labeling, advertising and promotion of drug products. A company can make only those claims relating to safety and efficacy, purity and potency that are approved by the FDA and in accordance with the provisions of the approved label.
In addition, the FDA closely regulates the marketing, labeling, advertising and promotion of drug products. A company can make only those claims relating to safety and efficacy, purity and potency that are 23 Table of Contents approved by the FDA and in accordance with the provisions of the approved label.
Our patent applications contain claims covering (i) proprietary antibodies; (ii) proprietary oligonucleotide chemical structures; (iii) proprietary oligonucleotide sequences; (iv) proprietary AOC structures; and (v) methods for manufacturing and using our AOC technologies. Some of these AOC platform cases 16 Table of Contents generically cover our various product candidates.
Our patent applications contain claims covering (i) proprietary antibodies; (ii) proprietary oligonucleotide chemical structures; (iii) proprietary oligonucleotide sequences; (iv) proprietary AOC structures; and (v) methods for manufacturing and using our AOC technologies. Some of these AOC platform cases generically cover our various product candidates.
The designation includes all of the Fast Track program features, as well 22 Table of Contents as more intensive FDA interaction and guidance beginning as early as Phase 1 and an organizational commitment to expedite the development and review of the product candidate, including involvement of FDA senior managers.
The designation includes all of the Fast Track program features, as well as more intensive FDA interaction and guidance beginning as early as Phase 1 and an organizational commitment to expedite the development and review of the product candidate, including involvement of FDA senior managers.
Specifically, under this program, a sponsor who receives an approval for a drug or biologic for a “rare pediatric disease” may qualify for a voucher that can be redeemed to receive a priority review of a subsequent marketing application for a different product.
Specifically, under this 22 Table of Contents program, a sponsor who receives an approval for a drug or biologic for a “rare pediatric disease” may qualify for a voucher that can be redeemed to receive a priority review of a subsequent marketing application for a different product.
In addition to filing and prosecuting patent applications in the United States, we often file counterpart patent applications in additional countries and jurisdictions where we believe such foreign filing is likely to be beneficial, including Australia, Brazil, Canada, China, Europe, Hong Kong, Israel, Japan, Mexico, Singapore, New Zealand, Taiwan, and South Korea.
In addition to filing and prosecuting patent applications in the United States, we often file counterpart patent applications in additional countries and jurisdictions where we believe such foreign filing is likely to be beneficial, including Australia, Brazil, Canada, China, Europe, Hong 14 Table of Contents Kong, Israel, Japan, Mexico, Singapore, New Zealand, Taiwan, and South Korea.
In addition, Orphan drug exclusive marketing rights in the United States may be lost if the FDA later determines that the request for designation was materially defective or, as noted above, if a second applicant demonstrates that its product is clinically superior to the approved product with Orphan exclusivity or the manufacturer of the approved product is unable to assure sufficient quantities of the product to meet the needs of patients with the rare disease or condition.
In addition, Orphan drug exclusive marketing rights in the United States may be lost if the FDA later determines that the request for designation was materially defective or, as noted above, if a second applicant demonstrates that its product is clinically superior to the approved product with Orphan exclusivity within the relevant approved use or indication or the manufacturer of the approved product is unable to assure sufficient quantities of the product to meet the needs relating to the approved use or indication for patients with the relevant rare disease or condition.
Additionally, MA may be granted to a similar product for the same indication at any time if (i) the second applicant can establish that its product, although 30 Table of Contents similar, is safer, more effective or otherwise clinically superior; (ii) the applicant consents to a second orphan medicinal product application; or (iii) the applicant cannot supply enough orphan medicinal product.
Additionally, MA may be granted to a similar product for the same indication at any time if (i) the second applicant can establish that its product, although similar, is safer, more effective or otherwise clinically superior; (ii) the applicant consents to a second orphan medicinal product application; or (iii) the applicant cannot supply enough orphan medicinal product.
We refer to the BMS Collaboration Agreement and the BMS Purchase Agreement together as the "BMS Agreements." Under the terms of the BMS Agreements, we received approximately $100 million upfront, which includes a $60 million cash payment under the terms of the BMS Collaboration Agreement, and approximately $40 million for the purchase of our common stock under the terms of the BMS Purchase Agreement.
We refer to 17 Table of Contents the BMS Collaboration Agreement and the BMS Purchase Agreement together as the "BMS Agreements." Under the terms of the BMS Agreements, we received approximately $100 million upfront, which includes a $60 million cash payment under the terms of the BMS Collaboration Agreement, and approximately $40 million for the purchase of our common stock under the terms of the BMS Purchase Agreement.
The FDA will not approve an application unless it determines that the manufacturing processes and facilities are in compliance with cGMP requirements and adequate to assure consistent production of the product within 21 Table of Contents required specifications.
The FDA will not approve an application unless it determines that the manufacturing processes and facilities are in compliance with cGMP requirements and adequate to assure consistent production of the product within required specifications.
Unlike directives, the CTR is directly applicable in all EU member states without the need for member states to further implement it into national law. The CTR notably harmonizes the assessment and supervision processes for clinical trials throughout the EU via a Clinical Trials Information System, which contains a centralized EU portal and database.
Unlike directives, the CTR is directly applicable in all EU member states without the need for member states to further implement it into national law. The CTR notably harmonizes 28 Table of Contents the assessment and supervision processes for clinical trials throughout the EU via a Clinical Trials Information System, which contains a centralized EU portal and database.
The issued U.S. patents and any U.S. patents issuing from our pending U.S. patent applications are expected to expire between 2037 and 2045.
The issued U.S. patents and any U.S. patents issuing from our pending U.S. patent applications are expected to expire between 2037 and 2046.
(SGT-003), and Genethon (GNT-004). We are also aware of several companies targeting non-dystrophin mechanisms for the treatment of DMD. There is a growing number of companies in pursuing different paths to treat DMD, including Capricor Therapeutics, Inc., and we expect that the space will continue to evolve as additional candidates advance.
We are also aware of several companies targeting non-dystrophin mechanisms for the treatment of DMD. There is a growing number of companies in pursuing different paths to treat DMD, including Capricor Therapeutics, Inc., and we expect that the space will continue to evolve as additional candidates advance.
For example, in March 2010, the Patient Protection and Affordable Care Act, or the ACA, was passed, which substantially changed the way healthcare is financed by both governmental and private insurers, and significantly affected the pharmaceutical industry.
For example, in March 2010, the Patient Protection 26 Table of Contents and Affordable Care Act, or the ACA, was passed, which substantially changed the way healthcare is financed by both governmental and private insurers, and significantly affected the pharmaceutical industry.
Del-desiran, del-brax and del-zota have all been granted Orphan Designation by the FDA and the European Medicines Agency, or EMA, and Fast Track designation by the FDA. In addition, the FDA has granted del-desiran Breakthrough Therapy designation for the treatment of DM1 and granted del-zota Rare Pediatric Disease designation.
Del-desiran, del-brax and del-zota have all been granted Orphan designation by the FDA and the European Medicines Agency, or EMA, and Fast Track designation by the FDA. In addition, the FDA has granted del-desiran and del-zota Breakthrough Therapy designation and granted del-zota Rare Pediatric Disease designation.
Intellectual Property Relating to Del-Zota (AOC 1044) and Other DMD AOC Product Candidates With regard to del-zota and other DMD AOC product candidates, as of December 31, 2024, we owned 6 issued U.S. patents, 8 pending U.S. patent applications, 3 granted foreign patents, 39 pending patent applications in various countries and regions including Australia, Canada, China, Europe, Hong Kong, Israel, Japan, Mexico, Singapore, Taiwan, New Zealand, and South Korea, and one pending patent application filed pursuant to the PCT.
Intellectual Property Relating to Del-Zota (AOC 1044) and Other DMD AOC Product Candidates With regard to del-zota and other DMD AOC product candidates, as of December 31, 2025, we owned 8 issued U.S. patents, 14 pending U.S. patent applications, 7 granted foreign patents, 46 pending patent applications in various countries and regions including Australia, Canada, China, Europe, Hong Kong, Israel, Japan, Mexico, Singapore, Taiwan, New Zealand, and South Korea, and 3 pending patent application filed pursuant to the PCT.
Lilly granted us a non-exclusive license under certain Lilly technology solely to conduct research under the Lilly Agreement. We retain 18 Table of Contents the right to use our technology to perform our obligations under the Lilly Agreement and for all purposes not granted to Lilly.
Lilly granted us a non-exclusive license under certain Lilly technology solely to conduct research under the Lilly Agreement. We retain the right to use our technology to perform our obligations under the Lilly Agreement and for all purposes not granted to Lilly.
We also have the ability to use a single mAb across multiple programs, providing significant leverage around development costs and timelines associated with each incremental program.
We also have the ability to use a single mAb across multiple 5 Table of Contents programs, providing significant leverage around development costs and timelines associated with each incremental program.
Other companies pursuing a similar mechanism include Dyne Therapeutics with DYNE-251, a PMO conjugated to a Fab currently being evaluated in a Phase 1/2 clinical trial for patients amendable to Exon 51 skipping; Wave Life Sciences, Ltd. with WVE-N531, an unconjugated PN-modified exon-skipping oligonucleotide currently being evaluated in a Phase 1/2 clinical trial for patients amenable to Exon 53 skipping; PepGen with PGN-EDO51, a peptide-conjugated oligonucleotide for patients amenable to Exon 51 skipping being evaluated in a Phase 2 clinical trial; and PTC Therapeutics with ataluren, a small molecule targeting nonsense mutations in a Phase 3 clinical trial.
Other companies pursuing a similar mechanism include Dyne Therapeutics with DYNE-251, a PMO conjugated to a Fab currently being evaluated in a Phase 1/2 clinical trial for patients amendable to Exon 13 Table of Contents 51 skipping; Wave Life Sciences, Ltd. with WVE-N531, an unconjugated PN-modified exon-skipping oligonucleotide currently being evaluated in a Phase 1/2 clinical trial for patients amenable to Exon 53 skipping; and PTC Therapeutics with ataluren, a small molecule targeting nonsense mutations in a Phase 3 clinical trial.
There is a growing number of companies in preclinical development pursuing different paths to treat FSHD, including, Dyne Therapeutics, Inc., miRecule, Inc./Sanofi S.A., Kate Therapeutics Inc./Novartis, Armatus Bio, Inc./Solid Biosciences Inc., and Celularity Inc. We expect that the space will continue to evolve as additional investigational therapies advance.
There is a growing number of companies in preclinical development pursuing different paths to treat FSHD, including, Dyne Therapeutics, Inc., miRecule, Inc./Sanofi S.A., Novartis, Armatus Bio, Inc./Solid Biosciences Inc., Altay Therapeutics, Inc., Vita Therapeutics, Inc., Modalis Therapeutics Corporation, OligomicsTx, Celularity Inc, and Souffle Therapeutics, Inc. We expect that the space will continue to evolve as additional investigational therapies advance.
Intellectual Property Relating to Our AOC Product Platform As of December 31, 2024, we owned 29 families of U.S. and foreign patents and patent applications generally covering our AOC product platform.
Intellectual Property Relating to Our AOC Product Platform As of December 31, 2025, we owned 40 families of U.S. and foreign patents and patent applications generally covering our AOC product platform.
As of December 31, 2024, the intellectual property portfolio consisted of 40 issued U.S. patents and 30 pending U.S. patent applications that we own or co-own. Collectively, these patent rights relate to various aspects of our AOC product candidates and technology platform.
As of December 31, 2025, the intellectual property portfolio consisted of 49 issued U.S. patents and 51 pending U.S. patent applications that we own or co-own. Collectively, these patent rights relate to various aspects of our AOC product candidates and technology platform.
We have one patent family licensed from the University of Alberta, which includes 2 issued U.S. patent, one pending U.S. patent application, 4 granted foreign patents, and six pending applications in Europe, Canada, China, Japan, South Korea and Hong Kong.
We have 1 patent family licensed from the University of Alberta, which includes 2 issued U.S. patents, 1 pending U.S. patent application, 5 granted foreign patents, and 6 pending applications in Europe, Canada, China, Japan, South Korea and Hong Kong.
Intellectual Property Relating to AOC 1086 and Other PLN AOC Product Candidates With regard to AOC 1086 and other PLN AOC product candidates, as of December 31, 2024, we owned one pending U.S. patent applications, and one pending patent application filed pursuant to the PCT.
Intellectual Property Relating to AOC 1086 and Other PLN AOC Product Candidates With regard to AOC 1086 and other PLN AOC product candidates, as of December 31, 2025, we owned 1 issued U.S. patent, 2 pending U.S. patent applications, and 1 pending patent application filed pursuant to the PCT.
These families include 37 issued U.S. patents, 26 granted foreign patents, 30 pending U.S. patent applications, 4 pending PCT patent applications and 133 pending foreign patent applications in Europe, Australia, Brazil, Canada, China, Israel, Hong Kong, Japan, South Korea, Mexico, Singapore, New Zealand, and Taiwan, relating to key aspects and components of our AOC product platform systems.
These families include 46 issued U.S. patents, 46 granted foreign patents, 51 pending U.S. patent applications, 11 pending PCT patent applications and 164 pending foreign patent applications in Europe, Australia, Brazil, Canada, China, Israel, Hong Kong, Japan, South Korea, Mexico, Singapore, New Zealand, and Taiwan, relating to key aspects and components of our AOC product platform systems.
For this and other risks related to our proprietary technology, inventions, improvements, platforms and product candidates, please see the section entitled “Risk Factors—Risks Related to Our Intellectual Property.” We have filed trademark applications for registration of the Avidity, Avidity Bioscience logo, del-brax, del-desiran, del-zota, EXPLORE44, EXPLORE44 logo, EXPLORE44-OLE logo, FORTITUDE, FORTITUDE 17 Table of Contents logo, HARBOR, HARBOR logo mark, MARINA, MARINA logo, MARINA-OLE, and MARINA-OLE logo marks with the United States Patent and Trademark Office and certain foreign trademark offices.
For this and other risks related to our proprietary technology, inventions, improvements, platforms and product candidates, please see the section entitled “Risk Factors—Risks Related to Our Intellectual Property.” We have filed trademark applications for registration of the Avidity, Avidity Bioscience logo, AVIDITY ON POINT, AVIDITY ON POINT logo, CDUX, DEL-BRAX, DEL-DESIRAN, DEL-ZOTA, EXPLORE44, EXPLORE44 logo, EXPLORE44-OLE, EXPLORE44-OLE logo, FORLENVY, FORTITUDE, FORTITUDE logo, HARBOR, HARBOR logo mark, KITE logo, MARINA, MARINA logo, MARINA-OLE, MARINA-OLE logo, ON POINT, ON POINT logo, QAFORZO, SAFARI44, SAFARI44 logo, SPEDELVI, TRIANGLE logo, and ZOBILITY marks with the United States Patent and Trademark Office and certain foreign trademark offices.
In November 2024, we announced we had expanded beyond rare neuromuscular disorders and opened up a new therapeutic field, precision cardiology, to address the root cause of genetic diseases of the heart.
We have expanded beyond rare neuromuscular disorders and opened up a new therapeutic field, precision cardiology, to address the root cause of genetic diseases of the heart.
There is one approved gene therapy for the delivery of microdystrophin mRNA, marketed as ELEVIDYS by Sarepta Therapeutics, Inc., fully approved for ambulatory DMD patients above the age of three and has received accelerated approval for non-ambulatory DMD patients above the age of three. Several other companies are developing microdystrophin-based gene therapies, including REGENEXBIO Inc. (RGX-202), Solid Biosciences Inc.
There is one approved gene therapy for the delivery of microdystrophin mRNA, marketed as ELEVIDYS by Sarepta Therapeutics, Inc., fully approved for ambulatory DMD patients above the age of three. Several other companies are developing microdystrophin-based gene therapies, including REGENEXBIO Inc. (RGX-202), Solid Biosciences Inc. (SGT-003), and Genethon (GNT-004).
Intellectual Property Relating to AOC 1072 and Other PRKAG2 AOC Product Candidates With regard to AOC 1072 and other PRKAG2 AOC product candidates, as of December 31, 2024, we owned two pending U.S. patent applications, and one pending patent application filed pursuant to the PCT.
Intellectual Property Relating to AOC 1072 and Other PRKAG2 AOC Product Candidates With regard to AOC 1072 and other PRKAG2 AOC product candidates, as of December 31, 2025, we owned 1 issued U.S. patent, 2 pending U.S. patent applications, 1 pending foreign patent application, and 2 pending patent applications filed pursuant to the PCT.
Human Capital As o f February 14, 2025, we had 391 full-time employees, 90 of whom have a Ph.D. or M.D. degree. None of our employees are represented by labor unions or covered by collective bargaining agreements. We consider our relationship with our employees to be good.
Human Capital As of February 13, 2026, we had 511 full-time employees, 111 of whom have a Ph.D. or M.D. degree. None of our employees are represented by labor unions or covered by collective bargaining agreements. We consider our relationship with our employees to be good.
Intellectual Property Relating to Del-Brax (AOC 1020) and Other FSHD AOC Product Candidates With regard to del-brax and other FSHD AOC product candidates, as of December 31, 2024, we owned or co-owned 8 issued U.S. patents, 5 pending U.S. patent applications, 1 granted foreign patent, 24 pending patent applications in foreign jurisdictions including Australia, Brazil, Canada, China, Europe, Hong Kong, Israel, Japan, Mexico, Singapore, Taiwan, New Zealand, and South Korea.
Intellectual Property Relating to Del-Brax (AOC 1020) and Other FSHD AOC Product Candidates With regard to del-brax and other FSHD AOC product candidates, as of December 31, 2025, we owned or co-owned 9 issued U.S. patents, 6 pending U.S. patent applications, 3 granted foreign patent, 26 pending patent applications in foreign jurisdictions including Australia, Brazil, Canada, China, Europe, Hong Kong, Israel, Japan, Mexico, Singapore, Taiwan, New Zealand, and South Korea, and two pending patent applications filed pursuant to the PCT.
Orphan designation does not convey any advantage in or shorten the duration of the regulatory review and approval process. 24 Table of Contents If a product that has Orphan designation subsequently receives the first FDA approval for the disease or condition for which it has such designation, the product is entitled to Orphan product exclusivity, which means that the FDA may not approve any other applications to market the same drug or biologic for the same disease or condition for seven years, except in limited circumstances, such as a showing of clinical superiority to the product with Orphan exclusivity or inability to manufacture the product in sufficient quantities of the Orphan drug to meet the needs of patients with the disease or condition for which the drug was designated.
If a product that has Orphan designation subsequently receives the first FDA approval for the disease or condition for which it has such designation, the product is entitled to Orphan product exclusivity, which means that the FDA may not approve any other applications to market the same drug or biologic for the same approved use or indication within such rare disease or condition for seven years, except in limited circumstances, such as a showing of clinical superiority to the product with Orphan exclusivity or inability to manufacture the product in sufficient quantities of the Orphan drug to meet the needs of patients with the disease or condition for which the drug was designated.
Del-desiran has received Breakthrough Therapy, Orphan Drug and Fast Track designations by the FDA and Orphan designation by the European Commission. DM1 Disease Overview DM1 is an underrecognized, progressive and often fatal neuromuscular disease with multiple organ involvement.
Del-desiran has received Breakthrough Therapy, Orphan Drug and Fast Track designations by the FDA, Orphan designation by the 6 Table of Contents European Commission and Orphan Drug Designation by the Japan Ministry of Health, Labour and Welfare (MHLW). DM1 Disease Overview DM1 is an underrecognized, progressive and often fatal neuromuscular disease with multiple organ involvement.
In particular, non-clinical studies, both in vitro and in vivo, must be planned, performed, monitored, recorded, reported and archived in accordance with the GLP principles, which define a set of rules and criteria 28 Table of Contents for a quality system for the organizational process and the conditions for non-clinical studies.
In particular, non-clinical studies, both in vitro and in vivo, must be planned, performed, monitored, recorded, reported and archived in accordance with the GLP principles, which define a set of rules and criteria for a quality system for the organizational process and the conditions for non-clinical studies. These GLP standards reflect the Organization for Economic Co-operation and Development requirements.
Most significantly, in August 2022, President Biden signed the Inflation Reduction Act of 2022, or IRA, into law. This statute marks the most significant action by Congress with respect to the pharmaceutical industry since adoption of the ACA in 2010.
The Inflation Reduction Act, or IRA, was enacted in 2022. This statute marks the most significant action by Congress with respect to the pharmaceutical industry since adoption of the ACA in 2010.
In December 2022, Entrada’s program ENTR-601-44 was placed on a clinical hold prior to initiating Phase 1 development but has been evaluated in a Phase 1 study outside of the U.S. Companies are also approaching DMD with viral-vector based gene therapy programs that are a one-time treatment versus oligonucleotide-based exon skipping chronic treatments.
In December 2022, Entrada’s program ENTR-601-44 is in a Phase 1 study outside of the U.S. Companies are also approaching DMD with viral-vector based gene therapy programs that are a one-time treatment versus oligonucleotide-based exon skipping chronic treatments.
Information relating to our corporate governance is also included on our investor relations website. The information in or accessible through the SEC and our website are not incorporated into, and are not considered part of, this Annual Report on Form 10-K.
The information in or accessible through the SEC and our website are not incorporated into, and are not considered part of, this Annual Report on Form 10-K.
Delpacibart braxlosiran, or del-brax (formerly AOC 1020), is the first investigational therapy designed to directly target DUX4 in people living with facioscapulohumeral muscular dystrophy, or FSHD, and is currently in Phase 1/2 development with the FORTITUDE™ trial.
Delpacibart braxlosiran, or del-brax (formerly AOC 1020), is the first investigational therapy designed to directly target DUX4 in people living with facioscapulohumeral muscular dystrophy, or FSHD, and is currently in development in the potentially registrational fully enrolled ongoing FORTITUDE™ biomarker cohort of the Phase 1/2 FORTITUDE trial, the Phase 2 FORTITUDE Open-Label Extension (FORTITUDE-OLE™) trial and the Phase 3 FORTITUDE-3™ trial.
Accordingly, our competitors may be more successful than us in research and development, manufacturing, preclinical testing, conducting clinical trials, obtaining approval for treatments and achieving widespread market acceptance, which could render our product candidates, if approved, obsolete or non-competitive.
Many of our competitors, either alone or with strategic partners, have substantially greater financial, technical and human resources than we do. Accordingly, our competitors may be more successful than us in research and development, manufacturing, preclinical testing, conducting clinical trials, obtaining approval for treatments and achieving widespread market acceptance, which could render our product candidates, if approved, obsolete or non-competitive.
Though the Phase 1/2 trial is not statistically powered to assess functional benefit, it will explore the clinical activity of del-brax including measures of mobility and muscle strength as well as patient reported outcomes and quality of life measures.
Though the Phase 1/2 trial is not statistically powered to assess functional benefit, it explores the clinical activity of del-brax including measures of functional mobility and muscle strength as well as patient reported outcomes and quality of life measures, as well as changes in in key biomarkers including KHDC1L or cDUX, a DUX4-regulated circulating biomarker.
Some states have also enacted legislation creating so-called prescription drug affordability boards, which ultimately may attempt to impose price limits on certain drugs in these states.
Some states have also enacted legislation creating so-called prescription drug affordability boards, which ultimately may attempt to impose price limits on certain drugs in these states, and at least one state board is imposing an upper payment limit.
Therefore, there remains a high unmet medical need for new disease modifying therapies. 6 Table of Contents Our Solution Del-desiran consists of a proprietary mAb that binds to TfR1 conjugated with an siRNA, siDMPK.19, targeted to DMPK RNA, and is designed to be administered to the patient as an intravenous infusion.
Our Solution Del-desiran consists of a proprietary mAb that binds to TfR1 conjugated with an siRNA, siDMPK.19, targeted to DMPK RNA, and is designed to be administered to the patient as an intravenous infusion.
They are also available for free on the SEC’s website at www.sec.gov . We use our investor relations website as a means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD. Investors should monitor such website, in addition to following our press releases, SEC filings and public conference calls and webcasts.
They are also available for free on the SEC’s website at www.sec.gov . 31 Table of Contents We use our investor relations website as a means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD.
While there are therapies approved and multiple programs in clinical development for other exons, there are no exon-skipping therapies approved targeting Exon 44. Our Solution Our development efforts in DMD are focused on AOCs based on PMOs that can induce exon skipping for Exon 44 and additional exons, including Exon 45, conjugated to our proprietary mAb targeting TfR1.
Our Solution Our development efforts in DMD are focused on AOCs based on PMOs that can induce exon skipping for Exon 44 and additional exons, including Exon 45, conjugated to our proprietary mAb targeting TfR1. Del-zota is our lead program in development for DMD and targets Exon 44.
Orphan designation must be requested before submitting a BLA. After the FDA grants Orphan designation, the identity of the therapeutic agent and its potential orphan use are disclosed publicly by the FDA.
Orphan designation must be requested before submitting a BLA. After the FDA grants Orphan designation, the identity of the therapeutic agent and its potential orphan use are disclosed publicly by the FDA. Orphan designation does not convey any advantage in or shorten the duration of the regulatory review and approval process.
Our pipeline currently has three programs in potentially registrational clinical trials. Delpacibart etedesiran, abbreviated as del-desiran (formerly AOC 1001), is designed to treat people with myotonic dystrophy type 1, or DM1, and is currently in Phase 3 development with the global HARBOR™ trial.
Delpacibart etedesiran, or del-desiran (formerly AOC 1001), is designed to treat people with myotonic dystrophy type 1, or DM1, and is currently in development with the global Phase 3 HARBOR™ trial and ongoing HARBOR Open-Label Extension (HARBOR-OLE™) trial.
Under the decentralized procedure, an identical dossier is submitted to the competent 29 Table of Contents authorities of each of the member states in which the MA is sought, one of which is selected by the applicant as the reference member state.
Under the decentralized procedure, an identical dossier is submitted to the competent authorities of each of the member states in which the MA is sought, one of which is selected by the applicant as the reference member state. Under the centralized procedure, the maximum timeframe for the evaluation of an MAA by the EMA is 210 days, excluding clock stops.
Please see “Risk Factors—Risks Related to Our Intellectual Property” for additional information on the risks associated with our intellectual property strategy and portfolio. 15 Table of Contents Intellectual Property Relating to Del-Desiran (AOC 1001) With regard to del-desiran, as of December 31, 2024, we owned 5 issued U.S. patents, 3 pending U.S. patent applications, 7 granted foreign patents, and 23 pending patent applications in foreign jurisdictions, including Australia, Brazil, Canada, China, Europe, Hong Kong, Israel, Japan, Mexico, Singapore, Taiwan, New Zealand, and South Korea.
Intellectual Property Relating to Del-Desiran (AOC 1001) With regard to del-desiran, as of December 31, 2025, we owned 9 issued U.S. patents, 5 pending U.S. patent applications, 14 granted foreign patents, and 30 pending patent applications in foreign jurisdictions, including Australia, Brazil, Canada, China, Europe, Hong Kong, Israel, Japan, Mexico, Singapore, Taiwan, New Zealand, and South Korea.
Those living with the condition often require special aid and assistance throughout their lives and have significantly shortened life expectancy. While there are treatments approved to treat people with DMD, there remains a very high unmet need.
Those living with the condition often require special aid and assistance throughout their lives and have significantly shortened life expectancy. While there are treatments approved to treat people with DMD, there remains a very high unmet need. DMD is a monogenic, X-linked, recessive disease that primarily affects males, with one in 3,500 to 5,000 boys born worldwide having DMD.
Del-zota is our lead program in development for DMD and targets Exon 44. Exon skipping produces a near full-length dystrophin protein which is believed to have better functional benefit than the significantly shorter version of dystrophin delivered via gene therapy.
Exon skipping produces a near full-length dystrophin protein which is believed to have better functional benefit than the significantly shorter version of dystrophin delivered via gene therapy. We believe that our AOCs have the potential to increase the production of dystrophin in people with DMD for two reasons.
We believe there are multiple sources for all of the materials required for the manufacture of our product candidates to supply our clinical trials and anticipated commercial requirements. Competition The biotechnology and biopharmaceutical industries are characterized by rapid technological advancement, significant competition and an emphasis on intellectual property.
We believe there are multiple sources for all of the materials required for the manufacture of our product candidates to supply our clinical trials and anticipated commercial requirements.
A designated Orphan drug may not receive Orphan drug exclusivity if it is approved for a use that is broader than the disease or condition for which it received Orphan designation.
Among the other benefits of Orphan drug designation are tax credits for certain research and a waiver of the BLA application user fee. A designated Orphan drug may not receive Orphan drug exclusivity if it is approved for a use that is broader than the disease or condition for which it received Orphan designation.
We believe these downstream genes can be used as biomarkers to assess the disease state and therapeutic activity. ▪ Efficient delivery of drug substance to diseased cells — The TfR1 antibody component of the AOC is designed to facilitate efficient delivery to skeletal and cardiac muscle cells, an advantage over other companies' previous unsuccessful efforts to deliver an unconjugated oligonucleotide into muscle cells. 9 Table of Contents Once inside the muscle cells, the siRNA component of del-brax, siDUX4, acts to reduce levels of DUX4 mRNA. ▪ Reproducible and scalable therapeutic —As with all our AOCs, del-brax is readily synthesized using well-established and scalable methods for manufacturing mAbs and oligonucleotides.
We believe these downstream genes can be used as biomarkers to assess the disease state and therapeutic activity. ▪ Efficient delivery of drug substance to diseased cells — The TfR1 antibody component of the AOC is designed to facilitate efficient delivery to skeletal and cardiac muscle cells, an advantage over other companies' previous unsuccessful efforts to deliver an unconjugated oligonucleotide into muscle cells.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeRisks Related to Our Limited Operating History, Financial Position and Capital Requirements We have a limited operating history, have incurred significant operating losses since our inception and expect to incur significant losses for the foreseeable future. We may never generate any product revenue or become profitable or, if we achieve profitability, we may not be able to sustain it.
Biggest changeAs a result, even if the portion of our business acquired by Novartis performs well following the Merger, our current stockholders will not receive any additional consideration or benefit from any such future performance of the portion of our business acquired by Novartis. 36 Table of Contents Risks Related to Our Limited Operating History, Financial Position and Capital Requirements We have a limited operating history, have incurred significant operating losses since our inception and expect to incur significant losses for the foreseeable future.
If we are unable to successfully develop, obtain regulatory approval for and ultimately commercialize product candidates, or experience significant delays in doing so, our business will be materially harmed. • Any difficulties or delays in the commencement or completion, or the termination or suspension, of our ongoing and planned clinical trials could result in increased costs to us, or delay or limit our ability to generate revenue and adversely affect our commercial prospects. • Use of our product candidates could be associated with side effects, adverse events or other properties or safety risks, which could delay or preclude approval, cause us to suspend or discontinue clinical trials, abandon a product candidate, limit the commercial profile of an approved label or result in other significant negative consequences that could severely harm our business, prospects, operating results and financial condition. 32 Table of Contents • We may find it difficult to enroll patients in our clinical trials.
If we are unable to successfully develop, obtain regulatory approval for and ultimately commercialize product candidates, or experience significant delays in doing so, our business will be materially harmed. 32 Table of Contents • Any difficulties or delays in the commencement or completion, or the termination or suspension, of our ongoing and planned clinical trials could result in increased costs to us, or delay or limit our ability to generate revenue and adversely affect our commercial prospects. • Use of our product candidates could be associated with side effects, adverse events or other properties or safety risks, which could delay or preclude approval, cause us to suspend or discontinue clinical trials, abandon a product candidate, limit the commercial profile of an approved label or result in other significant negative consequences that could severely harm our business, prospects, operating results and financial condition. • We may find it difficult to enroll patients in our clinical trials.
Even if we are able to obtain a license, the license would likely obligate us to pay license fees or royalties or both, and the rights granted to us might be nonexclusive, which could result in our competitors gaining access to the same intellectual property.
Even if we are able to obtain a license, the license would likely obligate us to pay license fees or royalties or both, and the rights granted to us might be nonexclusive, which could result in our competitors gaining access to the same intellectual property.
In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments, and if securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of our common stock.
In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments, and if securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of our common stock.
The commencement, associated data readouts and completion of clinical trials can be delayed for a number of reasons, including delays related to: • obtaining regulatory authorizations to commence a trial or reaching a consensus with regulatory authorities on trial design; • the FDA or comparable foreign regulatory authorities disagreeing as to the design or implementation of our clinical studies; • any failure or delay in reaching an agreement with CROs and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites; • obtaining approval from one or more IRBs or ethics committees; • IRBs or ethics committees refusing to approve, suspending or terminating the trial at an investigational site, precluding enrollment of additional subjects, or withdrawing their approval of the trial; • changes to clinical trial protocol; • clinical sites deviating from trial protocol or dropping out of a trial; • manufacturing sufficient quantities of product candidate for use in clinical trials; • subjects failing to enroll or remain in our trials at the rate we expect, or failing to return for post-treatment follow-up; • subjects choosing an alternative treatment for the indications for which we are developing our product candidates, or participating in competing clinical trials; • lack of adequate funding to continue the clinical trial; • subjects experiencing severe or unexpected drug-related adverse effects; • occurrence of serious adverse events in trials of the same class of agents conducted by other companies; 39 Table of Contents • selection of clinical endpoints that require prolonged periods of clinical observation or analysis of the resulting data; • a facility manufacturing our product candidates or any of their components being ordered by the FDA or comparable foreign regulatory authorities to temporarily or permanently shut down due to violations of cGMP, regulations or other applicable requirements, or infections or cross-contaminations of product candidates in the manufacturing process; • any changes to our manufacturing process that may be necessary or desired; • third-party clinical investigators losing the licenses or permits necessary to perform our clinical trials, not performing our clinical trials on our anticipated schedule or consistent with the clinical trial protocol, GCP, or other regulatory requirements; • third-party contractors not performing data collection or analysis in a timely or accurate manner; or • third-party contractors becoming debarred or suspended or otherwise penalized by the FDA or other government or regulatory authorities for violations of regulatory requirements, in which case we may need to find a substitute contractor, and we may not be able to use some or all of the data produced by such contractors in support of our marketing applications.
The commencement, associated data readouts and completion of clinical trials can be delayed for a number of reasons, including delays related to: • obtaining regulatory authorizations to commence a trial or reaching a consensus with regulatory authorities on trial design; • the FDA or comparable foreign regulatory authorities disagreeing as to the design or implementation of our clinical studies; • any failure or delay in reaching an agreement with CROs and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites; • obtaining approval from one or more IRBs or ethics committees; • IRBs or ethics committees refusing to approve, suspending or terminating the trial at an investigational site, precluding enrollment of additional subjects, or withdrawing their approval of the trial; • changes to clinical trial protocol; 42 Table of Contents • clinical sites deviating from trial protocol or dropping out of a trial; • manufacturing sufficient quantities of product candidate for use in clinical trials; • subjects failing to enroll or remain in our trials at the rate we expect, or failing to return for post-treatment follow-up; • subjects choosing an alternative treatment for the indications for which we are developing our product candidates, or participating in competing clinical trials; • lack of adequate funding to continue the clinical trial; • subjects experiencing severe or unexpected drug-related adverse effects; • occurrence of serious adverse events in trials of the same class of agents conducted by other companies; • selection of clinical endpoints that require prolonged periods of clinical observation or analysis of the resulting data; • a facility manufacturing our product candidates or any of their components being ordered by the FDA or comparable foreign regulatory authorities to temporarily or permanently shut down due to violations of cGMP, regulations or other applicable requirements, or infections or cross-contaminations of product candidates in the manufacturing process; • any changes to our manufacturing process that may be necessary or desired; • third-party clinical investigators losing the licenses or permits necessary to perform our clinical trials, not performing our clinical trials on our anticipated schedule or consistent with the clinical trial protocol, GCP, or other regulatory requirements; • third-party contractors not performing data collection or analysis in a timely or accurate manner; or • third-party contractors becoming debarred or suspended or otherwise penalized by the FDA or other government or regulatory authorities for violations of regulatory requirements, in which case we may need to find a substitute contractor, and we may not be able to use some or all of the data produced by such contractors in support of our marketing applications.
The FDA or comparable foreign regulatory authorities can delay, limit or deny approval of a product candidate for many reasons, including: • such authorities may disagree with the design or implementation of our or our collaborators’ current or future clinical trials; • negative or ambiguous results from our clinical trials or results may not meet the level of statistical significance required by the FDA or comparable foreign regulatory agencies for approval; • serious and unexpected drug-related side effects may be experienced by participants in our clinical trials or by individuals using drugs similar to our product candidates; • such authorities may not accept clinical data from trials which are conducted at clinical facilities or in countries where the standard of care is potentially different from that of the United States; • we or any of our current or future collaborators may be unable to demonstrate that a product candidate is safe and effective, and that product candidate’s clinical and other benefits outweigh its safety risks; • such authorities may disagree with our interpretation of data from preclinical studies or clinical trials; • such authorities may not agree that the data collected from clinical trials of our product candidates are acceptable or sufficient to support the submission of a BLA or other submission or to obtain regulatory approval in the United States or elsewhere, and such authorities may impose requirements for additional preclinical studies or clinical trials; • such authorities may disagree regarding the formulation, labeling and/or the specifications of our product candidates; • approval may be granted only for indications that are significantly more limited than what we apply for and/or with other significant restrictions on distribution and use; 43 Table of Contents • such authorities may find deficiencies in the manufacturing processes, approval policies or facilities of our third-party manufacturers with which we or any of our current or future collaborators contract for clinical and commercial supplies; • regulations of such authorities may significantly change in a manner rendering our or any of our potential future collaborators’ clinical data insufficient for approval; or • such authorities may not accept a submission due to, among other reasons, the content or formatting of the submission.
The FDA or comparable foreign regulatory authorities can delay, limit or deny approval of a product candidate for many reasons, including: • such authorities may disagree with the design or implementation of our or our collaborators’ current or future clinical trials; • negative or ambiguous results from our clinical trials or results may not meet the level of statistical significance required by the FDA or comparable foreign regulatory agencies for approval; • serious and unexpected drug-related side effects may be experienced by participants in our clinical trials or by individuals using drugs similar to our product candidates; • such authorities may not accept clinical data from trials which are conducted at clinical facilities or in countries where the standard of care is potentially different from that of the United States; 46 Table of Contents • we or any of our current or future collaborators may be unable to demonstrate that a product candidate is safe and effective, and that product candidate’s clinical and other benefits outweigh its safety risks; • such authorities may disagree with our interpretation of data from preclinical studies or clinical trials; • such authorities may not agree that the data collected from clinical trials of our product candidates are acceptable or sufficient to support the submission of a BLA or other submission or to obtain regulatory approval in the United States or elsewhere, and such authorities may impose requirements for additional preclinical studies or clinical trials; • such authorities may disagree regarding the formulation, labeling and/or the specifications of our product candidates; • approval may be granted only for indications that are significantly more limited than what we apply for and/or with other significant restrictions on distribution and use; • such authorities may find deficiencies in the manufacturing processes, approval policies or facilities of our third-party manufacturers with which we or any of our current or future collaborators contract for clinical and commercial supplies; • regulations of such authorities may significantly change in a manner rendering our or any of our potential future collaborators’ clinical data insufficient for approval; or • such authorities may not accept a submission due to, among other reasons, the content or formatting of the submission.
The market price for our 80 Table of Contents common stock may be influenced by those factors discussed in this “Risk Factors” section and many others, including: • results of our clinical trials and preclinical studies, and the results of trials of our competitors or those of other companies in our market sector; • our ability to enroll subjects in our ongoing and future clinical trials; • regulatory approval of our product candidates, or limitations to specific label indications or patient populations for its use, or changes or delays in the regulatory review process; • regulatory developments in the United States and foreign countries; • changes in the structure of healthcare payment systems; • the success or failure of our efforts to develop, acquire or license additional product candidates; • innovations, clinical trial results, product approvals and other developments regarding our competitors; • announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments; • manufacturing, supply or distribution delays or shortages; • any changes to our relationship with any manufacturers, suppliers, collaborators or other strategic partners; • achievement of expected product sales and profitability; • variations in our financial results or those of companies that are perceived to be similar to us; • market conditions in the biopharmaceutical sector and issuance of securities analysts’ reports or recommendations; • trading volume of our common stock; • an inability to obtain additional funding; • sales of our stock by insiders and stockholders; • general economic, industry and market conditions, other events or factors, many of which are beyond our control; • additions or departures of key personnel; and • intellectual property, product liability or other litigation against us.
The market price for our common stock may be influenced by those factors discussed in this “Risk Factors” section and many others, including: • results of our clinical trials and preclinical studies, and the results of trials of our competitors or those of other companies in our market sector; • our ability to enroll subjects in our ongoing and future clinical trials; • regulatory approval of our product candidates, or limitations to specific label indications or patient populations for its use, or changes or delays in the regulatory review process; 84 Table of Contents • regulatory developments in the United States and foreign countries; • changes in the structure of healthcare payment systems; • the success or failure of our efforts to develop, acquire or license additional product candidates; • innovations, clinical trial results, product approvals and other developments regarding our competitors; • announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments; • manufacturing, supply or distribution delays or shortages; • any changes to our relationship with any manufacturers, suppliers, collaborators or other strategic partners; • achievement of expected product sales and profitability; • variations in our financial results or those of companies that are perceived to be similar to us; • market conditions in the biopharmaceutical sector and issuance of securities analysts’ reports or recommendations; • trading volume of our common stock; • an inability to obtain additional funding; • sales of our stock by insiders and stockholders; • general economic, industry and market conditions, other events or factors, many of which are beyond our control; • additions or departures of key personnel; and • intellectual property, product liability or other litigation against us.
Our future capital requirements will depend on many factors, including, but not limited to: • the type, number, scope, progress, expansions, results, costs and timing of, discovery, preclinical studies and clinical trials of our product candidates which we are pursuing or may choose to pursue in the future; • the costs and timing of manufacturing for our product candidates and commercial manufacturing if any product candidate is approved; • the costs, timing and outcome of regulatory review of our product candidates; • the terms and timing of establishing and maintaining collaborations, licenses and other similar arrangements; • the costs of obtaining, maintaining and enforcing our patents and other intellectual property rights; • our efforts to enhance operational systems and hire additional personnel to satisfy our obligations as a public company, including enhanced internal controls over financial reporting; • the costs associated with hiring additional personnel and consultants as our preclinical, clinical and compliance activities increase; • the timing and amount of the milestone or other payments made to us under our current or future research and collaboration agreements; • the costs and timing of establishing or securing sales and marketing capabilities if any product candidate is approved; • our ability to achieve sufficient market acceptance, coverage and adequate reimbursement from third-party payors and adequate market share and revenue for any approved products; • the terms and timing of establishing and maintaining collaborations, licenses and other similar arrangements; and • costs associated with any products or technologies that we may in-license or acquire.
If the Merger is not completed, our future capital requirements will depend on many factors, including, but not limited to: • the type, number, scope, progress, expansions, results, costs and timing of, discovery, preclinical studies and clinical trials of our product candidates which we are pursuing or may choose to pursue in the future; • the costs and timing of manufacturing for our product candidates and commercial manufacturing if any product candidate is approved; • the costs, timing and outcome of regulatory review of our product candidates; • the terms and timing of establishing and maintaining collaborations, licenses and other similar arrangements; • the costs of obtaining, maintaining and enforcing our patents and other intellectual property rights; • our efforts to enhance operational systems and hire additional personnel to satisfy our obligations as a public company, including enhanced internal controls over financial reporting; • the costs associated with hiring additional personnel and consultants as our preclinical, clinical and compliance activities increase; • the timing and amount of the milestone or other payments made to us under our current or future research and collaboration agreements; • the costs and timing of establishing or securing sales and marketing capabilities if any product candidate is approved; • our ability to achieve sufficient market acceptance, coverage and adequate reimbursement from third-party payors and adequate market share and revenue for any approved products; • the terms and timing of establishing and maintaining collaborations, licenses and other similar arrangements; and • costs associated with any products or technologies that we may in-license or acquire.
The provisions in our charter documents include the following: • a classified board of directors with three-year staggered terms, which may delay the ability of stockholders to change the membership of a majority of our board of directors; • no cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates; • the exclusive right of our board of directors, unless the board of directors grants such right to the stockholders, to elect a director to fill a vacancy created by the expansion of the board of directors or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our board of directors; • the required approval of at least 66-2/3% of the shares entitled to vote to remove a director for cause, and the prohibition on removal of directors without cause; • the ability of our board of directors to authorize the issuance of shares of preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquiror; • the ability of our board of directors to alter our amended and restated bylaws without obtaining stockholder approval; • the required approval of at least 66-2/3% of the shares entitled to vote to adopt, amend or repeal our amended and restated bylaws or repeal the provisions of our amended and restated certificate of incorporation regarding the election and removal of directors; • a prohibition on stockholder action by written consent, which forces stockholder action to be taken at an annual or special meeting of our stockholders; • an exclusive forum provision providing that the Court of Chancery of the State of Delaware will be the exclusive forum for certain actions and proceedings; • the requirement that a special meeting of stockholders may be called only by the board of directors, the chair of our board of directors, our chief executive officer or our president (in the absence of a chief executive officer), which may delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors; and 82 Table of Contents • advance notice and other procedural requirements that stockholders must comply with in order to nominate candidates to our board of directors or to propose matters to be acted upon at a stockholders’ meeting, which may discourage or deter a potential acquiror from conducting a solicitation of proxies to elect the acquiror’s own slate of directors or otherwise attempting to obtain control of us.
The provisions in our charter documents include the following: • a classified board of directors with three-year staggered terms, which may delay the ability of stockholders to change the membership of a majority of our board of directors; • no cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates; • the exclusive right of our board of directors, unless the board of directors grants such right to the stockholders, to elect a director to fill a vacancy created by the expansion of the board of directors or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our board of directors; • the required approval of at least 66-2/3% of the shares entitled to vote to remove a director for cause, and the prohibition on removal of directors without cause; • the ability of our board of directors to authorize the issuance of shares of preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquiror; • the ability of our board of directors to alter our amended and restated bylaws without obtaining stockholder approval; • the required approval of at least 66-2/3% of the shares entitled to vote to adopt, amend or repeal our amended and restated bylaws or repeal the provisions of our amended and restated certificate of incorporation regarding the election and removal of directors; • a prohibition on stockholder action by written consent, which forces stockholder action to be taken at an annual or special meeting of our stockholders; • an exclusive forum provision providing that the Court of Chancery of the State of Delaware will be the exclusive forum for certain actions and proceedings; • the requirement that a special meeting of stockholders may be called only by the board of directors, the chair of our board of directors, our chief executive officer or our president (in the absence of a chief executive officer), which may delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors; and • advance notice and other procedural requirements that stockholders must comply with in order to nominate candidates to our board of directors or to propose matters to be acted upon at a stockholders’ meeting, which may discourage or deter a potential acquiror from conducting a solicitation of proxies to elect the acquiror’s own slate of directors or otherwise attempting to obtain control of us.
Similar to the U.S. federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation; • the federal Physician Payments Sunshine Act requires certain manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program, with specific exceptions, to report annually to the Centers for Medicare & Medicaid Services, or CMS, information related to payments or other transfers of value made during the previous year to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain other health care providers including, among others, physician assistants and nurse practitioners, and teaching hospitals, and applicable manufacturers and applicable group purchasing organizations to report annually to CMS ownership and investment interests held during the previous year by physicians as defined under statute and their immediate family members; • analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers; • some state laws require biotechnology companies to comply with the biotechnology industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government and may require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; and • some state laws that require biotechnology companies to report information on the pricing of certain drug products; and some state and local laws require the registration or pharmaceutical sales representatives.
Similar to the U.S. 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; 63 Table of Contents • the federal Physician Payments Sunshine Act requires certain manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program, with specific exceptions, to report annually to the Centers for Medicare & Medicaid Services, or CMS, information related to payments or other transfers of value made during the previous year to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain other health care providers including, among others, physician assistants and nurse practitioners, and teaching hospitals, and applicable manufacturers and applicable group purchasing organizations to report annually to CMS ownership and investment interests held during the previous year by physicians as defined under statute and their immediate family members; • analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers; • some state laws require biotechnology companies to comply with the biotechnology industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government and may require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; and • some state laws that require biotechnology companies to report information on the pricing of certain drug products; and some state and local laws require the registration or pharmaceutical sales representatives.
Despite the implementation of security measures, our internal technology systems (including infrastructure) and those of our current and any future CROs and other contractors, consultants and collaborators are vulnerable to attack, damage and interruption from computer viruses and malware (e.g. ransomware), misconfigurations, "bugs" or other vulnerabilities, malicious code, cybersecurity threats (such as denial or degredation-of-service attacks, cyber-attacks or cyber-intrusions over the Internet, hacking, phishing and other social engineering attacks), unauthorized access or use, natural disasters, terrorism, war and telecommunication and electrical failures, employee theft or misuse, human error, fraud, and sophisticated nation-state and nation-state-supported actors.
Despite the implementation of security measures, our information technology systems (including infrastructure) and those of our current and any future CROs and other contractors, consultants and collaborators are vulnerable to attack, damage and interruption from computer viruses and malware (e.g. ransomware), misconfigurations, "bugs" or other vulnerabilities, malicious code, cybersecurity threats (such as denial or degredation-of-service attacks, cyber-attacks or cyber-intrusions over the Internet, hacking, phishing and other social engineering attacks), unauthorized access or use, natural disasters, terrorism, war and telecommunication and electrical failures, employee theft or misuse, human error, fraud, and sophisticated nation-state and nation-state-supported actors.
If we obtain regulatory approval of our product candidates and ultimately commercialize our products in foreign markets, we would be subject to additional risks and uncertainties, including: • different regulatory requirements for approval of drugs in foreign countries; • reduced protection for intellectual property rights; • the existence of additional third-party patent rights of potential relevance to our business; • unexpected changes in tariffs, trade barriers and regulatory requirements; • economic weakness, including inflation, or political instability in particular foreign economies and markets; • compliance with tax, employment, immigration and labor laws for employees living or traveling abroad; • foreign currency fluctuations, which could result in increased operating expenses and reduced revenues, and other obligations incident to doing business in another country; • foreign reimbursement, pricing and insurance regimes; • workforce uncertainty in countries where labor unrest is common; • production shortages resulting from any events affecting raw material supply or manufacturing capabilities abroad; and • business interruptions resulting from geopolitical actions, including war and terrorism, or natural disasters including earthquakes, typhoons, floods and fires.
If we obtain regulatory approval of our product candidates and ultimately commercialize our products in foreign markets, we would be subject to additional risks and uncertainties, including: • different regulatory requirements for approval of drugs in foreign countries; • reduced protection for intellectual property rights; • the existence of additional third-party patent rights of potential relevance to our business; • unexpected changes in tariffs, trade barriers and regulatory requirements; • economic weakness, including inflation, or political instability in particular foreign economies and markets; • compliance with tax, employment, immigration and labor laws for employees living or traveling abroad; • foreign currency fluctuations, which could result in increased operating expenses and reduced revenues, and other obligations incident to doing business in another country; • foreign reimbursement, pricing and insurance regimes; • workforce uncertainty in countries where labor unrest is common; • production shortages resulting from any events affecting raw material supply or manufacturing capabilities abroad; and 61 Table of Contents • business interruptions resulting from geopolitical actions, including war and terrorism, or natural disasters including earthquakes, typhoons, floods and fires.
The degree of market acceptance of our products will depend on a number of factors, including: • demonstration of clinical efficacy and safety compared to other more-established products; • the indications for which our product candidates are approved; • the limitation of our targeted patient population and other limitations or warnings contained in any FDA-approved labeling; • acceptance of a new drug for the relevant indication by healthcare providers and their patients; • the pricing and cost-effectiveness of our products, as well as the cost of treatment with our products in relation to alternative treatments and therapies; • our ability to obtain and maintain sufficient third-party coverage and adequate reimbursement from government healthcare programs, including Medicare and Medicaid, private health insurers and other third-party payors; • the willingness of patients to pay all, or a portion of, out-of-pocket costs associated with our products in the absence of sufficient third-party coverage and adequate reimbursement; • any restrictions on the use of our products, and the prevalence and severity of any adverse effects; • potential product liability claims; • the timing of market introduction of our products as well as competitive drugs; • the effectiveness of our or any of our current or potential future collaborators’ sales and marketing strategies; and • unfavorable publicity relating to the product.
The degree of market acceptance of our products will depend on a number of factors, including: • demonstration of clinical efficacy and safety compared to other more-established products; • the indications for which our product candidates are approved; 56 Table of Contents • the limitation of our targeted patient population and other limitations or warnings contained in any FDA-approved labeling; • acceptance of a new drug for the relevant indication by healthcare providers and their patients; • the pricing and cost-effectiveness of our products, as well as the cost of treatment with our products in relation to alternative treatments and therapies; • our ability to obtain and maintain sufficient third-party coverage and adequate reimbursement from government healthcare programs, including Medicare and Medicaid, private health insurers and other third-party payors; • the willingness of patients to pay all, or a portion of, out-of-pocket costs associated with our products in the absence of sufficient third-party coverage and adequate reimbursement; • any restrictions on the use of our products, and the prevalence and severity of any adverse effects; • potential product liability claims; • the timing of market introduction of our products as well as competitive drugs; • the effectiveness of our or any of our current or potential future collaborators’ sales and marketing strategies; and • unfavorable publicity relating to the product.
For example: • others may be able to make products that are similar to our product candidate or utilize similar technology that are not covered by the claims of the patents that we license or may own; • we might not have been the first to make the inventions covered by our current or future patent applications; • we might not have been the first to file patent applications covering our inventions; • others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our intellectual property rights; • it is possible that our current or future patent applications will not lead to issued patents; • any patent issuing from our current or future patent applications may be held invalid or unenforceable, including as a result of legal challenges by our competitors or other third parties; • our competitors or other third parties might conduct research and development activities in countries where we do not have patent rights and then use the information learned from such activities to develop competitive products for sale in our major commercial markets; • we may not develop additional proprietary technologies that are patentable; • the patents of others may harm our business; and 75 Table of Contents • we may choose not to file for patent protection in order to maintain certain trade secrets or know-how, and a third party may subsequently file a patent application covering such intellectual property.
For example: • others may be able to make products that are similar to our product candidate or utilize similar technology that are not covered by the claims of the patents that we license or may own; • we might not have been the first to make the inventions covered by our current or future patent applications; • we might not have been the first to file patent applications covering our inventions; • others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our intellectual property rights; • it is possible that our current or future patent applications will not lead to issued patents; • any patent issuing from our current or future patent applications may be held invalid or unenforceable, including as a result of legal challenges by our competitors or other third parties; • our competitors or other third parties might conduct research and development activities in countries where we do not have patent rights and then use the information learned from such activities to develop competitive products for sale in our major commercial markets; • we may not develop additional proprietary technologies that are patentable; • the patents of others may harm our business; and • we may choose not to file for patent protection in order to maintain certain trade secrets or know-how, and a third party may subsequently file a patent application covering such intellectual property.
These fluctuations may occur due to a variety of factors, many of which are outside of our control, including, but not limited to: • the timing and cost of, and level of investment in, research, development, regulatory approval and commercialization activities relating to our product candidates, which may change from time to time; • coverage and reimbursement policies with respect to our product candidates, if approved, and potential future drugs that compete with our products; • the cost of manufacturing our product candidates, which may vary depending on the quantity of production and the terms of our agreements with third-party manufacturers; • the timing and amount of the milestone or other payments we may receive under our current or future research and collaboration agreements; expenditures that we may incur to acquire, develop or commercialize additional product candidates and technologies; • the level of demand for any approved products, which may vary significantly; 58 Table of Contents • future accounting pronouncements or changes in our accounting policies; and • the timing and success or failure of preclinical studies or clinical trials for our product candidates or competing product candidates, or any other change in the competitive landscape of our industry, including consolidation among our competitors or partners.
These fluctuations may occur due to a variety of factors, many of which are outside of our control, including, but not limited to: • the timing and cost of, and level of investment in, research, development, regulatory approval and commercialization activities relating to our product candidates, which may change from time to time; • coverage and reimbursement policies with respect to our product candidates, if approved, and potential future drugs that compete with our products; • the cost of manufacturing our product candidates, which may vary depending on the quantity of production and the terms of our agreements with third-party manufacturers; • the timing and amount of the milestone or other payments we may receive under our current or future research and collaboration agreements; expenditures that we may incur to acquire, develop or commercialize additional product candidates and technologies; • the level of demand for any approved products, which may vary significantly; • future accounting pronouncements or changes in our accounting policies; and • the timing and success or failure of preclinical studies or clinical trials for our product candidates or competing product candidates, or any other change in the competitive landscape of our industry, including consolidation among our competitors or partners.
ACA provisions of importance to our product candidates established an annual, nondeductible fee on any entity that manufactures or imports specified branded prescription drugs and biologic agents; extended manufacturers’ Medicaid rebate liability to covered drugs dispensed to individuals who are enrolled in Medicaid managed care organizations; expanded the entities eligible for enrollment in the 340B program; increased the statutory minimum rebates a manufacturer must pay under the Medicaid Drug Rebate Program; established a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in and conduct comparative clinical effectiveness research, along with funding for such research; and established a Center for Medicare and Medicaid Innovation at CMS to test innovative payment and service delivery models to lower Medicare and Medicaid spending.
ACA provisions of importance to our product candidates established an annual, nondeductible fee on any entity that manufactures or imports specified branded prescription drugs and biologic agents; extended manufacturers’ Medicaid rebate liability to covered drugs dispensed to individuals who are enrolled in Medicaid managed care organizations; expanded the entities eligible for enrollment in the 340B program; increased the statutory minimum rebates a manufacturer must pay under the Medicaid Drug Rebate Program; established a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in and conduct comparative clinical effectiveness 64 Table of Contents research, along with funding for such research; and established a Center for Medicare and Medicaid Innovation at CMS to test innovative payment and service delivery models to lower Medicare and Medicaid spending.
The success of our product candidates will depend on several factors, including the following: • successful completion of preclinical studies with favorable results, including those compliant with GLP, toxicology studies, biodistribution studies and minimum effective dose studies in animals; • allowance to proceed with clinical trials under INDs by the FDA, or under similar regulatory submissions by comparable foreign regulatory authorities for the conduct of clinical trials of our product candidates and our proposed design of future clinical trials; • successful enrollment in clinical trials and completion of clinical trials with favorable results; • demonstrating safety, purity, potency and efficacy of our product candidates to the satisfaction of applicable regulatory authorities; • receipt of marketing approvals from applicable regulatory authorities, including BLAs from the FDA, and maintaining such approvals; • making arrangements with our third-party manufacturers for, or establishing, commercial manufacturing capabilities; • establishing sales, marketing and distribution capabilities and launching commercial sales of our products, if and when approved, whether alone or in collaboration with others; • establishing and maintaining patent and trade secret protection or regulatory exclusivity for our product candidates, and defending these items, as required; • maintaining an acceptable safety profile of our products following approval; and • maintaining and growing an organization of people who can develop and commercialize our products and technology.
The success of our product candidates will depend on several factors, including the following: • successful completion of preclinical studies with favorable results, including those compliant with GLP, toxicology studies, biodistribution studies and minimum effective dose studies in animals; • allowance to proceed with clinical trials under INDs by the FDA, or under similar regulatory submissions by comparable foreign regulatory authorities for the conduct of clinical trials of our product candidates and our proposed design of future clinical trials; • successful enrollment in clinical trials and completion of clinical trials with favorable results; • demonstrating safety, purity, potency and efficacy of our product candidates to the satisfaction of applicable regulatory authorities; • receipt of marketing approvals from applicable regulatory authorities, including BLAs from the FDA, and maintaining such approvals; • making and managing arrangements with our third-party manufacturers for, or establishing, commercial manufacturing capabilities; 39 Table of Contents • establishing sales, marketing and distribution capabilities and launching commercial sales of our products, if and when approved, whether alone or in collaboration with others; • establishing and maintaining patent and trade secret protection or regulatory exclusivity for our product candidates, and defending these items, as required; • maintaining an acceptable safety profile of our products following approval; and • maintaining and growing an organization of people who can develop and commercialize our products and technology.
Subject enrollment, a significant factor in the timing of clinical trials, is affected by many factors including the size and nature of the patient population, the 40 Table of Contents proximity of patients to clinical sites, the eligibility and exclusion criteria for the trial, the design of the clinical trial, the risk that enrolled patients will not complete a clinical trial, our ability to recruit clinical trial investigators with the appropriate competencies and experience, competing clinical trials and clinicians’ and patients’ perceptions as to the potential advantages and risks of the product candidate being studied in relation to other available therapies, including any new products that may be approved for the indications we are investigating as well as any product candidates under development.
Subject enrollment, a significant factor in the timing of clinical trials, is affected by many factors including the size and nature of the patient population, the proximity of patients to clinical sites, the eligibility and exclusion criteria for the trial, the design of the clinical trial, the risk that enrolled patients will not complete a clinical trial, our ability to recruit clinical trial investigators with the appropriate competencies and experience, competing clinical trials and clinicians’ and patients’ perceptions as to the potential advantages and risks of the product candidate being studied in relation to other available therapies, including any new products that may be approved for the indications we are investigating as well as any product candidates under development.
Federal Trade Commission, or the FTC, also has authority to initiate enforcement actions against entities that mislead customers about HIPAA compliance, make deceptive statements about privacy and data sharing in privacy policies, fail to limit third-party use of personal health information, fail to implement policies to protect personal health information or engage in other unfair practices that harm customers or that may violate Section 5 of the FTC Act.
Federal Trade Commission, or the FTC, also has authority to initiate enforcement actions against entities that mislead consumers about HIPAA compliance, make deceptive statements about privacy and data sharing in privacy policies, fail to limit third-party use of health information, fail to implement policies to protect health information or engage in other unfair practices that harm customers or that may violate Section 5 of the FTC Act.
Disputes that may arise between us and our licensors regarding intellectual property subject to a license agreement could include disputes regarding: • the scope of rights granted under the license agreement and other interpretation-related issues; • whether and the extent to which our technology and processes infringe on intellectual property of the licensor that is not subject to the licensing agreement; • our right to sublicense patent and other rights to third parties under collaborative development relationships; • our diligence obligations with respect to the use of the licensed technology in relation to our development and commercialization of our product candidates and what activities satisfy those diligence obligations; and • the ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our licensors and us.
Disputes that may arise between us and our licensors regarding intellectual property subject to a license agreement could include disputes regarding: • the scope of rights granted under the license agreement and other interpretation-related issues; • whether and the extent to which our technology and processes infringe on intellectual property of the licensor that is not subject to the licensing agreement; 80 Table of Contents • our right to sublicense patent and other rights to third parties under collaborative development relationships; • our diligence obligations with respect to the use of the licensed technology in relation to our development and commercialization of our product candidates and what activities satisfy those diligence obligations; and • the ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our licensors and us.
For further discussion on the potential liability related to the violation of these laws, see “Risk Factors—We, our collaborators and our service providers may be subject to a variety of data privacy and security laws and contractual obligations, which could increase compliance costs and our actual or alleged failure to comply with them could subject us to potentially significant fines or penalties, regulatory investigation, negative publicity, liability or and otherwise harm our business, results of operations and financial condition.” 85 Table of Contents Business disruptions could seriously harm our future revenue and financial condition and increase our costs and expenses.
For further discussion on the potential liability related to the violation of these laws, see “Risk Factors—We, our collaborators and our service providers may be subject to a variety of data privacy and security laws and contractual obligations, which could increase compliance costs and our actual or alleged failure to comply with them could subject us to potentially significant fines or penalties, regulatory investigation, negative publicity, liability or and otherwise harm our business, results of operations and financial condition.” Business disruptions could seriously harm our future revenue and financial condition and increase our costs and expenses.
Misconduct by these parties could include intentional, reckless and/or negligent conduct or disclosure of unauthorized activities to us that violate: (i) the laws and regulations of the FDA and other similar regulatory requirements, including those laws that require the reporting of true, complete and accurate information to such authorities, (ii) manufacturing standards, including cGMP requirements, (iii) federal and state data privacy, security, fraud and abuse and other healthcare laws and regulations in the United States and abroad or (iv) laws that require the true, complete and accurate reporting of financial information or data.
Misconduct by 69 Table of Contents these parties could include intentional, reckless and/or negligent conduct or disclosure of unauthorized activities to us that violate: (i) the laws and regulations of the FDA and other similar regulatory requirements, including those laws that require the reporting of true, complete and accurate information to such authorities, (ii) manufacturing standards, including cGMP requirements, (iii) federal and state data privacy, security, fraud and abuse and other healthcare laws and regulations in the United States and abroad or (iv) laws that require the true, complete and accurate reporting of financial information or data.
Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware is the exclusive forum for any derivative action or proceeding brought on our behalf, any action asserting a breach of fiduciary duty, any action asserting a claim against us arising pursuant to the Delaware General Corporation Law, our amended and restated certificate of incorporation or our amended and restated bylaws, or any action asserting a claim against us that is governed by the internal affairs doctrine; provided, that, this provision would not apply to suits brought to enforce a duty or liability created by the Exchange Act.
Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware is the exclusive forum for any derivative action or proceeding brought on our behalf, any action asserting a breach of fiduciary duty, any action asserting a claim against us arising pursuant to the Delaware General Corporation Law, our amended and restated certificate of incorporation or our amended and restated 86 Table of Contents bylaws, or any action asserting a claim against us that is governed by the internal affairs doctrine; provided, that, this provision would not apply to suits brought to enforce a duty or liability created by the Exchange Act.
However, the FDA and other foreign equivalents may not accept data from such trials, in which case our development plans will be delayed, which could materially harm our business. We are conducting clinical trials for our product candidates outside the United States.
We are conducting certain of our clinical trials for our product candidates outside of the United States. However, the FDA and other foreign equivalents may not accept data from such trials, in which case our development plans will be delayed, which could materially harm our business. We are conducting clinical trials for our product candidates outside the United States.
For example, the CCPA requires covered businesses that process the personal information of California residents to, among other things: (i) provide certain disclosures to California residents regarding the business’s collection, use, and disclosure of their personal information; (ii) receive and respond to requests from California residents to access, delete, and correct their personal information, or to opt out of certain disclosures of their personal information; and (iii) enter into specific contractual provisions with service providers that process California resident personal information on the business’s behalf.
For example, the CCPA requires covered businesses that process the personal information of California residents 82 Table of Contents to, among other things: (i) provide certain disclosures to California residents regarding the business’s collection, use, and disclosure of their personal information; (ii) receive and respond to requests from California residents to access, delete, and correct their personal information, or to opt out of certain disclosures of their personal information; and (iii) enter into specific contractual provisions with service providers that process California resident personal information on the business’s behalf.
Our competitors may render our AOC approach obsolete, or limit the commercial value of our product candidates, by advances in existing 37 Table of Contents technological approaches or the development of new or different approaches (including, for example, using different mAbs or transporter protein combinations with oligonucleotides than us), potentially eliminating the advantages in our drug discovery process that we believe we derive from our research approach and proprietary technologies.
Our competitors may render our AOC approach obsolete, or limit the commercial value of our product candidates, by advances in existing technological approaches or the development of new or different approaches (including, for example, using different mAbs or transporter protein combinations with oligonucleotides than us), potentially eliminating the advantages in our drug discovery process that we believe we derive from our research approach and proprietary technologies.
Among other things, the IRA requires manufacturers of certain drugs to engage in price negotiations with Medicare, with prices that can be negotiated subject to a cap; imposes 61 Table of Contents rebates under Medicare Part B and Medicare Part D to penalize price increases that outpace inflation (first due in 2023); redesigns the Medicare Part D benefit (beginning in 2024); and replaces the Part D coverage gap discount program with a new manufacturer discount program (beginning in 2025).
Among other things, the IRA requires manufacturers of certain drugs to engage in price negotiations with Medicare, with prices that can be negotiated subject to a cap; imposes rebates under Medicare Part B and Medicare Part D to penalize price increases that outpace inflation (first due in 2023); redesigns the Medicare Part D benefit (beginning in 2024); and replaces the Part D coverage gap discount program with a new manufacturer discount program (beginning in 2025).
For example, our product candidates may require specific formulations to work effectively and efficiently, we may develop product candidates containing our compounds and pre-existing pharmaceutical compounds, or we may be required by the FDA or comparable foreign regulatory authorities to provide a companion diagnostic test or tests with our product candidates, any of which could require us to obtain rights to 77 Table of Contents use intellectual property held by third parties.
For example, our product candidates may require specific formulations to work effectively and efficiently, we may develop product candidates containing our compounds and pre-existing pharmaceutical compounds, or we may be required by the FDA or comparable foreign regulatory authorities to provide a companion diagnostic test or tests with our product candidates, any of which could require us to obtain rights to use intellectual property held by third parties.
Such legislation could limit the price or payment for certain drugs, and a number of states are authorized to impose civil monetary penalties or pursue other enforcement mechanisms against manufacturers who fail to comply with drug price transparency requirements, including the untimely, inaccurate, or incomplete reporting of drug pricing information. Pricing and rebate calculations vary among products and programs.
Such legislation could limit the price or payment for certain drugs, and a number of states are authorized to impose civil monetary penalties or pursue other enforcement mechanisms against manufacturers who fail to comply with drug price transparency requirements, including the untimely, inaccurate, or incomplete reporting of drug pricing information. 67 Table of Contents Pricing and rebate calculations vary among products and programs.
In such an event, potential competitors might be able to enter the market with similar or identical products or technology, which could have a material adverse effect on our business, financial condition, results of operations, and prospects. 69 Table of Contents Changes in U.S. patent law could diminish the value of patents in general, thereby impairing our ability to protect our products.
In such an event, potential competitors might be able to enter the market with similar or identical products or technology, which could have a material adverse effect on our business, financial condition, results of operations, and prospects. Changes in U.S. patent law could diminish the value of patents in general, thereby impairing our ability to protect our products.
Many of our competitors, either alone or with strategic partners, have substantially greater financial, technical and human resources than we do. Accordingly, our competitors may be more successful than us in research and development, manufacturing, preclinical testing, conducting clinical trials, obtaining approval for treatments and achieving widespread market acceptance, rendering our treatments obsolete or non- 56 Table of Contents competitive.
Many of our competitors, either alone or with strategic partners, have substantially greater financial, technical and human resources than we do. Accordingly, our competitors may be more successful than us in research and development, manufacturing, preclinical testing, conducting clinical trials, obtaining approval for treatments and achieving widespread market acceptance, rendering our treatments obsolete or non-competitive.
If the United States government exercised its march-in rights in our future intellectual property rights that are generated through the use of United States government funding or grants, we could be forced to license or sublicense intellectual property developed by us or that we license on terms unfavorable to us, and there can be no assurance that we would receive compensation from the United States government for the exercise of such rights.
If the United States government exercised its march-in rights in our future intellectual property rights that are generated through the use of United States 79 Table of Contents government funding or grants, we could be forced to license or sublicense intellectual property developed by us or that we license on terms unfavorable to us, and there can be no assurance that we would receive compensation from the United States government for the exercise of such rights.
If these relationships and any related compensation result in perceived or actual conflicts of interest, or the FDA concludes that the financial relationship may have affected the interpretation of the study, the integrity of the data generated at the applicable clinical trial site may be questioned and the utility 48 Table of Contents of the clinical trial itself may be jeopardized, which could result in the delay or rejection by the FDA of any BLA we submit.
If these relationships and any related compensation result in perceived or actual conflicts of interest, or the FDA concludes that the financial relationship may have affected the interpretation of the study, the integrity of the data generated at the applicable clinical trial site may be questioned and the utility of the clinical trial itself may be jeopardized, which could result in the delay or rejection by the FDA of any BLA we submit.
Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could have a material adverse effect on our ability to compete in the marketplace. 74 Table of Contents If our trademarks and trade names are not adequately protected, then we may not be able to build name recognition in our markets of interest and our business may be adversely affected.
Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could have a material adverse effect on our ability to compete in the marketplace. If our trademarks and trade names are not adequately protected, then we may not be able to build name recognition in our markets of interest and our business may be adversely affected.
In addition, there is a risk that one or more of our current service providers, manufacturers and other partners may not survive an economic downturn, which could directly affect our ability to attain our operating goals on schedule and on budget. Changes in tax laws may impact our future financial position and results of operations.
In addition, there is a risk that one or more of our current service providers, manufacturers and other partners may not survive an economic downturn, which could directly affect our ability to attain our operating goals on schedule and on budget. 90 Table of Contents Changes in tax laws may impact our future financial position and results of operations.
We may have to relinquish valuable rights to our future revenue streams, research programs, product candidates or AOC platform, or grant licenses on terms that may not be favorable to us, as part of any such arrangement, and such arrangements may restrict us from entering into additional agreements with other potential collaborators.
We may have to relinquish valuable rights to our future revenue streams, research programs, product candidates or AOC platform, or grant licenses on terms that may not be favorable to us, as part of any such arrangement, and such arrangements may restrict us from entering into additional agreements 54 Table of Contents with other potential collaborators.
We currently hold approximately $10 million in product liability insurance coverage in the aggregate. We may need to increase our insurance coverage as we expand our clinical trials or if we commence commercialization of our product candidates. Insurance coverage is increasingly expensive.
We currently hold approximately $20 million in product liability insurance coverage in the aggregate. We may need to increase our insurance coverage as we expand our clinical trials or if we commence commercialization of our product candidates. Insurance coverage is increasingly expensive.
In addition, the FDA may later decide that the product candidate no longer meets the conditions for qualification and rescind granted designations. We have obtained Rare Pediatric Disease designation for del-zota for the treatment of DMD44. However, there is no guarantee that FDA approval of will result in issuance of a priority review voucher.
In addition, the FDA may later decide that the product candidate no longer meets the conditions for qualification and rescind granted designations. 49 Table of Contents We have obtained Rare Pediatric Disease designation for del-zota for the treatment of DMD44. However, there is no guarantee that FDA approval of will result in issuance of a priority review voucher.
Any determination that our operations or activities are not in compliance with existing laws or regulations could result in the imposition of fines, civil and criminal penalties, equitable remedies, including disgorgement, injunctive relief and/or other 65 Table of Contents sanctions against us, and remediation of any such findings could have an adverse effect on our business operations.
Any determination that our operations or activities are not in compliance with existing laws or regulations could result in the imposition of fines, civil and criminal penalties, equitable remedies, including disgorgement, injunctive relief and/or other sanctions against us, and remediation of any such findings could have an adverse effect on our business operations.
Proceedings to enforce our intellectual property and proprietary rights in foreign jurisdictions could result in substantial costs and divert our efforts and attention from other aspects of our business, could put our patents at risk of being invalidated or interpreted narrowly, could put our patent applications at risk of not issuing and could provoke third parties to assert claims against us.
Proceedings to enforce our intellectual property and proprietary rights in foreign jurisdictions could result in substantial costs and divert our efforts and attention from other aspects of our business, could put our 72 Table of Contents patents at risk of being invalidated or interpreted narrowly, could put our patent applications at risk of not issuing and could provoke third parties to assert claims against us.
Depending upon the timing, duration and specifics of any FDA marketing approval of any product candidate we may develop, one or more of patents issuing from our U.S. patent applications may be eligible for limited patent term extension under the Drug Price Competition and Patent Term Restoration Action of 1984, or the Hatch-Waxman Amendments.
Depending upon the timing, duration and specifics of any FDA marketing approval of any product candidate we may develop, one or more of patents issuing from our U.S. patent applications may be eligible for limited patent term extension under the Drug Price Competition and Patent Term Restoration Action of 1984, or 74 Table of Contents the Hatch-Waxman Amendments.
Grounds for a validity challenge could be an alleged failure to meet any of several statutory requirements, including lack of novelty, obviousness or non-enablement. Grounds for an unenforceability assertion could be an allegation that someone connected with prosecution of the patent 70 Table of Contents withheld relevant information from the USPTO, or made a misleading statement, during prosecution.
Grounds for a validity challenge could be an alleged failure to meet any of several statutory requirements, including lack of novelty, obviousness or non-enablement. Grounds for an unenforceability assertion could be an allegation that someone connected with prosecution of the patent withheld relevant information from the USPTO, or made a misleading statement, during prosecution.
If the FDA or any comparable foreign regulatory authority does not approve these facilities for the manufacture of our product candidates or if it withdraws any such approval in the future, we may need to find alternative manufacturing facilities, which would significantly impact our ability to develop, obtain regulatory approval for or market our product candidates, if approved.
If the FDA or any comparable foreign regulatory authority does not approve these facilities for the manufacture of our 52 Table of Contents product candidates or if it withdraws any such approval in the future, we may need to find alternative manufacturing facilities, which would significantly impact our ability to develop, obtain regulatory approval for or market our product candidates, if approved.
As a result, increasingly high barriers are being erected to the entry of new products. We face significant competition, and if our competitors develop technologies or product candidates more rapidly than we do or their technologies are more effective, our business and our ability to develop and successfully commercialize products may be adversely affected.
As a result, increasingly high barriers are being erected to the entry of new products. 58 Table of Contents We face significant competition, and if our competitors develop technologies or product candidates more rapidly than we do or their technologies are more effective, our business and our ability to develop and successfully commercialize products may be adversely affected.
Other companies pursuing a similar mechanism include Dyne Therapeutics with DYNE-251, a PMO conjugated to a Fab currently being evaluated in a Phase 1/2 clinical trial for patients amendable to Exon 51 skipping; Wave Life Sciences, Ltd. with WVE-N531, an unconjugated PN-modified exon-skipping oligonucleotide currently being evaluated in a Phase 1/2 clinical trial for patients amenable to Exon 53 skipping; PepGen with PGN-EDO51, a peptide-conjugated oligonucleotide for patients amenable to Exon 51 skipping being evaluated in a Phase 2 clinical trial; and PTC Therapeutics with ataluren, a small molecule targeting nonsense mutations in a Phase 3 clinical trial.
Other companies pursuing a similar mechanism include Dyne Therapeutics with DYNE-251, a PMO conjugated to a Fab currently being evaluated in a Phase 1/2 clinical trial for patients amendable to Exon 51 skipping; Wave Life Sciences, Ltd. with WVE-N531, an unconjugated PN-modified exon-skipping oligonucleotide currently being evaluated in a Phase 1/2 clinical trial for patients amenable to Exon 53 skipping; PepGen with PGN-EDO51, a peptide- 59 Table of Contents conjugated oligonucleotide for patients amenable to Exon 51 skipping being evaluated in a Phase 2 clinical trial; and PTC Therapeutics with ataluren, a small molecule targeting nonsense mutations in a Phase 3 clinical trial.
In connection with Medicare Part B, a pharmaceutical manufacturer must provide CMS with average sales price (ASP) information for its drugs or biologicals payable under Part B on a quarterly basis. ASP is calculated based on a statutorily defined formula, as well as regulations and interpretations of the statute by 62 Table of Contents CMS.
In connection with Medicare Part B, a pharmaceutical manufacturer must provide CMS with average sales price (ASP) information for its drugs or biologicals payable under Part B on a quarterly basis. ASP is calculated based on a statutorily defined formula, as well as regulations and interpretations of the statute by CMS.
Some of the policies we currently maintain include property, general liability, employment benefits liability, business automobile, workers’ compensation, malicious invasion of our electronic systems, directors’ and officers’, employment practices, fiduciary liability, and product liability insurance. We do not know, however, if we will be able to maintain insurance with adequate levels of coverage.
Some of the policies we currently maintain include property, general liability, employment benefits liability, business 68 Table of Contents automobile, workers’ compensation, malicious invasion of our electronic systems, directors’ and officers’, employment practices, fiduciary liability, and product liability insurance. We do not know, however, if we will be able to maintain insurance with adequate levels of coverage.
We may in the future pursue invalidity proceedings with respect to third-party patents. The outcome following legal assertions of invalidity is unpredictable. Even if resolved in our favor, these legal proceedings may cause us to incur significant expenses and could distract our technical and management personnel from their normal responsibilities.
We may in the future pursue invalidity proceedings with respect to third-party patents. The outcome following legal assertions of invalidity is unpredictable. Even if resolved in our favor, these legal proceedings 77 Table of Contents may cause us to incur significant expenses and could distract our technical and management personnel from their normal responsibilities.
Moreover, there have been only a limited number of clinical trials involving the use of oligonucleotide therapeutics or the proprietary technology used in our AOC platform. It is impossible to predict when or if any product candidates we may develop will prove safe in humans.
Moreover, there have been only a limited number of clinical trials involving the 44 Table of Contents use of oligonucleotide therapeutics or the proprietary technology used in our AOC platform. It is impossible to predict when or if any product candidates we may develop will prove safe in humans.
For 34 Table of Contents example, in August 2024, we entered into a sales agreement, or the 2024 Sales Agreement, with TD Securities (USA) LLC, or the Sales Agent, under which we may, from time to time, sell shares of common stock having an aggregate offering price of up to $400.0 million through the Sales Agent.
For example, in August 2024, we entered into a sales agreement, or the 2024 Sales Agreement, with TD Securities (USA) LLC, or the Sales Agent, under which we may, from time to time, sell shares of common stock having an aggregate offering price of up to $400.0 million through the Sales Agent.
Our ability to utilize our NOLs and other tax attributes to offset future taxable income or tax liabilities may be limited as a result of ownership changes, including potential changes in connection with our initial public offering, or IPO, that was completed in June 2020, our subsequent public offerings or any future offerings.
Our ability to utilize our NOL carryforwards and other tax attributes to offset future taxable income or tax liabilities may be limited as a result of ownership changes, including potential changes in connection with our initial public offering, or IPO, that was completed in June 2020, our subsequent public offerings or any future offerings.
The FDA may also revoke any priority review voucher if the Rare Pediatric Disease drug for which the voucher was awarded is not marketed in the U.S. within one year following the date of approval. 46 Table of Contents We have obtained Rare Pediatric Disease designation for del-zota for the treatment of DMD44.
The FDA may also revoke any priority review voucher if the Rare Pediatric Disease drug for which the voucher was awarded is not marketed in the U.S. within one year following the date of approval. We have obtained Rare Pediatric Disease designation for del-zota for the treatment of DMD44.
Any dispute with Lilly may result in the delay or termination of the research, development or commercialization of the Lilly AOCs, and may result in costly litigation that diverts our management’s attention 50 Table of Contents and resources away from our day-to-day activities and which may adversely affect our business, financial condition, results of operation and prospects.
Any dispute with Lilly may result in the delay or termination of the research, development or commercialization of the Lilly AOCs, and may result in costly litigation that diverts our management’s attention and resources away from our day-to-day activities and which may adversely affect our business, financial condition, results of operation and prospects.
In addition, we may need to obtain additional licenses from our existing licensors and others to advance our research or allow commercialization of product candidates we may develop. It is possible that we may be unable to obtain any 76 Table of Contents additional licenses at a reasonable cost or on reasonable terms, if at all.
In addition, we may need to obtain additional licenses from our existing licensors and others to advance our research or allow commercialization of product candidates we may develop. It is possible that we may be unable to obtain any additional licenses at a reasonable cost or on reasonable terms, if at all.
Additionally, our product candidates, if approved, could be subject to labeling and other restrictions on marketing or withdrawal from the market, and we may be subject to penalties if we fail to 51 Table of Contents comply with regulatory requirements or if we experience unanticipated problems with our product candidates, when and if any of them are approved.
Additionally, our product candidates, if approved, could be subject to labeling and other restrictions on marketing or withdrawal from the market, and we may be subject to penalties if we fail to comply with regulatory requirements or if we experience unanticipated problems with our product candidates, when and if any of them are approved.
Unexpected refunds to the government, and responding to a government investigation or 63 Table of Contents enforcement action, would be expensive and time-consuming, and could have a material adverse effect on our business, financial condition, results of operations and growth prospects if we enroll in the program.
Unexpected refunds to the government, and responding to a government investigation or enforcement action, would be expensive and time-consuming, and could have a material adverse effect on our business, financial condition, results of operations and growth prospects if we enroll in the program.
Filing, prosecuting and defending patents on our therapeutic programs and other proprietary technologies we may develop in all countries throughout the world would be prohibitively expensive, and the 68 Table of Contents laws of foreign countries may not protect our rights to the same extent as the laws of the United States.
Filing, prosecuting and defending patents on our therapeutic programs and other proprietary technologies we may develop in all countries throughout the world would be prohibitively expensive, and the laws of foreign countries may not protect our rights to the same extent as the laws of the United States.
A failure to obtain accelerated approval or any other form of expedited 44 Table of Contents development, review or approval for our product candidate would result in a longer time period to commercialization of such product candidate, if any, could increase the cost of development of such product candidate and could harm our competitive position in the marketplace.
A failure to obtain accelerated approval or any other form of expedited development, review or approval for our product candidate would result in a longer time period to commercialization of such product candidate, if any, could increase the cost of development of such product candidate and could harm our competitive position in the marketplace.
Nevertheless, we are responsible for ensuring that each of our clinical trials is conducted in accordance with the applicable protocol and legal, regulatory and scientific standards, and our reliance on our CROs and other third parties does not relieve us of our regulatory responsibilities.
Nevertheless, we are responsible for ensuring that each of our clinical trials is conducted in accordance with the applicable protocol and legal, regulatory and scientific standards, and our reliance on our 51 Table of Contents CROs and other third parties does not relieve us of our regulatory responsibilities.
Our approach to the discovery and development of product candidates based on our AOC platform is unproven, and we do not know whether we will be able to 33 Table of Contents develop any product candidates that succeed in clinical development or products of commercial value.
Our approach to the discovery and development of product candidates based on our AOC platform is unproven, and we do not know whether we will be able to develop any product candidates that succeed in clinical development or products of commercial value.
Identifying potential product candidates and conducting preclinical studies and clinical trials is a time consuming, expensive and uncertain process that takes years to complete, and we may never generate the necessary data or results required to obtain regulatory approval and commercialize our product candidates. In addition, our product candidates, if approved, may not achieve commercial success.
Identifying potential product candidates and conducting preclinical studies and clinical trials is a time consuming, expensive and uncertain process that takes years to complete, and we may never generate the 38 Table of Contents necessary data or results required to obtain regulatory approval and commercialize our product candidates. In addition, our product candidates, if approved, may not achieve commercial success.
If any product candidate is approved but does not achieve an adequate level of acceptance by physicians, hospitals, healthcare payors or patients, we may not generate sufficient revenue from that product 53 Table of Contents and may not become or remain profitable.
If any product candidate is approved but does not achieve an adequate level of acceptance by physicians, hospitals, healthcare payors or patients, we may not generate sufficient revenue from that product and may not become or remain profitable.
By way of example, the regulations promulgated under HIPAA and the Health Information Technology for Economic and Clinical Health Act impose, among other things, certain standards relating to the privacy, security, transmission and breach reporting of 78 Table of Contents individually identifiable health information.
By way of example, the regulations promulgated under HIPAA and the Health Information Technology for Economic and Clinical Health Act impose, among other things, certain standards relating to the privacy, security, transmission and breach reporting of individually identifiable health information.
Even after an Orphan drug is approved, the FDA or comparable foreign regulatory authority can subsequently approve the same drug for the same disease or condition if such regulatory authority concludes that the later drug is clinically superior because it is shown to be safer, more effective or makes a major contribution to patient care.
Even after an Orphan drug is approved, the FDA or comparable foreign regulatory authority can subsequently approve the same drug for the same approved use or indication within the applicable disease or condition if such regulatory authority concludes that the later drug is clinically superior because it is shown to be safer, more effective or makes a major contribution to patient care.
Our research methodology and novel approach to oligonucleotide based therapy may be unsuccessful in identifying additional product candidates, and any product candidates based on our technology platform may be shown to have harmful side effects or may have other characteristics that may necessitate additional clinical testing, or make the product candidates unmarketable or unlikely to receive marketing approval.
Our research methodology and novel approach to oligonucleotide based therapy may be unsuccessful in identifying additional product candidates, and any product candidates based on our technology platform may be shown to have harmful side 40 Table of Contents effects or may have other characteristics that may necessitate additional clinical testing, or make the product candidates unmarketable or unlikely to receive marketing approval.
We seek to protect these trade secrets and other proprietary technology, in part, by entering into non-disclosure and confidentiality agreements with parties who have access to them, such as our employees, corporate collaborators, outside scientific collaborators, CROs, contract manufacturers, consultants, advisors 71 Table of Contents and other third parties.
We seek to protect these trade secrets and other proprietary technology, in part, by entering into non-disclosure and confidentiality agreements with parties who have access to them, such as our employees, corporate collaborators, outside scientific collaborators, CROs, contract manufacturers, consultants, advisors and other third parties.
Any future debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take 35 Table of Contents specific actions, such as incurring additional debt, selling or licensing our assets, making capital expenditures, declaring dividends or encumbering our assets to secure future indebtedness.
Any future debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, selling or licensing our assets, making capital expenditures, declaring dividends or encumbering our assets to secure future indebtedness.
Therefore, we cannot be certain that we or our licensors were the first to make the inventions claimed in any of our owned or licensed patents or pending patent applications, or that we or our licensors were the first to file for patent protection of such inventions.
Therefore, we cannot be certain that we or our licensors were 71 Table of Contents the first to make the inventions claimed in any of our owned or licensed patents or pending patent applications, or that we or our licensors were the first to file for patent protection of such inventions.
Further, even if we obtain significant market share for our product candidates, because some of our potential target populations are very small, we may never achieve profitability despite obtaining such significant market share.
Further, even if we obtain significant market 60 Table of Contents share for our product candidates, because some of our potential target populations are very small, we may never achieve profitability despite obtaining such significant market share.
In addition, in 2023, the closures of financial institutions and their placement into receivership with the Federal 86 Table of Contents Deposit Insurance Corporation, or FDIC, created bank-specific and broader financial institution liquidity risk and concerns.
In addition, in 2023, the closures of financial institutions and their placement into receivership with the Federal Deposit Insurance Corporation, or FDIC, created bank-specific and broader financial institution liquidity risk and concerns.
If we face such litigation, it could result in substantial costs and a diversion of our management’s attention and resources, which could harm our business. ITEM 1B. Unresolved Staff Comments None.
If we face such litigation, it could result in substantial costs and a diversion of our management’s attention and resources, which could harm our business. ITEM 1B. Unresolved Staff Comments None. 91 Table of Contents
In addition, if a subsequent drug is approved for marketing for the same or a similar disease or condition as any of our product candidates that receive marketing approval, we may face increased competition and lose market share regardless of orphan drug exclusivity.
In addition, if a subsequent drug is approved for marketing for the same or a similar approved use or indication within the same rare disease or condition as any of our product candidates that receive marketing approval, we may face increased competition and lose market share regardless of orphan drug exclusivity.
We may not be successful in maintaining our unique company culture and continuing to attract or retain qualified management and other key personnel in the future due to the intense competition for qualified personnel among biopharmaceutical, biotechnology and other businesses, particularly in the San Diego area.
We may not be successful in maintaining our unique company culture and continuing to attract or retain qualified 62 Table of Contents management and other key personnel in the future due to the intense competition for qualified personnel among biopharmaceutical, biotechnology and other businesses, particularly in the San Diego area.
In that event, we would be unable to 73 Table of Contents further develop and commercialize our product candidate or technologies, which could harm our business significantly. Further, we cannot predict whether any required license would be available at all or whether it would be available on commercially reasonable terms.
In that event, we would be unable to further develop and commercialize our product candidate or technologies, which could harm our business significantly. Further, we cannot predict whether any required license would be available at all or whether it would be available on commercially reasonable terms.
If we are not successful in commercializing 57 Table of Contents our products, either on our own or through arrangements with one or more third parties, we may not be able to generate any future product revenue and we would incur significant additional losses.
If we are not successful in commercializing our products, either on our own or through arrangements with one or more third parties, we may not be able to generate any future product revenue and we would incur significant additional losses.
Our inability to obtain and retain sufficient product liability insurance at an acceptable cost to protect against potential product 64 Table of Contents liability claims could prevent or inhibit the commercialization of our product candidates.
Our inability to obtain and retain sufficient product liability insurance at an acceptable cost to protect against potential product liability claims could prevent or inhibit the commercialization of our product candidates.
We seek to protect our proprietary technology, in part, by entering into confidentiality agreements, and, if applicable, material transfer agreements, collaborative research agreements, consulting agreements or other similar agreements with our collaborators, advisors, employees and consultants prior to beginning research or disclosing proprietary information.
We seek to protect our proprietary technology, in part, by entering into confidentiality agreements, and, if applicable, material transfer agreements, collaborative research agreements, consulting agreements or other similar agreements with our collaborators, advisors, employees and consultants prior to 53 Table of Contents beginning research or disclosing proprietary information.
While the control deficiency identified did not result in any misstatements, a reasonable possibility exists that a material misstatement to the annual or interim financial statements and disclosures would not have been prevented or 83 Table of Contents detected on a timely basis.
While the control deficiency identified did not result in any misstatements, a reasonable possibility exists that a material misstatement to the annual or interim financial statements and disclosures would not have been prevented or detected on a timely basis.
More established companies may have a competitive advantage over us due to their size, cash resources and greater clinical development and commercialization capabilities. In addition, companies that perceive us to be a competitor may be unwilling to assign or license rights to us.
More established companies may have a competitive advantage over us due to their size, cash resources and greater clinical development and commercialization capabilities. In 81 Table of Contents addition, companies that perceive us to be a competitor may be unwilling to assign or license rights to us.
We could be subject to securities class action litigation. In the past, securities class action litigation has often been brought against a company following a decline in the market price of its securities. This risk is especially relevant for us, because biotechnology and biopharmaceutical companies have experienced significant stock price volatility in recent years.
In the past, securities class action litigation has often been brought against a company following a decline in the market price of its securities. This risk is especially relevant for us, because biotechnology and biopharmaceutical companies have experienced significant stock price volatility in recent years.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

6 edited+1 added−1 removed5 unchanged
Biggest changeHowever, there can be no assurance that our cybersecurity risk management program and processes, including our policies, controls or procedures, will be fully implemented, complied with or effective in protecting our systems and information.
Biggest changeThe program is designed to manage cybersecurity risks and is supported by a multi-year roadmap to mature cybersecurity capabilities and services; however, as with any risk management program, there can be no assurance that these measures will be fully implemented, complied with, or effective in all circumstances.
Key elements of our cybersecurity risk management program include but are not limited to the following: • risk assessments to help identify material risks from cybersecurity threats to our critical systems and information; • a security team that includes internal IT and data privacy personnel and external managed services partners, principally responsible for managing (i) our cybersecurity risk assessment processes, (ii) our security controls and (iii) our response to cybersecurity incidents; • use of external service providers, where appropriate, to assess, test or otherwise assist with aspects of our security controls, including: • annual external and internal penetration tests; • 24-hour monitoring of our networks and cloud resources to help detect, respond to and recover from cyber-attacks; • IT managed services that includes help desk support and managed infrastructure (networks and servers support); and • a ransomware defense plan. • cybersecurity awareness training for our employees, including incident response personnel and senior management; • a cybersecurity incident response plan that includes procedures for responding to cybersecurity incidents; and 88 Table of Contents • third-party risk management and reporting process for key service providers based on our assessment of their criticality to our operations and respective risk profile, suppliers and vendors with access to our information systems or data.
Key elements of our cybersecurity risk management program include but are not limited to the following: • risk assessments to help identify material risks from cybersecurity threats to our critical systems and information; • a security team that includes internal IT and data privacy personnel and external managed services partners, principally responsible for managing (i) our cybersecurity risk assessment processes, (ii) our security controls and (iii) our response to cybersecurity incidents; • use of external service providers, where appropriate, to assess, test or otherwise assist with aspects of our security processes, including: • annual external and internal penetration tests; • 24-hour monitoring of our networks and cloud resources to help detect, respond to and recover from cyber-attacks; • IT managed services that includes help desk support and managed infrastructure (networks and servers support); and • a ransomware defense plan. • cybersecurity awareness training for our employees, including incident response personnel and senior management; • a cybersecurity incident response plan that includes procedures for responding to cybersecurity incidents; and • third-party risk management and reporting process for key service providers based on our assessment of their criticality to our operations and respective risk profile, suppliers and vendors with access to our information systems or data.
Our cybersecurity risk management program is integrated into our overall enterprise risk management program, and shares reporting channels and governance processes that apply across the risk management program to other legal, compliance, operational and financial risk areas.
Our cybersecurity risk management program is integrated into our overall enterprise risk management program and shares reporting channels and governance processes with other legal, compliance, operational, and financial risk areas.
Board members receive presentations on cybersecurity topics from management and have available to them external resources related to cybersecurity as part of the board of directors' continuing education on topics that impact companies similar to ours.
The audit committee reports to the full board of directors regarding its activities, including those related to cybersecurity. Board members receive presentations on cybersecurity topics from management and have available to them external resources related to cybersecurity as part of the board of directors' continuing education on topics that impact companies similar to ours.
The audit committee receives periodic reports from management on our cybersecurity risks. In addition, management alerts the audit committee of any material cybersecurity incidents. The audit committee reports to the full board of directors regarding its activities, including those related to cybersecurity.
The audit committee oversees management’s implementation of our cybersecurity risk management program. The audit committee receives periodic reports from management on our cybersecurity risks. In addition, management alerts the audit committee of any cybersecurity incidents it considers to be significant or potentially significant.
This means that we use the NIST CSF as a guide to help us identify, assess and manage cybersecurity risks relevant to our business. It does not, however, mean that we meet any technical standards, specifications or requirements.
NIST CSF is used as a guide to help us identify, assess and manage cybersecurity risks relevant to our business. This framework enables Avidity to mature its cybersecurity operations through a structured, risk-based approach aligned with evolving technical standards, specifications and requirements.
Removed
Cybersecurity Governance Our board of directors considers cybersecurity risk as part of its risk oversight function and has delegated to the audit committee of the board of directors, or the audit committee, oversight of cybersecurity and other information technology risks. The audit committee oversees management’s implementation of our cybersecurity risk management program.
Added
See “Risk Factors –We, our collaborators and our service providers may be subject to a variety of data privacy and security laws and contractual obligations, which could increase compliance costs and our actual or alleged failure to comply with them could subject us to potentially significant fines or penalties, regulatory investigations, negative publicity, liability or otherwise harm our business, results of operations and financial condition.” Cybersecurity Governance Our board of directors considers cybersecurity risk as part of its risk oversight function and has delegated to the audit committee of the board of directors, or the audit committee, oversight of cybersecurity 92 Table of Contents and other information technology risks.

Item 2. Properties

Properties — owned and leased real estate

2 edited+1 added−0 removed1 unchanged
Biggest changeIn April 2024, we entered into a sublease agreement to rent 105,000 square feet for office and laboratory space for the Company’s future corporate headquarters. We also have an option and a right of first refusal for an additional 80,000 square feet in an adjacent available building, which we have not exercised.
Biggest changeIn April 2024, we entered into a sublease agreement, or the Sublease, to rent 105,000 square feet for office and laboratory space for the Company’s corporate headquarters. The Sublease commenced in August 2025, with a term of 9 years, 9 months.
The term of the sublease is approximately 9 years, 9 months with payments expected to begin in August 2025. We believe that our current and expected future facilities are adequate to meet our needs and that suitable additional alternative spaces will be available in the future on commercially reasonable terms, if required.
We believe that our current and expected future facilities are adequate to meet our needs and that suitable additional alternative spaces will be available in the future on commercially reasonable terms, if required.
Added
In March 2025, we also exercised the option to rent an additional 80,000 square feet in an adjacent available building under an amended sublease agreement, or the Amended Sublease, with Turning Point Therapeutics, Inc. The term of the Amended Sublease is approximately 9 years, 1 month with payments expected to begin in April 2026.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed1 unchanged
Biggest changeRegardless of the outcome, such proceedings or claims can have an adverse impact on us because of defense and settlement costs, diversion of resources and other factors, and there can be no assurances that favorable outcomes will be obtained. ITEM 4. Mine Safety Disclosures Not applicable. 89 Table of Contents PART II
Biggest changeRegardless of the outcome, such proceedings or claims can have an adverse impact on us because of defense and settlement costs, diversion of resources and other factors, and there can be no assurances that favorable outcomes will be obtained. ITEM 4. Mine Safety Disclosures Not applicable. 93 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

3 edited+0 added−0 removed4 unchanged
Biggest changeSecurities Authorized for Issuance Under Equity Compensation Plans See Item 12 of Part III of this Annual Report on Form 10-K for information about our equity compensation plans which is incorporated by reference herein. 90 Table of Contents Performance Graph The following stock performance graph illustrates a comparison from June 12, 2020 (the date our common stock commenced trading on the Nasdaq Global Market) through December 31, 2024, of the total cumulative stockholder return on our common stock, the Nasdaq Composite Index and the Nasdaq Biotechnology Index.
Biggest changeSecurities Authorized for Issuance Under Equity Compensation Plans See Item 12 of Part III of this Annual Report on Form 10-K for information about our equity compensation plans which is included herein. 94 Table of Contents Performance Graph The following stock performance graph illustrates a comparison from June 12, 2020 (the date our common stock commenced trading on the Nasdaq Global Market) through December 31, 2025, of the total cumulative stockholder return on our common stock, the Nasdaq Composite Index and the Nasdaq Biotechnology Index.
The comparisons in the graph are required by the SEC and are not intended to forecast or be indicative of possible future performance of our common stock. Unregistered Sales of Equity Securities None. Issuer Repurchases of Equity Securities None. ITEM 6. [Reserved] 91 Table of Contents
The comparisons in the graph are required by the SEC and are not intended to forecast or be indicative of possible future performance of our common stock. Unregistered Sales of Equity Securities None. Issuer Repurchases of Equity Securities None. ITEM 6. [Reserved] 95 Table of Contents
ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is listed on the Nasdaq Global Market under the symbol “RNA.” Holders of Common Stock As of February 14, 2025, there were approximately 19 holders of record of our common stock.
ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is listed on the Nasdaq Global Market under the symbol “RNA.” Holders of Common Stock As of February 13, 2026, there were approximately 13 holders of record of our common stock.

Item 7. Management's Discussion & Analysis

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

38 edited+34 added−8 removed46 unchanged
Biggest changeResearch and Development Expenses The following tables illustrate the components of our research and development expenses for the years presented (in thousands): 95 Table of Contents Year Ended December 31, Change 2024 2023 External costs: Del-desiran $ 47,026 $ 25,216 $ 21,810 Del-brax 33,230 18,352 14,878 Del-zota 27,073 20,137 6,936 Other programs 7,617 8,884 (1,267) Unallocated 74,729 31,044 43,685 Total external costs 189,675 103,633 86,042 Internal costs: Employee-related expenses 90,935 68,136 22,799 Facilities, lab supplies and other 22,983 19,199 3,784 Total internal costs 113,918 87,335 26,583 Total research and development expenses $ 303,593 $ 190,968 $ 112,625 Research and development expenses increased by $112.6 million for the year ended December 31, 2024 as compared to the same period in 2023.
Biggest changeResults of Operations Comparison of the Years Ended December 31, 2025 and 2024 The following table summarizes our results of operations for the years presented (in thousands): Year Ended December 31, Change 2025 2024 Revenue $ 18,755 $ 10,897 $ 7,858 Research and development expenses 559,159 303,593 255,566 General and administrative expenses 205,539 86,240 119,299 Other income 61,312 56,634 4,678 Revenue Revenue increased by $7.9 million for the year ended December 31, 2025 as compared to the same period in 2024, primarily due to the recognition of a $10.0 million milestone under the Lilly Agreement, partially offset by a slight decrease in revenues earned under the BMS agreement. 100 Table of Contents Research and Development Expenses The following tables illustrate the components of our research and development expenses for the years presented (in thousands): Year Ended December 31, Change 2025 2024 External costs: Del-desiran $ 92,716 $ 47,026 $ 45,690 Del-brax 76,238 33,230 43,008 Del-zota 47,401 27,073 20,328 Other programs 27,989 7,617 20,372 Unallocated (1) 133,365 74,729 58,636 Total external costs 377,709 189,675 188,034 Internal costs: Employee-related expenses 152,305 90,935 61,370 Facilities, lab supplies and other 29,145 22,983 6,162 Total internal costs 181,450 113,918 67,532 Total research and development expenses $ 559,159 $ 303,593 $ 255,566 ____________________ (1) Unallocated costs primarily relate to manufacturing costs for monoclonal antibodies and professional services used across all programs.
If we obtain regulatory approval for any of our product candidates, we expect to incur significant commercialization expenses related to product sales, marketing, manufacturing, and distribution.
If we obtain regulatory approval for any of our product candidates, we expect to incur significant commercialization expenses related to product sales, marketing, manufacturing, and distribution.
Our failure to raise capital or enter into such other arrangements when needed would have a negative impact on our financial condition and could force us to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.
Our failure to raise capital or enter into such other arrangements when needed would have a negative impact on our financial condition and could force us to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.
Investing Activities Net cash used in investing activities of $854.2 million for the year ended December 31, 2024 consisted of $1.4 billion for purchases of marketable securities due to investing the proceeds from the issuance of common stock and pre-funded warrants as well as the reinvestment of proceeds from matured marketable securities, as well as $7.1 million in purchases of property and equipment, offset by $586.4 million of proceeds from maturities of marketable securities.
Net cash used in investing activities of $854.2 million for the year ended December 31, 2024 consisted of $1.4 billion for purchases of marketable securities due to investing the proceeds from the issuance of common stock and pre-funded warrants as well as the reinvestment of proceeds from matured marketable securities, as well as $7.1 million in purchases of property and equipment, offset by $586.4 million of proceeds from maturities of marketable securities.
Our development costs may vary significantly based on factors such as: • the number and scope of clinical, preclinical, and IND-enabling studies; • per patient trial costs; • the number of trials required for approval; • the number of sites included in the trials; • the countries in which the trials are conducted; • the length of time required to enroll eligible patients; • the number of patients that participate in the trials; • the number of doses that patients receive; • the drop-out or discontinuation rates of patients; 94 Table of Contents • potential additional safety monitoring requested by regulatory agencies; • the duration of patient participation in the trials and follow-up; • the cost and timing of manufacturing our product candidates; • the various phases of development of our product candidates; and • the efficacy and safety profiles of our product candidates.
Our development costs may vary significantly based on factors such as: • the number and scope of clinical, preclinical, and IND-enabling studies; • per patient trial costs; • the number of trials required for approval; • the number of sites included in the trials; • the countries in which the trials are conducted; • the length of time required to enroll eligible patients; • the number of patients that participate in the trials; • the number of doses that patients receive; • the drop-out or discontinuation rates of patients; • potential additional safety monitoring requested by regulatory agencies; • the duration of patient participation in the trials and follow-up; 99 Table of Contents • the cost and timing of manufacturing our product candidates; • the various phases of development of our product candidates; and • the efficacy and safety profiles of our product candidates.
If we fail to complete preclinical and clinical development of product candidates or obtain regulatory approval for our product candidates, our ability to generate future revenues and our results of operations and financial position would be adversely affected. 93 Table of Contents Operating Expenses Research and Development Research and development expenses consist of costs associated with our research and development activities, including our discovery and research efforts, and the preclinical and clinical development of our product candidates.
If we fail to complete preclinical and clinical development of product candidates or obtain regulatory approval for our product candidates, our ability to generate future revenues and our results of operations and financial position would be adversely affected. 98 Table of Contents Operating Expenses Research and Development Research and development expenses consist of costs associated with our research and development activities, including our discovery and research efforts, and the preclinical and clinical development of our product candidates.
Accordingly, until such time as we can generate significant revenue from sales of our product candidates, if ever, we expect to finance our cash needs through equity offerings, debt financings or other capital sources, including current and potential future collaborations, licenses and other similar arrangements.
Accordingly, until such time as we can generate significant revenue from sales of our product candidates, if ever, we expect to finance our cash needs through equity offerings, debt financings, or other capital sources, including potential collaborations, licenses, and other similar arrangements.
To date, 99 Table of Contents there have been no material differences between our estimates of such expenses and the amounts actually incurred. Recent Accounting Pronouncements See Note 2 to our consolidated financial statements included elsewhere in this annual report.
To date, there have been no material differences between our estimates of such expenses and the amounts actually incurred. Recent Accounting Pronouncements See Note 2 to our consolidated financial statements included elsewhere in this annual report. 105 Table of Contents
Financing Activities Net cash provided by financing activities of $1.2 billion for the year ended December 31, 2024 consisted primarily of $762.2 million in net proceeds from sales of our common stock, $238.4 million in net proceeds from the issuance of common stock from a private placement transaction, $141.4 million in net proceeds from the sale of pre-funded warrants in a private placement, as well as $50.4 million in proceeds from the issuance of common stock under employee incentive equity plans.
Net cash provided by financing activities of $1.2 billion for the year ended December 31, 2024 consisted primarily of $762.2 million in net proceeds from sales of our common stock, $238.4 million in net proceeds from the issuance of common stock from a private placement transaction, $141.4 million in net proceeds from the sale of pre-funded warrants in a 103 Table of Contents private placement transaction, as well as $50.4 million in proceeds from the issuance of common stock under employee incentive equity plans.
While we may generate revenue under our current and/or future collaboration agreements, we do not expect to generate any revenues from product sales until we successfully complete development and obtain regulatory approval for one or more of our product candidates.
While we may generate revenue under our current and/or future collaboration 96 Table of Contents agreements, we do not expect to generate any revenues from product sales until we successfully complete development and obtain regulatory approval for one or more of our product candidates.
Future Capital Requirements As of December 31, 2024, we had cash, cash equivalents, and marketable securities of $1.5 billion. Based upon our current operating plans, we believe that our existing cash, cash equivalents, and marketable securities will be sufficient to fund our operations for at least 12 months from the date of the filing of this Form 10-K.
Future Capital Requirements As of December 31, 2025, we had cash, cash equivalents, and marketable securities of $1.7 billion. Based upon our current operating plans, we believe that our existing cash, cash equivalents, and marketable securities will be sufficient to fund our operations for at least 12 months from the date of the filing of this Form 10-K.
In June 2023, we further amended the lease to expand our office and laboratory space. The expansion increased monthly base rent by approximately $45,000 increasing to $49,000 per month in the last year of the Lease's term. The total remaining base rent commitment for the initial term under the Lease is $7.5 million.
In June 2023, we further amended the lease to expand our office and laboratory space. The expansion increased monthly base rent by approximately $45,000 increasing to $49,000 per month in the last year of the Lease's term. The total remaining base rent commitment for the initial term under the Lease is $3.1 million.
As of December 31, 2024, other significant sources of capital raised to fund our operations were comprised of aggregate gross proceeds of $144.6 million from funding under collaboration and research services agreements of which approximately $40.0 million relates to the sale of 5,075,304 unregistered shares in November 2023 to BMS in a private placement under the terms of the BMS Purchase Agreement.
As of December 31, 2025, other significant sources of capital raised to fund our operations were comprised of aggregate gross proceeds of $130.0 million from funding under collaboration and research services agreements of which approximately $40.0 million relates to the sale of 5,075,304 unregistered shares in November 2023 to BMS in a private placement under the terms of the BMS Purchase Agreement.
We will need to raise substantial additional capital in the future. In addition, we cannot forecast which development programs may be subject to future collaborations, when such arrangements will be secured, if at all, and to what degree such arrangements would affect our development plans and capital requirements.
If the Merger is not completed, we will need to raise substantial additional capital in the future. In addition, we cannot forecast which development programs may be subject to future collaborations, when such arrangements will be secured, if at all, and to what degree such arrangements would affect our development plans and capital requirements.
Our proprietary AOC platform is designed to combine the specificity of monoclonal antibodies, or mAbs, with the precision of RNA therapeutics to target the root cause of diseases previously untreatable with such therapeutics. Our pipeline currently has three programs in potentially registrational clinical trials.
Our proprietary AOC platform is designed to combine the specificity of monoclonal antibodies, or mAbs, with the precision of RNA therapeutics to target the root cause of diseases previously untreatable with such therapeutics. Our pipeline currently has three programs in clinical development.
Del-desiran, del-brax, and del-zota have all been granted Orphan Designation by the FDA and the European Medicines Agency, or EMA, and Fast Track Designation by the FDA. In addition, the FDA has granted del-desiran Breakthrough Therapy designation for the treatment of DM1 and granted del-zota Rare Pediatric Disease designation.
Del-desiran, del-brax and del-zota have all been granted Orphan designation by the FDA and the European Medicines Agency, or EMA, and Fast Track designation by the FDA. In addition, the FDA has granted del-desiran and del-zota Breakthrough Therapy designation and granted del-zota Rare Pediatric Disease designation.
For the comparison of the financial results for the fiscal years ended December 31, 2023 and 2022, see Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on February 28, 2024 .
For the comparison of the financial results for the fiscal years ended December 31, 2024 and 2023, see Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, in our Annual Report on Form 10-K for the fiscal year ended December 31, 202 4 , filed with the SEC on February 2 7 , 202 5 .
Other Income Other income increased by $33.3 million for the year ended December 31, 2024 as compared to the same period in 2023, due to higher interest income earned on marketable securities investments and cash and cash equivalent balances.
Other Income Other income increased by $4.7 million for the year ended December 31, 2025 as compared to the same period in 2024, due to higher interest income earned on marketable securities investments and cash and cash equivalent balances.
Our future capital requirements are difficult to forecast and will depend on many factors, including but not limited to: • the type, number, scope, progress, expansions, results, costs and timing of discovery, preclinical studies and clinical trials of our product candidates that we are pursuing or may choose to pursue in the future; • the costs and timing of manufacturing for our product candidates and commercial manufacturing if any product candidate is approved; • the costs, timing, and outcome of regulatory review of our product candidates; • the terms and timing of establishing and maintaining collaborations, licenses, and other similar arrangements; • the costs of obtaining, maintaining, and enforcing our patents and other intellectual property rights; • the costs associated with hiring additional personnel and consultants as we continue to grow our company; • the timing and amount of the milestone or other payments made to us under current or future research and collaboration agreements; • the costs and timing of establishing or securing sales and marketing capabilities if any product candidate is approved; • our ability to achieve sufficient market acceptance, coverage and adequate reimbursement from third-party payors, and adequate market share and revenue for any approved products; and • costs associated with any products or technologies that we may in-license or acquire. 97 Table of Contents While we may generate revenue under our current and/or future collaboration agreements, we do not expect to generate any revenues from product sales until we successfully complete development and obtain regulatory approval for one or more of our product candidates, which we do not expect will occur in the immediate near term, and may never occur.
If the Merger is not completed, our future capital requirements are difficult to forecast and will depend on many factors, including but not limited to: • the type, number, scope, progress, expansions, results, costs and timing of discovery, preclinical studies and clinical trials of our product candidates that we are pursuing or may choose to pursue in the future; • the costs and timing of manufacturing for our product candidates and commercial manufacturing if any product candidate is approved; • the costs, timing, and outcome of regulatory review of our product candidates; • the terms and timing of establishing and maintaining collaborations, licenses, and other similar arrangements; • the costs of obtaining, maintaining, and enforcing our patents and other intellectual property rights; • the costs associated with hiring additional personnel and consultants as we continue to grow our company; • the timing and amount of the milestone or other payments made to us under current or future research and collaboration agreements; • the costs and timing of establishing or securing sales and marketing capabilities if any product candidate is approved; • our ability to achieve sufficient market acceptance, coverage and adequate reimbursement from third-party payors, and adequate market share and revenue for any approved products; and • costs associated with any products or technologies that we may in-license or acquire.
Delpacibart etedesiran, abbreviated as del-desiran (formerly AOC 1001), is designed to treat people with myotonic dystrophy type 1, or DM1, and is currently in Phase 3 development with the global HARBOR™ trial.
Delpacibart etedesiran, or del-desiran (formerly AOC 1001), is designed to treat people with myotonic dystrophy type 1, or DM1, and is currently in development with the global Phase 3 HARBOR™ trial and ongoing HARBOR Open-Label Extension (HARBOR-OLE™) trial.
Accordingly, until such time as we can generate 92 Table of Contents significant revenue from sales of our product candidates, if ever, we expect to finance our cash needs through equity offerings, debt financings, or other capital sources, including potential collaborations, licenses, and other similar arrangements.
Accordingly, if the Merger is not completed, until such time as we can generate significant revenue from sales of our product candidates, if ever, we expect to finance our cash needs through equity offerings, debt financings or other capital sources, including current and potential future collaborations, licenses and other similar arrangements.
Our net losses were $322.3 million, $212.2 million, and $174.0 million for the years ended December 31, 2024, 2023, and 2022, respectively. As of December 31, 2024, we had an accumulated deficit of $893.1 million.
Our net losses were $684.6 million, $322.3 million, and $212.2 million for the years ended December 31, 2025, 2024, and 2023, respectively. As of December 31, 2025, we had an accumulated deficit of $1.6 billion.
Accrued Research and Development Costs As part of the process of preparing our consolidated financial statements, we are required to make estimates of our accrued research and development expenses resulting from our obligations under contracts with CROs, manufacturers, vendors and consultants.
Deferred revenue represented the portion of payments received that have not been earned. Accrued Research and Development Costs As part of the process of preparing our consolidated financial statements, we are required to make estimates of our accrued research and development expenses resulting from our obligations under contracts with CROs, manufacturers, vendors and consultants.
Research and development expense increased primarily due to increased external costs associated with the progression of clinical trials and preclinical studies, including $41.1 million in higher manufacturing costs related to monoclonal antibodies used across programs, as well as higher internal costs including $22.8 million in higher personnel costs.
Research and development expense increased primarily due to increased external costs associated with the progression of clinical trials and preclinical studies, including $53.9 million in higher unallocated manufacturing costs related to monoclonal antibodies, as well as higher internal costs including $61.4 million in higher personnel costs.
Delpacibart braxlosiran, or del-brax (formerly AOC 1020), is the first investigational therapy designed to directly target DUX4 in people living with facioscapulohumeral muscular dystrophy, or FSHD, and is currently in Phase 1/2 development with the FORTITUDE TM trial.
Delpacibart braxlosiran, or del-brax (formerly AOC 1020), is the first investigational therapy designed to directly target DUX4 in people living with facioscapulohumeral muscular dystrophy, or FSHD, and is currently in development in the potentially registrational fully enrolled ongoing FORTITUDE™ biomarker cohort of the Phase 1/2 FORTITUDE trial, the Phase 2 FORTITUDE Open-Label Extension (FORTITUDE-OLE™) trial and the Phase 3 FORTITUDE-3™ trial.
In April 2024, we entered into a new sublease agreement to rent office and laboratory space for our future corporate headquarters. The term of the sublease is approximately 9 years, 9 months with payments expected to begin in August 2025.
In April 2024, we entered into a new Sublease agreement to rent office and laboratory space for our corporate headquarters. The Sublease commenced on August 14, 2025, with a term of 9 years, 9 months. Total aggregate future lease commitments under the Sublease are approximately $78.0 million.
General and Administrative Expenses General and administrative expenses increased by $32.1 million for the year ended December 31, 2024 as compared to the same period in 2023, primarily due to $21.5 million in higher personnel costs and $6.1 million in higher professional fees to support our expanded operations and commercial readiness.
General and Administrative Expenses General and administrative expenses increased by $119.3 million for the year ended December 31, 2025 as compared to the same period in 2024, primarily due to $52.5 million in higher personnel costs and $46.1 million in higher professional fees.
The amount of the termination payments vary depending on the timing of the termination and the specific terms of the contract. Therefore, these contracts are considered cancellable contracts.
These contracts may include certain provisions that could require payments for early termination. The amount of the termination payments vary depending on the timing of the termination and the specific terms of the contract. Therefore, these contracts are considered cancelable contracts.
Net proceeds from the offering were approximately $323.7 million, after deducting underwriting discounts and offering expenses of $21.4 million. The shares sold in the offering were registered pursuant to our shelf registration statement on Form S-3, which became automatically effective upon filing on May 9, 2024.
The shares sold in the offering were registered pursuant to our shelf registration statement on Form S-3, which became automatically effective upon filing on May 9, 2024.
On June 17, 2024, we completed a public offering of 12,132,500 shares of our common stock at a public offering price of $38.00 per share. Net proceeds from the offering were approximately $432.8 million, after deducting underwriting discounts and offering expenses of $28.3 million.
On September 15, 2025, we completed an underwritten public offering of 17,250,000 shares of our common stock at a public offering price of $40.00 per share. Net proceeds from the offering were approximately $651.4 million, after deducting underwriting discounts and offering expenses of $38.6 million.
Delpacibart zotadirsen, or del-zota (formerly AOC 1044), is designed for people with Duchenne muscular dystrophy, or DMD, and is currently in development with the Phase 2 EXPLORE44-OLE TM study. Del-zota is specifically designed for people with mutations amenable to exon 44 skipping, or DMD44, and is the first of multiple AOCs we are developing for DMD.
Del-zota is specifically designed for people with mutations amenable to exon 44 skipping, or DMD44, and is the first of multiple AOCs we are developing for DMD.
Cash Flows The following table summarizes our cash flows for the years presented (in thousands): Year Ended December 31, Change 2024 2023 Net cash provided by (used in): Operating activities $ (300,870) $ (119,064) $ (181,806) Investing activities (854,201) (130,070) (724,131) Financing activities 1,192,357 93,864 1,098,493 Net increase (decrease) in cash, cash equivalents and restricted cash $ 37,286 $ (155,270) $ 192,556 Operating Activities Net cash used in operating activities of $300.9 million and $119.1 million for the years ended December 31, 2024 and 2023, respectively, consisted primarily of cash used to fund our operations related to the development of del-desiran, del-brax, del-zota, and other potential programs.
Cash Flows The following table summarizes our cash flows for the years presented (in thousands): Year Ended December 31, Change 2025 2024 Net cash provided by (used in): Operating activities $ (650,441) $ (300,870) $ (349,571) Investing activities (38,035) (854,201) 816,166 Financing activities 850,990 1,192,357 (341,367) Effect of exchange rate on cash, cash equivalents and restricted cash 137 — 137 Net increase in cash, cash equivalents and restricted cash $ 162,651 $ 37,286 $ 125,365 Operating Activities Net cash used in operating activities of $650.4 million and $300.9 million for the years ended December 31, 2025 and 2024, respectively, consisted primarily of cash used to fund our operations related to the development of del-desiran, del-brax, del-zota, and other potential programs.
Net cash used in investing activities of $130.1 million for the year ended December 31, 2023 consisted of $461.0 million for purchases of marketable securities and $4.2 million in purchases of property and equipment, partially offset by $335.2 million of proceeds from maturities of marketable securities.
Investing Activities Net cash used in investing activities of $38.0 million for the year ended December 31, 2025 consisted of $1.1 billion for purchases of marketable securities due to investing the proceeds from the issuance of common stock as well as the reinvestment of proceeds from matured marketable securities, as well as $13.3 million in purchases of property and equipment, offset by $1.1 billion of proceeds from maturities of marketable securities.
In accruing for these activities, we obtain information from various sources and estimate the level of effort or expense allocated to each period.
In accruing for these activities, we obtain information from various sources and estimate the level of effort or expense allocated to each period. These accruals of research and development expenses require estimates of expenses incurred, including estimates of the time period over which services will be performed and the completion of contract components.
Additionally, the process of conducting preclinical studies and testing product candidates in clinical trials is costly, and the timing of progress and expenses in these studies and trials is uncertain.
Additionally, the process of conducting preclinical studies and testing product candidates in clinical trials is costly, and the timing of progress and expenses in these studies and trials is uncertain. In addition, the Merger Agreement contains restrictions on our issuance of shares of our common stock, subject to certain exceptions described therein.
On August 9, 2024, we entered into a sales agreement, or the 2024 Sales Agreement, with TD Securities (USA) LLC, or the 2024 Sales Agent, with substantially similar terms as the 2022 Sales Agreement. 96 Table of Contents The 2022 Sales Agreement was terminated upon effectiveness of the 2024 Sales Agreement.
Liquidity and Capital Resources Sources of Liquidity On August 9, 2024, we entered into a sales agreement, or the 2024 Sales Agreement, with TD Securities (USA) LLC, or the 2024 Sales Agent.
Net cash provided by financing activities of $93.9 million for the year ended December 31, 2023 consisted primarily of $60.5 million in net proceeds from the issuance of common stock in public offerings, $31.2 million in net proceeds from the issuance of common stock from a 98 Table of Contents private placement transaction, as well as $2.1 million in proceeds from the issuance of common stock under employee incentive equity plans.
Financing Activities Net cash provided by financing activities of $851.0 million for the year ended December 31, 2025 consisted primarily of $836.9 million in net proceeds from sales of our common stock and $26.5 million in proceeds from the issuance of common stock under employee incentive equity plans, offset by $12.4 million of payments for taxes related to the net share settlement of equity awards.
We enter into contracts in the normal course of business for contract research services, contract manufacturing services, clinical trials, professional services, and other services and products for operating purposes. These contracts may include certain provisions that could require payments for early termination.
Refer to Note 7, "Commitments and Contingencies" to our consolidated financial statements included elsewhere in this report for further details of our commitments. We enter into contracts in the normal course of business for contract research services, contract manufacturing services, clinical trials, professional services, and other services and products for operating purposes.
Removed
Results of Operations Comparison of the Years Ended December 31, 2024 and 2023 The following table summarizes our results of operations for the years presented (in thousands): Year Ended December 31, Change 2024 2023 Revenue $ 10,897 $ 9,560 $ 1,337 Research and development expenses 303,593 190,968 112,625 General and administrative expenses 86,240 54,190 32,050 Other income 56,634 23,378 33,256 Revenue Revenue increased by $1.3 million for the year ended December 31, 2024 as compared to the same period in 2023, primarily due to the recognition of revenues under the BMS agreement in the current year for which there were no revenues recognized in the prior year comparative period, partially offset by a decrease in revenues under the Lilly agreement in the current year.
Added
Delpacibart zotadirsen, or del-zota (formerly AOC 1044) is a registrational study designed for people living with Duchenne muscular dystrophy, or DMD, and is currently in development with the ongoing Phase 2 EXPLORE44 Open-Label Extension (EXPLORE44-OLE™) study.
Removed
Liquidity and Capital Resources Sources of Liquidity On November 8, 2022, we entered into a sales agreement (the 2022 Sales Agreement) with Cowen and Company, LLC (the Sales Agent), under which we could sell shares of our common stock having an aggregate offering price of up to $200.0 million through the Sales Agent.
Added
Del-desiran has also been granted Orphan Drug designation by the Japan Ministry of Health, Labour and Welfare (MHLW).
Removed
Sales of the shares of common stock were made at prevailing market prices at the time of sale, or as otherwise agreed with the Sales Agent.
Added
Recent Events On October 25, 2025, we entered into the Merger Agreement, with Novartis and Merger Sub, pursuant to which, on the terms and subject to the conditions set forth in the Merger Agreement, Merger Sub will merge with and into us, and we will survive the Merger as an indirect wholly owned subsidiary of Parent, which we refer to as the Merger.
Removed
During the years ended December 31, 2024 and 2023, we sold 418,408 and 4,107,810 shares of its common stock, respectively, pursuant to the Sales Agreement and received net proceeds of $5.6 million and $60.5 million, respectively, after deducting offering-related transaction costs and commissions of $0.1 million and $1.4 million, respectively.
Added
In connection with the Merger, we, SpinCo, and Parent (with respect to certain sections specified therein) entered into the Separation and Distribution Agreement, pursuant to which, on the terms and subject to the conditions set forth in the Separation and Distribution Agreement, prior to the Effective Time, we will effect the Pre-Closing Reorganization, which will generally result in SpinCo owning, assuming or retaining all assets and liabilities held by us and our subsidiaries exclusively related to our early stage precision cardiology programs, including AOC 1086 and AOC 1072, which target rare genetic cardiomyopathies, including phospholamban and Protein Kinase AMP-activated non-catalytic subunit Gamma 2 Syndrome, respectively, and certain collaboration agreements, including those with Bristol-Myers Squibb Company and Eli Lilly and Company, and us owning, assuming or retaining all other assets and liabilities.
Removed
On March 4, 2024, we completed a private placement of 15,224,773 shares of our common stock at a price of $16.50 per share and pre-funded warrants to purchase an aggregate 9,030,851 shares of our common stock at a price of $16.499 per pre-funded warrant.
Added
The transfer of assets to SpinCo includes certain of our assets that triggered a ROFN with the ROFN Holder.
Removed
The net proceeds from the private placement were $379.8 million after deducting placement fees and offering costs of $20.4 million. Each pre-funded warrant has an exercise price of $0.001 per share of common stock, is immediately exercisable, and does not expire.
Added
During the ROFN period, which expired on February 5, 2026, we were permitted to negotiate the sale of our assets subject to the ROFN with the ROFN Holder, and, if an agreement had been reached, consummate the sale of all or a portion of such assets.
Removed
As of December 31, 2024, we had sold no shares of our common stock under the 2024 Sales Agreement. On August 16, 2024, we completed a public offering of 8,418,000 shares of our common stock at a public offering price of $41.00 per share.
Added
If such a sale had been consummated, SpinCo could have received less than all of the SpinCo Business.
Removed
We also have an option and a right of first refusal for an additional 80,000 square feet in an adjacent available building, which we have not exercised. Total aggregate future lease commitments under the sublease agreement are approximately $72.6 million. Refer to Note 7, "Commitments and Contingencies" to our consolidated financial statements included elsewhere in this report.
Added
Following the Separation, but prior to the Effective Time, we will either (a) distribute to our stockholders, as of the Distribution Record Date, on a pro rata basis, all of the issued and outstanding shares of SpinCo Common Stock at a ratio of one share of SpinCo Common Stock per ten shares of our common stock held, with SpinCo continuing its existence as a separate and independent company or (b) subject to Parent's written consent, consummate a sale of SpinCo to a third party in accordance with the terms of the Merger Agreement, subject to the terms and conditions specified in the Merger Agreement and the Separation and Distribution Agreement, and thereafter distribute the Permitted Sale Proceeds to our stockholders or the Company Equity Awards, as of the chosen record date for distributing such proceeds, on a pro rata basis and subject to applicable tax withholding.
Added
In connection with the Distribution, holders of Company Equity Awards (subject to certain exceptions) as of the Distribution Record Date who are current service providers to SpinCo and its affiliates (including us) are entitled to receive certain make whole awards that will be settled in shares of SpinCo Common Stock at a ratio of one share of SpinCo Common Stock per ten shares of our common stock underlying each such Company Equity Award.
Added
If the Distribution occurs, SpinCo will operate as a separate, independent, publicly held company. Consummation of the Merger is subject to closing conditions related to the Distribution and other customary closing conditions. The parties expect the Merger, the Distribution and the other transactions contemplated by the Merger Agreement to close in the first half of 2026.
Added
In the event the Merger Agreement is terminated, under specified circumstances, we will be required to pay Parent a termination fee of $450 million. The Merger Agreement further provides that Parent will be required to pay us a reverse termination fee of $600 million in the event the Merger Agreement is terminated by either us or Parent under certain circumstances.
Added
For additional information related to the Merger Agreement, please refer to our definitive proxy statement on Schedule 14A filed with the SEC on January 30, 2026, as thereafter amended or supplemented, and the registration statement on Form 10 filed by SpinCo with the SEC on December 10, 2025, as thereafter amended or supplemented.
Added
For additional information regarding risks and uncertainties associated with the 97 Table of Contents Merger and the Distribution, see Part I, Item 1A – “Risk Factors” included in this annual report on Form 10-K. There is no guarantee that the Merger or the Distribution will be consummated.
Added
In August 2025, Lilly paid us $10.0 million as the result of the achievement of a clinical development milestone under the Lilly Agreement for a collaboration target.
Added
Research and development expenses increased by $255.6 million for the year ended December 31, 2025 as compared to the same period in 2024.
Added
Professional fees included $35.9 million of transaction-related costs incurred in connection with the Merger, as well as costs to support our expanded operations and commercial readiness.
Added
As of December 31, 2025, we sold 5,646,583 shares of our common stock pursuant to the 2024 Sales Agreement and received net proceeds of $185.5 million, after deducting offering-related transaction costs and commissions of $4.8 million, at an average price of $33.69 per share. 101 Table of Contents On July 23, 2025, pre-funded warrants, originally issued by the Company on March 4, 2024, or the 2024 Pre-Funded Warrants, to purchase 2,208,114 shares of our common stock were exercised in a cashless transaction, which resulted in an aggregate of 2,208,048 shares of our common stock being issued.
Added
On October 27, 2025, 2024 Pre-Funded Warrants to purchase an aggregate of 3,761,945 shares of our common stock were exercised in cashless transactions, which resulted in an aggregate of 3,761,868 shares of our common stock being issued. As of December 31, 2025, 2024 Pre-Funded Warrants to purchase a total of 3,060,792 shares of our common stock remained available for exercise.
Added
While we may generate revenue under our current and/or future collaboration agreements, we do not expect to generate any revenues from product sales until we successfully complete development and obtain 102 Table of Contents regulatory approval for one or more of our product candidates, which we do not expect will occur in the immediate near term, and may never occur.
Added
In March 2025, we also exercised the option to rent an adjacent available building under the Amended Sublease agreement with Turning Point Therapeutics, Inc. The term of the Amended Sublease is approximately 9 years, 1 month with payments expected to commence in April 2026. Total aggregate future lease commitments under the Amended Sublease are approximately $53.7 million.
Added
Refer to Note 7, "Commitments and Contingencies" to our consolidated financial statements included elsewhere in this report. In August 2025, we entered into a manufacturing agreement with a Contract Manufacturing Organization (CMO) for the manufacturing of the Company’s drug substances, conjugated drug substances, and drug products.
Added
The manufacturing agreement requires the Company to meet minimum purchase obligations on an annual basis, beginning in 2026 and ending in 2028.
Added
The total aggregate amount of future unconditional minimum purchase obligations under the manufacturing agreement is approximately $621.6 million, subject to foreign currency changes, annual price increases, other adjustments, and payments for certain costs and net of the nonrefundable reservation fees.
Added
Revenue Recognition To date, all of our revenue has been derived from our collaboration and research agreements entered into with various parties.
Added
The terms of these arrangements include payments to us for the following: non- 104 Table of Contents refundable, upfront license fees; development, regulatory, and commercial milestone payments; payments for research and development services provided by us or for manufacturing supply services we may provide through our contract manufacturers; and royalties on net sales of licensed products.
Added
If an agreement includes a license to our intellectual property and that license is determined to be distinct from the other performance obligations identified in the arrangement, we recognize revenues allocated to the license when the license is transferred to the customer and the customer is able to use and benefit from the license.
Added
For licenses that are bundled with other promises, we utilize judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue from non-refundable, upfront fees.
Added
We evaluate the measure of progress each reporting period and, if necessary, adjust the measure of performance and related revenue recognition. With respect to BMS, we identified two distinct units of accounting under the BMS Agreements.
Added
The first distinct unit of accounting includes (i) a license to technology and patents; (ii) collaboration services, including research services and technical and regulatory support; and (iii) participation on research oversight committees.
Added
The Company has determined that these delivered elements individually are either not capable of being distinct or are not distinct within the context of the contract and, therefore, will account for them as a single distinct performance obligation for purposes of revenue recognition.
Added
The second distinct unit of accounting is related to the sale of common stock, which will be accounted for as an issuance of equity at fair value in accordance with the applicable accounting standards. Consideration received related to the premium on sale of the Company's common stock was allocated to the transaction price for purposes of revenue recognition.
Added
The Company will recognize revenue using the input method in an amount proportional to the collaboration expenses incurred and the total estimated collaboration expenses over the seven-year period in which it expects to deliver its performance obligation as this method provides the most faithful depiction of the Company's transfer of services under the BMS Agreements.
Added
The Company periodically reviews and updates the estimated collaboration expenses, when appropriate, which adjusts the percentage of revenue that is recognized for the period. For all periods presented, amounts received prior to satisfying the above revenue recognition criteria were recorded as deferred revenue until all applicable revenue recognition criteria were met.
Added
If the actual timing of the performance of services varies from estimates, the accrual or prepaid expenses are adjusted accordingly.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

1 edited+0 added−1 removed4 unchanged
Biggest changeWe are subject to fluctuations in foreign currency exchange rates in connection with these arrangements. To date, we have not experienced any material effects from foreign currency fluctuations. We believe an immediate hypothetical 5% change in foreign currency exchange rates would not have had a material effect on our results of operations during the periods presented. ITEM 8.
Biggest changeWe are subject to fluctuations in foreign currency exchange rates in connection with these arrangements. To date, we have not experienced any material effects from foreign currency fluctuations. We believe an immediate hypothetical 5% change in foreign currency exchange rates would not have had a material effect on our results of operations during the periods presented.
Removed
Financial Statements and Supplementary Data The consolidated financial statements required pursuant to this item are incorporated by reference herein from the applicable information included in Item 15 of this annual report and are presented beginning on page F-1. ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.

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