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

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

+538 added−520 removedSource: 10-K (2024-03-25) vs 10-K (2023-03-06)

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

538 paragraphs added · 520 removed · 411 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

171 edited+49 added−41 removed261 unchanged
Biggest changeThe pooled data from these two studies demonstrated that, as of the time of the 2022 interim analysis, single and multiple doses of STK-001 up to 45mg were well-tolerated. 27% (15 of 55) of patients experienced a TEAE related to the study drug, all of which were mild or moderate in severity. 22% (12 of 55) of patients had a treatment-emergent serious adverse event, none of which were related to the study drug.
Biggest changeThe pooled data from these studies demonstrated that STK-001 was generally well tolerated. 30% (24/81) of the patients experienced a treatment-emergent adverse event that was related to study drug, with the most common being CSF protein elevations and procedural vomiting. 22% (18/81) of the patients had a treatment-emergent serious adverse event, which were all assessed as unrelated to study drug except for the previously reported case of one patient who experienced Suspected Unexpected Serious Adverse Reactions.
The issued patents and any patents that may issue from these pending patent applications are expected to expire between 2035 and 2036, absent any patent term adjustments or extensions.
The issued patents and any patents that may issue from these pending patent applications are expected to expire between 2035 and 2036, absent any patent term adjustments or extensions.
Furthermore, some EU Member States impose direct or indirect controls on the profitability of the company placing the medicinal product on the market. Health Technology Assessment (“HTA”) of medicinal products is becoming an increasingly common part of the pricing and reimbursement procedures in EU Member States.
Furthermore, some EU Member States impose direct or indirect controls on the profitability of the company placing the medicinal product on the market. Health Technology Assessment (“HTA”) of medicinal products is becoming an increasingly common part of the pricing and reimbursement procedures in some EU Member States.
The HTA Regulation covers new medicines and certain new medical devices, “providing the basis for permanent and sustainable cooperation at the EU level for joint clinical assessments in these areas.” Member states will be able to use common HTA tools, methodologies and procedures across the EU, working together in four main areas: 1) joint clinical assessments focusing on the most innovative health technologies with the most potential impact for patients; 2) joint scientific consultations whereby developers can seek advice from HTA authorities; 3) identification of emerging health technologies to identify promising technologies early; and 4) continuing voluntary cooperation in other areas.
The HTA Regulation covers new medicines and certain new medical devices, “providing the basis for permanent and sustainable cooperation at the EU level for joint clinical 33 assessments in these areas.” Member states will be able to use common HTA tools, methodologies and procedures across the EU, working together in four main areas: 1) joint clinical assessments focusing on the most innovative health technologies with the most potential impact for patients; 2) joint scientific consultations whereby developers can seek advice from HTA authorities; 3) identification of emerging health technologies to identify promising technologies early; and 4) continuing voluntary cooperation in other areas.
Dose-related target engagement and OPA1 protein upregulation in retinal tissue of NHPs following administration of STK-002 Source Venkatesh A, et al. STK-002, an Antisense Oligonucleotide (ASO) for the Treatment of Autosomal Dominant Optic Atrophy (ADOA), is Taken Up by Retinal Ganglion Cells (RGC) and Upregulates OPA-1 Protein Expression After Intravitreal Administration to Non-human Primates (NHPs). ASGCT; May 16-19, 2022.
Dose-related target engagement and OPA1 protein upregulation in retinal tissue of NHPs following IVT administration of STK-002 Source Venkatesh A, et al. STK-002, an Antisense Oligonucleotide (ASO) for the Treatment of Autosomal Dominant Optic Atrophy (ADOA), is Taken Up by Retinal Ganglion Cells (RGC) and Upregulates OPA-1 Protein Expression After Intravitreal Administration to Non-human Primates (NHPs). ASGCT; May 16-19, 2022.
We have built a target discovery process utilizing proprietary bioinformatics algorithms and extensive in-house expertise in whole transcriptome RNA sequencing to rapidly and systematically identify 1 diseases that we believe can be addressed using our platform. We are also advancing additional early programs focused on multiple targets, including haploinsufficiency diseases of the central nervous system (the “CNS”) and eye.
We have built a target discovery process utilizing proprietary bioinformatics algorithms and extensive in-house expertise in whole transcriptome RNA sequencing to rapidly and systematically identify diseases that we believe can be addressed using our platform. We are also advancing additional early programs focused on multiple targets, including haploinsufficiency diseases of the central nervous system (the “CNS”) and eye.
If STK-001 is approved by the FDA, we believe our precision medicine approach may have a profound impact on individuals and families. Preclinical data We have generated compelling preclinical data that demonstrate proof-of-mechanism for STK-001. Our initial target engagement, pharmacology and efficacy studies were performed in mice, including both wild-type and a Dravet syndrome mouse model.
If STK-001 is approved by the FDA, we believe our precision medicine approach may have a profound impact on individuals and families. 7 Preclinical data We have generated compelling preclinical data that demonstrate proof-of-mechanism for STK-001. Our initial target engagement, pharmacology and efficacy studies were performed in mice, including both wild-type and a Dravet syndrome mouse model.
This loss of Na v 1.1 channels in inhibitory interneurons and other nerve cells results in Dravet syndrome. Dravet syndrome is characterized by multiple seizure types and may progress to status epilepticus or prolonged seizures lasting more than five minutes that require immediate intervention. Patients typically experience their first seizure before 12 months of age.
This loss of Na v 1.1 channels in inhibitory interneurons and other nerve cells results in Dravet syndrome. 6 Dravet syndrome is characterized by multiple seizure types and may progress to status epilepticus or prolonged seizures lasting more than five minutes that require immediate intervention. Patients typically experience their first seizure before 12 months of age.
Failure to comply with 26 applicable U.S. regulations may subject a company to a variety of administrative or judicial sanctions, such as a clinical hold, FDA refusal to approve pending new drug applications, or NDAs, warning or untitled letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, civil penalties and criminal prosecution.
Failure to comply with applicable U.S. regulations may subject a company to a variety of administrative or judicial sanctions, such as a clinical hold, FDA refusal to approve pending new drug applications, or NDAs, warning or untitled letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, civil penalties and criminal prosecution.
Disease Overview ADOA is the most common inherited optic nerve disorder seen in clinical practice. ADOA causes progressive and irreversible vision loss in both eyes starting in the first decade of life. Many children progress to blindness. Roughly half of people with ADOA fail driving standards and up to 46% are registered as legally blind.
Disease Overview ADOA is the most common inherited optic nerve disorder seen in clinical practice. ADOA causes progressive and irreversible vision loss in both eyes starting in the first decade of life. Many children and adults progress to blindness. Roughly half of people with ADOA fail driving standards and up to 46% are registered as legally blind.
We are pioneers in developing disease-modifying therapies to treat haploinsufficiencies and are uniquely positioned to exploit this significant opportunity with our TANGO platform. 22 If our current product candidate, STK-001, is approved for the treatment of Dravet syndrome, it may compete with other products currently marketed or in development.
We are pioneers in developing disease-modifying therapies to treat haploinsufficiencies and are uniquely positioned to exploit this significant opportunity with our TANGO platform. If our current product candidate, STK-001, is approved for the treatment of Dravet syndrome, it may compete with other products currently marketed or in development.
As illustrated in exhibit 8 , STK-001 treated samples showed an increase in expression of the SCN1A gene, but not any of the other SCN family members. These biological studies demonstrate that STK-001 is highly specific for SCN1A among the highly homologous family of sodium channel genes, limiting the likelihood of off-target activities. Exhibit 8.
As illustrated in exhibit 8, STK-001 treated samples showed an increase in expression of the SCN1A gene, but not any of the other SCN family members. These biological studies demonstrate that STK-001 is highly specific for SCN1A among the highly homologous family of sodium channel genes, limiting the likelihood of off-target activities. 9 Exhibit 8.
FDA may also refer applications for novel drug products, or drug products that present difficult questions of safety or efficacy, to an external drug advisory committee—typically a panel that includes clinicians, statisticians, patient representatives and other experts—for review, evaluation and a recommendation as to whether the application should be approved.
FDA may also refer applications for novel drug products, or drug products that present difficult questions of safety or efficacy, to an external drug advisory committee—typically a panel that includes clinicians, statisticians, patient representatives and other experts—for review, evaluation and a recommendation as to whether the application should be 24 approved.
Possible change in law or policy Healthcare reforms that have been adopted, and that may be adopted in the future, could result in further reductions in coverage and levels of reimbursement for pharmaceutical products, increases in rebates payable under U.S. government rebate programs and additional downward pressure on pharmaceutical product prices.
Possible change in law or policy Healthcare reforms that have been adopted, and that may be adopted in the future, could result in further reductions in coverage and levels of reimbursement for pharmaceutical products, increases in rebates payable under U.S. government 30 rebate programs and additional downward pressure on pharmaceutical product prices.
Net prices for drugs or therapeutic biologics may be reduced 23 by mandatory discounts or rebates required by government healthcare programs or private payors and by any future relaxation of laws that presently restrict imports of drugs or therapeutic biologics from countries where they may be sold at lower prices than in the United States.
Net prices for drugs or therapeutic biologics may be reduced by mandatory discounts or rebates required by government healthcare programs or private payors and by any future relaxation of laws that presently restrict imports of drugs or therapeutic biologics from countries where they may be sold at lower prices than in the United States.
In many cases our confidentiality 25 and other agreements with consultants, outside scientific collaborators, sponsored researchers and other advisors require them to assign or grant us licenses to inventions they invent as a result of the work or services they render under such agreements or grant us an option to negotiate a license to use such inventions.
In many cases our confidentiality and other agreements with consultants, outside scientific collaborators, sponsored researchers and other advisors require them to assign or grant us licenses to inventions they invent as a result of the work or services they render under such agreements or grant us an option to negotiate a license to use such inventions.
The principal purposes of our equity incentive and cash-based performance bonus plans are to attract, retain and motivate selected employees, consultants and directors through the granting of stock-based compensation awards. Available Information Stoke Therapeutics, Inc. was founded in June 2014 and was incorporated under the laws of the State of Delaware.
The principal purposes of our equity incentive and cash-based performance bonus plans are to attract, retain and motivate selected employees, consultants and directors through the granting of stock-based compensation awards. 34 Available Information Stoke Therapeutics, Inc. was founded in June 2014 and was incorporated under the laws of the State of Delaware.
As a result, the current treatment strategy involves the use of multiple ASMs, including combinations of cannabidiol, stiripentol, clobazam, valproate, topiramate and others. Patients are typically treated with two to four drugs administered concomitantly, and in most cases the relief provided by polytherapy is insufficient.
As a result, the current treatment strategy involves the use of multiple ASMs, including combinations of cannabidiol, stiripentol, fenfluramine, clobazam, valproate, topiramate and others. Patients are typically treated with two to four drugs administered concomitantly, and in most cases the relief provided by polytherapy is insufficient.
Increase of Na v 1.1 in Dravet Syndrome (DS) mice after a single dose of STK-001 Source: Han et al ., Science Trans Med, 2020 9 In addition to an increase in the Na v 1.1 protein, the administration of a single dose of 20 µg of STK-001 in neonate Dravet syndrome mice (postnatal day two) resulted in a significant reduction in premature mortality.
Increase of Na v 1.1 in Dravet Syndrome (DS) mice after a single dose of STK-001 Source: Han et al ., Science Trans Med, 2020 In addition to an increase in the Na v 1.1 protein, the administration of a single dose of 20 µg of STK-001 in neonate Dravet syndrome mice (postnatal day two) resulted in a significant reduction in premature mortality.
The results of preclinical testing are submitted to FDA as part of an IND along with other information, including information about product chemistry, manufacturing and controls, and a proposed clinical trial protocol. Long-term preclinical tests, such as animal tests of reproductive toxicity and carcinogenicity, may continue after the IND is submitted.
The results of preclinical testing are submitted to FDA as part of an IND along with other information, including information about product chemistry, 23 manufacturing and controls, and a proposed clinical trial protocol. Long-term preclinical tests, such as animal tests of reproductive toxicity and carcinogenicity, may continue after the IND is submitted.
One category of non-productive splicing events amenable to TANGO is alternative splicing that leads to nonsense-mediated mRNA decay, or NMD, of the resulting mRNA. An example of a NMD event is a NMD exon, which is found in over 25% of gene transcripts. NMD exons are part of the wild-type sequence of the genes.
One category of non-productive splicing events amenable to TANGO is alternative splicing that leads to nonsense-mediated mRNA decay, or NMD, of the resulting mRNA. An example of an NMD event is an NMD exon, which is found in over 25% of gene transcripts. NMD exons are part of the wild-type sequence of the genes.
Certain changes to a drug, such as the addition of a new indication to the package insert, can be the subject of a three-year period if the application contains reports of new clinical investigations (other than bioavailability studies) conducted or sponsored by the sponsor that were essential to the approval of the application.
Certain changes to a drug, such as the addition of a new indication to the package insert, can be the subject of a three-year period if the application 28 contains reports of new clinical investigations (other than bioavailability studies) conducted or sponsored by the sponsor that were essential to the approval of the application.
We believe that leveraging our proprietary database and focusing on our core competencies of target identification and clinical and regulatory execution will allow us to reduce the time, cost and risks of drug development. Target identification We continue to make significant investments in our infrastructure to accelerate the pace and scale of target identification.
We believe that leveraging our proprietary database and focusing on our core competencies of target identification and clinical and regulatory execution will allow us to reduce the time, cost and risks of drug development. 4 Target identification We continue to make significant investments in our infrastructure to accelerate the pace and scale of target identification.
Treatment with STK-001 resulted in 97% survival of Dravet syndrome mice for the 90-day post-natal observation period (survival of 33 out of 34 mice was observed in the STK-001 Dravet syndrome mouse group) compared with 23% survival of placebo-treated mice (survival of 14 out of 62 mice). This is illustrated in exhibit 7. Exhibit 7.
Treatment with STK-001 resulted in 97% survival of Dravet syndrome mice for the 90-day post-natal observation period (survival of 33 out of 34 mice was observed in the STK-001 Dravet syndrome mouse group) compared with 23% survival of placebo-treated mice (survival of 14 out of 62 mice). This is illustrated in exhibit 7. 8 Exhibit 7.
Our policy is to seek to protect our proprietary position by, among, other methods, pursuing and obtaining patent protection in the United States and in jurisdictions outside of the United States related to our proprietary technology, inventions, improvements, platforms and product candidates that are important to the development and implementation of our business.
Our policy is to seek to protect our proprietary position by, among, other methods, pursuing and 20 obtaining patent protection in the United States and in jurisdictions outside of the United States related to our proprietary technology, inventions, improvements, platforms and product candidates that are important to the development and implementation of our business.
If a submission is granted Fast Track Designation, the sponsor may engage in more frequent interactions with FDA, and FDA may review sections of the NDA before the full 28 application is complete. This rolling review is available if, in agreement with the FDA, the applicant provides, a schedule for the submission of the remaining information.
If a submission is granted Fast Track Designation, the sponsor may engage in more frequent interactions with FDA, and FDA may review sections of the NDA before the full application is complete. This rolling review is available if, in agreement with the FDA, the applicant provides, a schedule for the submission of the remaining information.
We have now demonstrated that a single injection of ASO-14 surrogate in the rabbit eye leads to a dose-dependent increase in ASO accumulation in the retina that correlated with an increase in target engagement (removal of Exon X) and an increase in OPA1 protein (exhibit 18 below).
We have now demonstrated that a single injection of ASO-14 surrogate in the rabbit eye leads to a dose-dependent increase in ASO accumulation in the retina that correlated with an increase in target engagement (removal of Exon X) and an increase in OPA1 protein (Exhibit 14 below).
During the seven-year exclusivity period, FDA may not approve any other applications to market the same drug for the same disease, except in limited circumstances, such 29 as a showing of clinical superiority to the product with orphan drug exclusivity.
During the seven-year exclusivity period, FDA may not approve any other applications to market the same drug for the same disease, except in limited circumstances, such as a showing of clinical superiority to the product with orphan drug exclusivity.
Applications for marketing authorization for innovative 34 medicinal products must contain the results of pharmaceutical tests, preclinical tests and clinical trials conducted with the medicinal product for which marketing authorization is sought. EU legislation provides for a system of regulatory data and market exclusivity.
Applications for marketing authorization for innovative medicinal products must contain the results of pharmaceutical tests, preclinical tests and clinical trials conducted with the medicinal product for which marketing authorization is sought. EU legislation provides for a system of regulatory data and market exclusivity.
With respect to MECP2 and the neurodevelopmental target, we granted to Acadia worldwide, exclusive licenses to develop and commercialize licensed products for such targets. Pursuant to the terms of the agreement, we received an upfront payment of $60 million from Acadia.
With respect to MECP2 and the neurodevelopmental target, we granted to Acadia worldwide, exclusive licenses to develop and commercialize licensed products for such targets. Pursuant to the terms of the agreement, we received an upfront payment of $60.0 million from Acadia.
Our initial focus is haploinsufficiencies and diseases of the central nervous system and the eye, although proof of concept has been demonstrated in other organs, tissues, and systems, supporting our belief in the broad potential for our proprietary approach.
Our initial focus is on haploinsufficiencies and diseases of the central nervous system and the eye, although proof of concept has been demonstrated in other organs, tissues, and systems, supporting our belief in the broad potential for our proprietary approach.
The approval processes for both approval and marketing of commercial drugs vary from country to country and the time may be longer or shorter than that required for FDA approval. The requirements governing the product licensing, pricing and reimbursement vary greatly from country to country.
The approval processes 31 for both approval and marketing of commercial drugs vary from country to country and the time may be longer or shorter than that required for FDA approval. The requirements governing the product licensing, pricing and reimbursement vary greatly from country to country.
The outcome of HTA may influence the pricing and reimbursement status for specific medicinal products within individual EU member states. The extent to which pricing and imbursement decisions are influenced by the HTA of a specific medicinal product vary between the EU Member States.
The outcome of HTA may influence the pricing and reimbursement status for specific medicinal products within individual EU member states. The extent to which pricing and reimbursement decisions are influenced by the HTA of a specific medicinal product vary between the EU Member States.
The application for orphan drug designation must be submitted before the application for marketing authorization. The applicant may receive a fee reduction for the marketing authorization application if the orphan drug designation has been granted, but not if the designation is still pending at the time the marketing authorization is submitted.
The application for orphan drug designation must be submitted before the application for marketing authorization. The applicant may receive a fee reduction for the marketing authorization application if the orphan drug designation has been granted, but not if the designation is still pending at the time the marketing authorization is 32 submitted.
In addition, HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, or HITECH, and their respective implementing regulations, including the Final Omnibus Rule published on January 25, 2013, impose obligations on certain healthcare providers, health plans, and healthcare clearinghouses, known as covered entities, as well as their business associates that perform certain services involving the storage, use or disclosure of individually identifiable health information, including mandatory contractual terms, with respect to safeguarding the privacy, security, and transmission of individually identifiable health information, and require notification to affected individuals and regulatory authorities of certain breaches of security of individually identifiable health information.
In addition, HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009 (“HITECH”), and their respective implementing regulations, including the Final Omnibus Rule published on January 25, 2013, impose obligations on certain healthcare providers, health plans, and healthcare clearinghouses, known as covered 29 entities, as well as their business associates that perform certain services involving the storage, use or disclosure of individually identifiable health information, including mandatory contractual terms, with respect to safeguarding the privacy, security, and transmission of individually identifiable health information, and require notification to affected individuals and regulatory authorities of certain breaches of security of individually identifiable health information.
We further showed that in OPA1 haploinsufficient human cells, ASO-14-mediated increase in OPA1 protein translates to improved mitochondrial function as measured by the substantial restoration of ATP levels in the treated cells (exhibit 19 below). ATP is produced by the mitochondria and is the key energy carrying molecule in cells. We observed a 20% ATP deficit in OPA1 +/- HEK293.
We further showed that in OPA1 haploinsufficient human cells, ASO-14-mediated increase in OPA1 protein translates to improved mitochondrial function as measured by the substantial restoration of ATP levels in the treated cells (Exhibit 15 below). ATP is produced by the mitochondria and is the key energy carrying molecule in cells. We observed a 20% ATP deficit in OPA1 +/- HEK293.
Requiring an SCN1A mutation for trial enrollment allows for a clear and definitive etiologic diagnosis, a more homogeneous patient population and tailored treatment based on a precision medicine approach. Eligible patients will also have failed at least two epilepsy treatments in the past and currently be taking at least one ASM.
Requiring an SCN1A mutation for trial enrollment allows for a clear and definitive etiologic diagnosis, a more homogeneous patient population and tailored treatment based on a precision medicine approach. Eligible patients also failed at least two epilepsy treatments in the past and currently be taking at least one ASM.
We have an intellectual property estate that includes multi-national allowed and pending claims for the TANGO mechanisms, as well as multi-national pending claims relating to compositions of matter of oligonucleotides designed to target specific TANGO elements in genes for many genetic diseases that we believe are amenable to upregulation of target protein expression using TANGO.
We have an intellectual property estate that includes multi-national issued and pending claims for the TANGO mechanisms, as well as multi-national issued and pending claims relating to compositions of matter of oligonucleotides designed to target specific TANGO elements in genes for many genetic diseases that we believe are amenable to upregulation of target protein expression using TANGO.
In addition, the rights granted under any issued patents may not provide us with protection or competitive advantages against competitors with similar technology. Furthermore, our competitors may independently develop similar technologies. For these reasons, we may have competition for our TANGO platform and product candidates.
In addition, the rights granted under any issued patents may not provide us with protection or competitive advantages against competitors with similar technology. Furthermore, our competitors may independently develop similar technologies. For these reasons, we expect to have competition for our TANGO platform and product candidates.
The public can obtain any documents that we file with the SEC at www.sec.gov. Copies of each of our filings with the SEC can also be viewed and downloaded free of charge at our website, www. stoketherapeutics.com, after the reports and amendments are electronically filed with or furnished to the SEC. 37
The public can obtain any documents that we file with the SEC at www.sec.gov. Copies of each of our filings with the SEC can also be viewed and downloaded free of charge at our website, www. stoketherapeutics.com, after the reports and amendments are electronically filed with or furnished to the SEC. 35
Presented at The Association for Research in Vision and Ophthalmology; May 3-7, 2020; Baltimore, MD. 18 Exhibit 19 : Human ASO demonstrates ATP upregulation in OPA1 haploinsufficient HEK293 cells Source: Stoke data In May 2021, we presented new preclinical efficacy data at the Association for Research in Vision and Ophthalmology (ARVO) Annual Meeting demonstrating that our TANGO ASOs can increase OPA1 protein levels and improve mitochondrial function in human cells derived from ADOA patients with different OPA1 mutations.
Presented at The Association for Research in Vision and Ophthalmology; May 3-7, 2020; Baltimore, MD. 15 Exhibit 15: Human ASO demonstrates ATP upregulation in OPA1 haploinsufficient HEK293 cells Source: Stoke data In May 2021, we presented new preclinical efficacy data at the Association for Research in Vision and Ophthalmology (ARVO) Annual Meeting demonstrating that our TANGO ASOs can increase OPA1 protein levels and improve mitochondrial function in human cells derived from ADOA patients with different OPA1 mutations.
Patients with few seizures have been observed to possess severe encephalopathy, and conversely patients with frequent seizures have been observed to exhibit relatively minimal cognitive decline. In addition, there does not appear to be a correlation between cognitive outcome and SCN1A mutation type, whether a missense or truncating mutation.
Patients with few seizures have been observed to possess severe encephalopathy, and conversely patients with frequent seizures have been observed to exhibit relatively minimal cognitive decline. In addition, there does not appear to be a correlation between cognitive outcome and SCN1A mutation type, whether a missense or nonsense mutation.
Patients who participated in the MONARCH study in the United States or the ADMIRAL study in the United Kingdom and meet study entry criteria are eligible to continue treatment in SWALLOWTAIL or LONGWING, respectively, both of which are designed to evaluate the long-term safety and tolerability of repeated doses of STK-001.
Patients who participated in the MONARCH study in the United States or the ADMIRAL study in the United Kingdom and met study entry criteria are eligible to continue treatment in SWALLOWTAIL or LONGWING, respectively, both of which are designed to evaluate the long-term safety and tolerability of repeated doses of STK-001.
Among pediatric Dravet syndrome patients, approximately 90% in North America and Europe undergo genetic testing as part of their diagnostic work-up, according to a 2021 market research report commissioned by Stoke and prepared by Recon Strategy, or the Recon Strategy report.
Among pediatric Dravet syndrome patients, approximately 90% in North America and Europe undergo genetic testing as part of their diagnostic work-up, according to a 2021 market research report commissioned by Stoke and prepared by Recon Strategy.
As of December 31, 2022, the issued U.S. patents, issued foreign patents, pending U.S. patent applications and pending foreign patent applications that we have licensed from the University of Southampton are anticipated to expire between 2035 and 2036, absent any patent term adjustments or extensions.
As of December 31, 2023, the issued U.S. patents, issued foreign patents, pending U.S. patent applications and pending foreign patent applications that we have licensed from the University of Southampton are anticipated to expire between 2035 and 2036, absent any patent term adjustments or extensions.
As we continue to advance our programs, we may pursue strategic collaborations to share risk and upside in programs with higher inherent biology risk, larger clinical trial sizes or longer or more complex clinical, regulatory or commercial paths.
As we continue to advance our programs, we expect to pursue strategic collaborations to share risk and upside in programs with higher inherent biology risk, larger clinical trial sizes or longer or more complex clinical, regulatory or commercial paths.
These royalty obligations apply on a licensed product-by-licensed product and country-by-country basis until the latest of (i) the expiration of the last valid claim of a CSHL patent covering the applicable licensed product or (ii) the expiration of any regulatory exclusivity for the applicable licensed product.
These royalty obligations applied on a licensed product-by-licensed product and country-by-country basis until the latest of (i) the expiration of the last valid claim of a CSHL patent covering the applicable licensed product or (ii) the expiration of any regulatory exclusivity for the applicable licensed product.
Preclinical data We previously identified a novel exon inclusion event (“Exon X”) in OPA1 that leads to non-productive mRNA due to introduction of a premature termination codon (“PTC”) (exhibit 16 below).
Preclinical data We previously identified a novel exon inclusion event (“Exon X”) in OPA1 that leads to non-productive mRNA due to introduction of a premature termination codon (“PTC”) (Exhibit 12 below).
Exhibit 20 below demonstrates that our TANGO ASO increases OPA1 protein and ATP linked mitochondrial respiration in ADOA patient cells. Exhibit 20: TANGO ASO increases OPA1 protein and ATP linked mitochondrial respiration in ADOA patient cells Source (left graph): Stoke data Source (right graph): Venkatesh A, et al.
Exhibit 16 below demonstrates that our TANGO ASO increases OPA1 protein and ATP linked mitochondrial respiration in ADOA patient cells. Exhibit 16: TANGO ASO increases OPA1 protein and ATP linked mitochondrial respiration in ADOA patient cells Source (left graph): Stoke data Source (right graph): Venkatesh A, et al.
Exhibit 5: Pipeline Source: Stoke corporate presentation, March 2022 6 STK-001 for the treatment of Dravet syndrome STK-001 is an investigational new medicine for the treatment of Dravet syndrome currently being evaluated in ongoing clinical trials. We believe that STK-001 has the potential to be the first disease-modifying therapy to address the genetic cause of Dravet syndrome.
Exhibit 5: Pipeline Source: Stoke corporate presentation, March 2024 STK-001 for the treatment of Dravet syndrome STK-001 is an investigational new medicine for the treatment of Dravet syndrome currently being evaluated in ongoing clinical trials. We believe that STK-001 has the potential to be the first disease-modifying therapy to address the genetic cause of Dravet syndrome.
Fold change in mRNA of Scn gene family ion channels Source: Stoke data. We also investigated the pharmacology, distribution and tolerability of STK-001 in a study with cynomolgus monkeys. As a pilot experiment, this study was not required to be performed under Good Laboratory Practices, or GLP.
Fold change in mRNA of Scn gene family ion channels Source: Stoke data. We also investigated the pharmacology, distribution and tolerability of STK-001 in a study with cynomolgus monkeys. As a pilot experiment, this study was not required to be performed under Good Laboratory Practices (“GLP”).
With respect to STK-001, as of December 31, 2022, we have exclusively licensed U.S. patents that cover the mechanism of action of STK-001, as well as foreign patents and pending foreign patent applications.
With respect to STK-001, as of December 31, 2023, we have exclusively licensed U.S. patents that cover the mechanism of action of STK-001, as well as foreign patents and pending foreign patent applications.
With respect to STK-002, as of December 31, 2022, we have exclusively licensed U.S. patents that cover the mechanism of action of STK-002, as well as foreign patents and pending foreign patent applications.
With respect to STK-002, as of December 31, 2023, we have exclusively licensed U.S. patents that cover the mechanism of action of STK-002, as well as foreign patents and pending foreign patent applications.
Under the Southampton Agreement, we may be obligated to make additional payments that are contingent upon certain milestones being achieved, as well as royalties on future product sales.
Under the Southampton Agreement, the Company may be obligated to make additional payments that are contingent upon certain milestones being achieved, as well as royalties on future product sales.
We are e ligible to receive up to $907.5 million in potential total milestone payments based upon the achievement of certain development, regulatory, first commercial sales and sales milestone events across the programs for the three targets, assuming each milestone were achieved at least once.
We are eligible to receive up to $907.5 million in potential total milestone payments based upon the achievement of certain development, regulatory, first commercial sales and sales milestone events across the programs for the three targets, assuming each milestone were achieved at least once.
Our currently issued patents will likely expire on dates ranging from 2035 to 2038, unless we receive patent term extension or patent term adjustment, or both.
Our currently issued patents will likely expire on dates ranging from 2035 to 2041, unless we receive patent term extension or patent term adjustment, or both.
A new EU Regulation on HTA was adopted on December 13, 2021, Regulation (EU) 2021/2282 of the European Parliament and of the Council of 15 December 2021 on health technology assessment and amending Directive 2011/24/EU (“HTA Regulation”). It will become applicable on January12, 2025.
A new EU Regulation on HTA was adopted on December 13, 2021, Regulation (EU) 2021/2282 of the European Parliament and of the Council of 15 December 2021 on health technology assessment and amending Directive 2011/24/EU (“HTA Regulation”). It will become applicable on January 12, 2025.
However, the 24 term of United States patents may be extended for delays incurred due to compliance with the FDA requirements or by delays encountered during prosecution that are caused by the United States Patent and Trademark Office, or the USPTO.
However, the term of United States patents may be extended for delays incurred due to compliance with the FDA requirements or by delays encountered during prosecution that are caused by the United States Patent and Trademark Office (the “USPTO”).
The critical components of our strategy include: • Rapidly advance our lead program, STK-001, to clinical proof-of-concept, approval and commercialization.
The critical components of our strategy include the following activities: • Rapidly advance our lead program, STK-001, to clinical proof-of-concept, approval and commercialization.
In May 2022, we presented further preclinical data for STK-002 demonstrating in-vivo , dose-related target engagement and OPA1 protein upregulation with sustained effect in NHP retinal tissue following administration of STK-002 (Exhibit 21). Additionally, a dose-related increase in OPA1 protein was detected in retinal ganglion cells of NHPs treated with STK-002. 19 Exhibit 21.
In May 2022, we presented further preclinical data for STK-002 demonstrating in-vivo, dose-related target engagement and OPA1 protein upregulation with sustained effect in NHP retinal tissue following administration of STK-002 (Exhibit 17). Additionally, a dose-related increase in OPA1 protein was detected in retinal ganglion cells of NHPs treated with STK-002. 16 Exhibit 17.
With respect to licensed products for MECP2 and the neurodevelopmental target, we are also eligible 20 to receive tiered royalties at percentages ranging from the mid-single digits to the mid-teens on future net sales by Acadia of licensed products worldwide. Royalties payable under the a greement are subject to standard royalty reductions.
With respect to licensed products for MECP2 and the neurodevelopmental target, we are also eligible to receive tiered royalties at percentages ranging from the mid-single digits to the mid-teens on future net sales by Acadia of licensed products worldwide. Royalties payable under the agreement are subject to standard royalty reductions.
We seek to attract, hire and retain individuals of diverse backgrounds and of all ages, genders, ethnicities, religions, home countries and sexual orientation. As of December 31, 2022, approximately 55% of our employees are female, and approximately 47% of our management team (which we define as at the vice president level and above) are female.
We seek to attract, hire and retain individuals of diverse backgrounds and of all ages, genders, ethnicities, religions, home countries and sexual orientation. As of December 31, 2023, approximately 59% of our employees are female, and approximately 47% of our management team (which we define as at the vice president level and above) are female.
If patents are issued on our pending patent applications, the resulting patents are projected to expire on dates ranging from 2036 to 204 3 , 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 2036 to 2044, unless we receive patent term extension or patent term adjustment, or both.
Rare Pediatric Disease Priority Review Voucher program Under the Rare Pediatric Disease Priority Review Voucher program, FDA may award a priority review voucher to the sponsor of an approved marketing application for a product that treats or prevents a rare pediatric disease. The voucher entitles the sponsor to priority review of one subsequent marketing application.
Rare Pediatric Disease Priority Review Voucher program Under the Rare Pediatric Disease Priority Review Voucher program, FDA may award a priority review voucher to the sponsor of an approved marketing application for a product that treats or prevents a rare pediatric disease.
Treatment with ASO-14 restored ATP levels to ~90% of control cells. Exhibit 16: A representation of the non-productive mRNA splicing event in OPA1 17 Exhibit 17: Inhibition of NMD with cycloheximide allows for evaluation of the abundance of this event in vitro Exhibit 18: Rabbit ASO demonstrates dose-dependent OPA1 protein increase in rabbit retina Source: Venkatesh A, et al.
Treatment with ASO-14 restored ATP levels to ~90% of control cells . Exhibit 12: A representation of the non-productive mRNA splicing event in OPA1 14 Exhibit 13: Inhibition of NMD with cycloheximide allows for evaluation of the abundance of this event in vitro Exhibit 14: Rabbit ASO demonstrates dose-dependent OPA1 protein increase in rabbit retina Source: Venkatesh A, et al.
As of December 31, 2022, the issued U.S. patents, the issued foreign patents and any patents that may issue from the currently pending patent applications, including PCT international applications, U.S. patent applications, and foreign patent applications, are expected to expire between 2036 and 2043, absent any patent term adjustments or extensions.
As of December 31, 2023, the issued U.S. patents, the issued foreign patents and any patents that may issue from the currently pending patent applications, including PCT international applications, U.S. patent applications, and foreign patent applications, are expected to expire between 2036 and 2044, absent any patent term adjustments or extensions.
With respect to our TANGO platform, we have exclusively licensed intellectual property for our TANGO technology from the University of Southampton and Cold Spring Harbor Laboratory, which includes issued U.S. and foreign patents and pending U.S. and foreign patent applications that cover the TANGO mechanisms.
With respect to our TANGO platform, we have exclusively licensed intellectual property for our TANGO technology from the University of Southampton, which includes issued U.S. and foreign patents and pending U.S. and foreign patent applications that cover the TANGO mechanisms.
More than 40% of our employees self-identify as racially or ethnically diverse as of December 31, 2022. Our human capital resources objectives include, as applicable, identifying, recruiting, integrating, motivating, developing, and retaining our existing and additional employees.
More than 36% of our employees self-identify as racially or ethnically diverse as of December 31, 2023. Our human capital resources objectives include, as applicable, identifying, recruiting, integrating, motivating, developing, and retaining our existing and additional employees.
We are also required to pay royalties, tiered based on the scope of patent coverage for each licensed product, ranging from a low-single digit percentage to a mid-single digit percentage on annual net sales.
The Company was also required to pay royalties, tiered based on the scope of patent coverage for each licensed product, ranging from a low-single digit percentage to a mid-single digit percentage on annual net sales.
Many of the currently marketed ASMs are available as generics. In addition, numerous compounds are in clinical development for treatment of epilepsy. To our knowledge, the clinical development pipeline includes cannabinoids, 5-HT release stimulants, cholesterol 24-hydroxylase inhibitors, and sodium channel antagonists from a variety of companies.
Many of the currently marketed ASMs are available as generics. In addition, numerous compounds are in clinical development for treatment of epilepsy. To our knowledge, the clinical development pipeline for non-disease modifying therapies includes cannabinoids, 5-HT release stimulants, cholesterol 24-hydroxylase inhibitors, potassium channel openers, and sodium channel antagonists from a variety of companies.
Employees and Human Capital Resources As of December 31, 2022, we had 117 employees, 39 of whom have an M.D. or Ph.D. We have not experienced any work stoppages. None of our employees is represented by a labor union or covered by collective bargaining agreements, and we consider our relationship with our employees to be good.
Employees and Human Capital Resources As of December 31, 2023, we had 110 employees, 37 of whom have an M.D. or Ph.D. We have not experienced any work stoppages. None of our employees is represented by a labor union or covered by collective bargaining agreements, and we consider our relationship with our employees to be good.
Longer-term, we believe that our ASOs may have the potential to upregulate non-mutated genes in biological pathways to treat diseases or conditions that are caused by multiple genes or are multifactorial, such as autoimmune diseases, aging and cancer. • Maintain broad commercial rights to our product candidates where we believe we can realize maximum value.
Longer-term, we believe that our ASOs may have the potential to upregulate non-mutated genes in biological pathways to treat diseases or conditions that are caused by multiple genes or are multifactorial. • Maintain broad commercial rights to our product candidates where we believe we can realize maximum value.
A secondary objective is to assess the efficacy of STK-001 as an adjunctive ASM treatment with respect to the percent change from baseline in convulsive seizure frequency over a 12-week treatment period. We are measuring non-seizure aspects of the disease, such as quality of life as secondary endpoints.
A secondary objective was to assess the efficacy of STK-001 as an adjunctive ASM treatment with respect to the percent change from baseline in convulsive seizure frequency over a 12-week treatment period. We also measured non-seizure aspects of the disease, such as quality of life as secondary endpoints.
One of several secondary endpoints for both the MONARCH and ADMIRAL studies was a comparison of the percentage change in convulsive seizure frequency as measured by daily seizure diaries and calculated over 4-week periods: between baseline and 12 weeks after treatment; and between baseline and end of study.
One of several secondary endpoints for these studies was a comparison of the percent change in convulsive seizure frequency as measured by daily seizure diaries and calculated over 4-week periods: between baseline and 12 weeks after treatment; and between baseline and end of study.
For more information, please see the section entitled “Risk Factors – Risks Related to our Intellectual Property.” License and research agreements In July 2015, we entered into a worldwide license agreement, or the CSHL Agreement, with CSHL, with respect to TANGO patents.
For more information, please see the section entitled “Risk Factors – Risks Related to our Intellectual Property.” 22 License and research agreements In July 2015, the Company entered into a worldwide license agreement with CSHL (the “CSHL Agreement”), with respect to TANGO patents.
The sponsor submitting the priority review voucher must notify FDA of is intent to submit the voucher with the NDA or BLA at least 90 days prior to submission of the NDA or BLA and must pay a priority review user fee in addition to any other required user fee ($1,226,651 in fiscal year 2022).
The sponsor submitting the priority review voucher must notify FDA of is intent to submit the voucher with the NDA or BLA at least 90 days prior to submission of the NDA or BLA and must pay a priority review user fee in addition to any other required user fee.
Sponsors of applications for drugs granted Orphan Drug Designation are exempt from these user fees. 27 FDA has 60 days from its receipt of an NDA to determine whether the application will be accepted for filing based on the agency’s threshold determination that it is sufficiently complete to permit substantive review.
Sponsors of applications for drugs granted Orphan Drug Designation are exempt from these user fees. FDA has 60 days from its receipt of an NDA to determine whether the application will be accepted for filing based on the agency’s threshold determination that it is sufficiently complete to permit substantive review. FDA may request additional information rather than file an NDA.
Item 1. Business. Overview We are dedicated to addressing the underlying causes of severe diseases by upregulating protein expression with RNA-based medicines. Using our proprietary TANGO (Targeted Augmentation of Nuclear Gene Output) approach, we are developing antisense oligonucleotides (“ASOs”) to selectively restore protein levels.
Item 1. Bu siness. Overview We are a clinical-stage company dedicated to addressing the underlying causes of severe diseases by upregulating protein expression with RNA-based medicines. Using our proprietary TANGO (Targeted Augmentation of Nuclear Gene Output) approach, we are developing antisense oligonucleotides (“ASOs”) to selectively restore protein levels.
In April 2016, we entered into an exclusive, worldwide license agreement with the University of Southampton (the “Southampton Agreement”), whereby we acquired rights to foundational technologies related to our TANGO technology. Under the Southampton Agreement, we receive an exclusive, worldwide license under certain licensed patents and applications relating to TANGO.
In April 2016, the Company entered into an exclusive, worldwide license agreement with the University of Southampton (the “Southampton Agreement”), whereby the Company acquired rights to foundational technologies related to the Company’s TANGO technology. Under the Southampton Agreement, the Company receives an exclusive, worldwide license under certain licensed patents and applications relating to TANGO.
A secondary objective is to assess the effect of multiple doses of STK-001 as an adjunctive antiepileptic treatment with respect to the percentage change from baseline in convulsive seizure frequency over a 24-week treatment period. We are measuring non-seizure aspects of the disease, such as overall clinical status and quality of life, as secondary endpoints.
A secondary objective was to assess the effect of multiple doses of STK-001 as an adjunctive antiepileptic treatment with respect to the percentage change from baseline in convulsive seizure frequency over a 24-week treatment period. Non-seizure aspects of the disease, such as overall clinical status and quality of life, were also measured as secondary endpoints.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeFor as long as we continue to be an emerging growth company, we may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including (i) not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, as amended (the “Sarbanes-Oxley Act”), (ii) reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and (iii) exemptions from the requirements of holding nonbinding advisory stockholder votes on executive compensation and stockholder approval of any golden parachute payments not approved previously. 77 We will remain an emerging growth company until the earliest of (i) the last day of the fiscal year (a) in which we have total annual gross revenue of at least $1.07 billion or (b) in which we are deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceed s $700 million as of the prior June 30th, (ii) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period and (iii) December 31, 2024.
Biggest changeFor as long as we continue to be an emerging growth company, we may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including (i) not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, as amended (the “Sarbanes-Oxley Act”), (ii) reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and (iii) exemptions from the requirements of holding nonbinding advisory stockholder votes on executive compensation and stockholder approval of any golden parachute payments not approved previously.
While we have not experienced any such material system failure, or accident, and are unaware of any security breach to date, if such an event were to occur and cause interruptions in our operations, it could result in a material disruption of our development programs and our business operations, whether due to a loss of our trade secrets or other proprietary information or other similar disruptions.
While we have not experienced any such material system failure, or accident, and are unaware of any security breach to date, if such an event were to occur and cause interruptions in our operations, it could result in a material disruption of our development programs and our business operations, whether due to a loss of our trade secrets or other proprietary information or other similar disruptions.
For example, the loss of data from completed or future preclinical studies or clinical trials could result in significant delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data.
For example, the loss of data from completed or future preclinical studies or clinical trials could result in significant delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data.
To the extent that any disruption or security breach were to result in a loss of, or damage to, our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur liability, our competitive position could be harmed and the further development and commercialization of our product candidates could be significantly delayed.
To the extent that any disruption or security breach were to result in a loss of, or damage to, our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur liability, our competitive position could be harmed and the further development and commercialization of our product candidates could be significantly delayed.
The degree of market acceptance of genetic medicines and, in particular, STK-001, STK-002 and our future product candidates, if approved for commercial sale, will depend on several factors, including: • the efficacy, durability and safety of such product candidates as demonstrated in clinical trials; • the potential and perceived advantages of product candidates over alternative treatments; • the cost of treatment relative to alternative treatments; • the clinical indications for which the product candidate is approved by the FDA, the MHRA or the European Commission; • the willingness of providers to prescribe new therapies; • the willingness of the target patient population to try new therapies; • the prevalence and severity of any side effects; • product labeling or product insert requirements of the FDA, MHRA, EMA or other regulatory authorities, including any limitations or warnings contained in a product’s approved labeling; • the willingness of providers to prescribe, and of patients to receive, intrathecal injections; • the strength of marketing and distribution support; • the timing of market introduction of competitive products; • the quality of our relationships with patient advocacy groups; 52 • publicity concerning our product candidates or competing products and treatments; and • sufficient third-party payor coverage and adequate reimbursement.
The degree of market acceptance of genetic medicines and, in particular, STK-001, STK-002 and our future product candidates, if approved for commercial sale, will depend on several factors, including: • the efficacy, durability and safety of such product candidates as demonstrated in clinical trials; • the potential and perceived advantages of product candidates over alternative treatments; • the cost of treatment relative to alternative treatments; • the clinical indications for which the product candidate is approved by the FDA, the MHRA or the European Commission; • the willingness of providers to prescribe new therapies; • the willingness of the target patient population to try new therapies; • the prevalence and severity of any side effects; • product labeling or product insert requirements of the FDA, MHRA, EMA or other regulatory authorities, including any limitations or warnings contained in a product’s approved labeling; • the willingness of providers to prescribe, and of patients to receive, intrathecal injections; • the strength of marketing and distribution support; • the timing of market introduction of competitive products; • the quality of our relationships with patient advocacy groups; • publicity concerning our product candidates or competing products and treatments; and • sufficient third-party payor coverage and adequate reimbursement.
The risks we face in connection with acquisitions, include: • diversion of management time and focus from operating our business to addressing acquisition integration challenges; • coordination of research and development efforts; • retention of key employees from the acquired company; • changes in relationships with strategic partners as a result of product acquisitions or strategic positioning resulting from the acquisition; • cultural challenges associated with integrating employees from the acquired company into our organization; • the need to implement or improve controls, procedures, and policies at a business that prior to the acquisition may have lacked sufficiently effective controls, procedures and policies; • liability for activities of the acquired company before the acquisition, including intellectual property infringement claims, violation of laws, commercial disputes, tax liabilities, and other known liabilities; • unanticipated write-offs or charges; and • litigation or other claims in connection with the acquired company, including claims from terminated employees, customers, former stockholders or other third parties.
The risks we face in connection with acquisitions, include: • diversion of management time and focus from operating our business to addressing acquisition integration challenges; • coordination of research and development efforts; 70 • retention of key employees from the acquired company; • changes in relationships with strategic partners as a result of product acquisitions or strategic positioning resulting from the acquisition; • cultural challenges associated with integrating employees from the acquired company into our organization; • the need to implement or improve controls, procedures, and policies at a business that prior to the acquisition may have lacked sufficiently effective controls, procedures and policies; • liability for activities of the acquired company before the acquisition, including intellectual property infringement claims, violation of laws, commercial disputes, tax liabilities, and other known liabilities; • unanticipated write-offs or charges; and • litigation or other claims in connection with the acquired company, including claims from terminated employees, customers, former stockholders or other third parties.
The market price for our common stock may be influenced by many factors, including the other risks described in this section and elsewhere in this report and the following: • results of preclinical studies and clinical trials of our product candidates, or those of our competitors or our existing or future collaborators; • regulatory or legal developments in the United States and other countries, especially changes in laws or regulations applicable to our product candidates; • the success of competitive products or technologies; • introductions and announcements of new products by us, our future commercialization partners, or our competitors, and the timing of these introductions or announcements; • actions taken by regulatory agencies with respect to our product candidates, clinical studies, manufacturing process or sales and marketing terms; • actual or anticipated variations in our financial results or those of companies that are perceived to be similar to us; • the success of our efforts to acquire or in-license additional technologies, products or product candidates; • developments concerning any future collaborations, including but not limited to those with our sources of manufacturing supply and our commercialization partners; • market conditions in the pharmaceutical and biotechnology sectors; • announcements by us or our competitors of significant acquisitions, strategic collaborations, joint ventures or capital commitments; • developments or disputes concerning patents or other proprietary rights, including patents, litigation matters and our ability to obtain patent protection for our product candidates and products; • our ability or inability to raise additional capital and the terms on which we raise it; • the recruitment or departure of key personnel; • changes in the structure of healthcare payment systems; • actual or anticipated changes in earnings estimates or changes in stock market analyst recommendations regarding our common stock, other comparable companies or our industry generally; • our failure or the failure of our competitors to meet analysts’ projections or guidance that we or our competitors may give to the market; • fluctuations in the valuation of companies perceived by investors to be comparable to us; • announcement and expectation of additional financing efforts; • speculation in the press or investment community; • trading volume of our common stock; • sales of our common stock by us or our stockholders; • the concentrated ownership of our common stock; 76 • changes in accounting principles; • terrorist acts, acts of war or periods of widespread civil unrest, including the conflict in Ukraine and actions taken by third parties in response to such conflict; • natural disasters and other calamities; and • general economic, industry and market conditions including interest rate increases and inflation.
The market price for our common stock may be influenced by many factors, including the other risks described in this section and elsewhere in this report and the following: • results of preclinical studies and clinical trials of our product candidates, or those of our competitors or our existing or future collaborators; • regulatory or legal developments in the United States and other countries, especially changes in laws or regulations applicable to our product candidates; • the success of competitive products or technologies; • introductions and announcements of new products by us, our future commercialization partners, or our competitors, and the timing of these introductions or announcements; • actions taken by regulatory agencies with respect to our product candidates, clinical studies, manufacturing process or sales and marketing terms; • actual or anticipated variations in our financial results or those of companies that are perceived to be similar to us; • the success of our efforts to acquire or in-license additional technologies, products or product candidates; • developments concerning any future collaborations, including but not limited to those with our sources of manufacturing supply and our commercialization partners; • market conditions in the pharmaceutical and biotechnology sectors; • announcements by us or our competitors of significant acquisitions, strategic collaborations, joint ventures or capital commitments; • developments or disputes concerning patents or other proprietary rights, including patents, litigation matters and our ability to obtain patent protection for our product candidates and products; • our ability or inability to raise additional capital and the terms on which we raise it; 74 • the recruitment or departure of key personnel; • changes in the structure of healthcare payment systems; • actual or anticipated changes in earnings estimates or changes in stock market analyst recommendations regarding our common stock, other comparable companies or our industry generally; • our failure or the failure of our competitors to meet analysts’ projections or guidance that we or our competitors may give to the market; • fluctuations in the valuation of companies perceived by investors to be comparable to us; • announcement and expectation of additional financing efforts; • speculation in the press or investment community; • trading volume of our common stock; • sales of our common stock by us or our stockholders; • the concentrated ownership of our common stock; • changes in accounting principles; • terrorist acts, acts of war or periods of widespread civil unrest, including the conflict in Ukraine and actions taken by third parties in response to such conflict; • natural disasters and other calamities; and • general economic, industry and market conditions including interest rate increases and inflation.
For example: • others may be able to make or use compounds that are similar to the active compositions of our product candidates but that are not covered by the claims of our patents; • the active pharmaceutical ingredients in our current product candidates will eventually become commercially available in generic drug products, and no patent protection may be available with regard to formulation or method of use; • we or our licensors, as the case may be, may fail to meet our obligations to the U.S. government regarding any in-licensed patents and patent applications funded by U.S. government grants, leading to the loss or unenforceability of patent rights; 63 • we or our licensors, as the case may be, might not have been the first to file patent applications for certain inventions; • others may independently develop similar or alternative technologies or duplicate any of our technologies; • it is possible that our pending patent applications will not result in issued patents; • it is possible that there are prior public disclosures that could invalidate our owned or in-licensed patents, as the case may be, or parts of our owned or in-licensed patents; • it is possible that others may circumvent our owned or in-licensed patents; • it is possible that there are unpublished applications or patent applications maintained in secrecy that may later issue with claims covering our product candidates or technology similar to ours; • the laws of foreign countries may not protect our or our licensors’, as the case may be, proprietary rights to the same extent as the laws of the United States; • the claims of our owned or in-licensed issued patents or patent applications, if and when issued, may not cover our product candidates; • our owned or in-licensed issued patents may not provide us with any competitive advantages, may be narrowed in scope, or be held invalid or unenforceable as a result of legal challenges by third parties; • the inventors of our owned or in-licensed patents or patent applications may become involved with competitors, develop products or processes that design around our patents, or become hostile to us or the patents or patent applications on which they are named as inventors; • it is possible that our owned or in-licensed patents or patent applications omit individual(s) that should be listed as inventor(s) or include individual(s) that should not be listed as inventor(s), which may cause these patents or patents issuing from these patent applications to be held invalid or unenforceable; • we have engaged in scientific collaborations in the past and will continue to do so in the future and our collaborators may develop adjacent or competing products that are outside the scope of our patents; • we may not develop additional proprietary technologies for which we can obtain patent protection; • it is possible that product candidates or diagnostic tests we develop may be covered by third parties’ patents or other exclusive rights; or • the patents of others may have an adverse effect on our business.
For example: • others may be able to make or use compounds that are similar to the active compositions of our product candidates but that are not covered by the claims of our patents; • the active pharmaceutical ingredients in our current product candidates will eventually become commercially available in generic drug products, and no patent protection may be available with regard to formulation or method of use; • we or our licensors, as the case may be, may fail to meet our obligations to the U.S. government regarding any in-licensed patents and patent applications funded by U.S. government grants, leading to the loss or unenforceability of patent rights; 61 • we or our licensors, as the case may be, might not have been the first to file patent applications for certain inventions; • others may independently develop similar or alternative technologies or duplicate any of our technologies; • it is possible that our pending patent applications will not result in issued patents; • it is possible that there are prior public disclosures that could invalidate our owned or in-licensed patents, as the case may be, or parts of our owned or in-licensed patents; • it is possible that others may circumvent our owned or in-licensed patents; • it is possible that there are unpublished applications or patent applications maintained in secrecy that may later issue with claims covering our product candidates or technology similar to ours; • the laws of foreign countries may not protect our or our licensors’, as the case may be, proprietary rights to the same extent as the laws of the United States; • the claims of our owned or in-licensed issued patents or patent applications, if and when issued, may not cover our product candidates; • our owned or in-licensed issued patents may not provide us with any competitive advantages, may be narrowed in scope, or be held invalid or unenforceable as a result of legal challenges by third parties; • the inventors of our owned or in-licensed patents or patent applications may become involved with competitors, develop products or processes that design around our patents, or become hostile to us or the patents or patent applications on which they are named as inventors; • it is possible that our owned or in-licensed patents or patent applications omit individual(s) that should be listed as inventor(s) or include individual(s) that should not be listed as inventor(s), which may cause these patents or patents issuing from these patent applications to be held invalid or unenforceable; • we have engaged in scientific collaborations in the past and will continue to do so in the future and our collaborators may develop adjacent or competing products that are outside the scope of our patents; • we may not develop additional proprietary technologies for which we can obtain patent protection; • it is possible that product candidates or diagnostic tests we develop may be covered by third parties’ patents or other exclusive rights; or • the patents of others may have an adverse effect on our business.
Those factors may include the design or results of clinical trials, the likelihood of approval by the FDA or similar regulatory authorities outside the United States, the potential market for the subject product candidate, the costs and complexities of manufacturing and delivering such product candidate to patients, the potential of competing drugs, the existence of uncertainty with respect to 57 our ownership of technology, which can exist if there is a challenge to such ownership without regard to the merits of the challenge and industry and market conditions generally.
Those factors may include the design or results of clinical trials, the likelihood of approval by the FDA or similar regulatory authorities outside the United States, the potential market for the subject product candidate, the costs and complexities of manufacturing and delivering such product candidate to patients, the potential of competing drugs, the existence of uncertainty with respect to our ownership of technology, which can exist if there is a challenge to such ownership without regard to the merits of the challenge and industry and market conditions generally.
Although no misappropriation or improper disclosure claims against us are currently pending, and although we 68 try to ensure that our employees and consultants do not use the proprietary information or know-how of others in their work for us, we may be subject to claims that we or our employees, consultants or independent contractors have inadvertently or otherwise used or disclosed intellectual property, including trade secrets or other proprietary information, of a former employer or other third parties.
Although no misappropriation or improper disclosure claims against us are currently pending, and although we try to ensure that our employees and consultants do not use the proprietary information or know-how of others in their work for us, we may be subject to claims that we or our employees, consultants or independent contractors have inadvertently or otherwise used or disclosed intellectual property, including trade secrets or other proprietary information, of a former employer or other third parties.
If our operations are found to be in violation of any of these laws or any other governmental regulations that may apply to us, we may be subject to significant civil, criminal and administrative penalties, damages, fines, imprisonment, exclusion of product candidates from government-funded healthcare programs, such as Medicare and Medicaid, disgorgement, contractual damages, reputational harm, diminished profits and future earnings, and the curtailment or restructuring of our operations.
If our operations are found to be in violation of any of these laws or any other governmental regulations that may apply to us, we may be subject to significant civil, criminal and administrative penalties, damages, fines, imprisonment, exclusion of product candidates from government-funded healthcare programs, such as Medicare and Medicaid, disgorgement, contractual damages, reputational harm, diminished profits and future earnings, and the curtailment 49 or restructuring of our operations.
These new laws may result in additional reductions in Medicare and other healthcare funding, which could have a material adverse effect on customers for our drugs, if approved, and accordingly, our financial operations. Additionally, on May 30, 2018, the Trickett Wendler, Frank Mongiello, Jordan McLinn, and Matthew Bellina Right to Try Act of 2017 was signed into law.
These new laws may result in additional reductions in Medicare and other healthcare funding, which could have a material 46 adverse effect on customers for our drugs, if approved, and accordingly, our financial operations. Additionally, on May 30, 2018, the Trickett Wendler, Frank Mongiello, Jordan McLinn, and Matthew Bellina Right to Try Act of 2017 was signed into law.
The positive results we have observed for our product candidates in preclinical animal 40 models may not be predictive of our future clinical trials in humans, as mouse models carry inherent limitations relevant to all preclinical studies. In particular, the Dravet syndrome mouse model is more severe than the human disease and provides a shorter post-symptomatic observation period.
The positive results we have observed for our product candidates in preclinical animal models may not be predictive of our future clinical trials in humans, as mouse models carry inherent limitations relevant to all preclinical studies. In particular, the Dravet syndrome mouse model is more severe than the human disease and provides a shorter post-symptomatic observation period.
The collaborator may also consider alternative product candidates or technologies for similar indications that may be available to collaborate on and whether such a collaboration could be more attractive than the one with us for our product candidate. The terms of any additional collaborations or other arrangements that we may establish may not be favorable to us.
The collaborator may also consider alternative product candidates or technologies for similar indications that may be available to collaborate on and whether such a collaboration could be more attractive than the one with us for our product candidate. The terms of any additional collaborations or other arrangements 55 that we may establish may not be favorable to us.
Although we monitor our use of open source software, the terms of many open source licenses have not been interpreted by U.S. courts, and there is a risk that those licenses could be construed in a manner that could impose unanticipated conditions or restrictions on our ability to commercialize our product candidates.
Although we monitor our use of open source software, the terms of many open source licenses have not been interpreted by 66 U.S. courts, and there is a risk that those licenses could be construed in a manner that could impose unanticipated conditions or restrictions on our ability to commercialize our product candidates.
We currently intend to retain all of our future earnings, if any, to finance the growth and development of our business. As a result, capital appreciation, if any, of our common stock will be your sole source of gain for the foreseeable future. We may be subject to securities litigation, which is expensive and could divert management attention.
We currently intend to retain all of our future earnings, if any, to finance the growth and development of our business. As a result, capital appreciation, if any, of our common stock will be your sole source of gain for the foreseeable future. 78 We may be subject to securities litigation, which is expensive and could divert management attention.
A weak or declining economy could also strain our suppliers, possibly resulting in supply disruption, or cause our customers to delay making payments for our services. If the current equity and credit markets deteriorate, it may make any necessary debt or equity financing more difficult, more costly, and more dilutive.
A weak or declining economy could also strain our suppliers, possibly resulting in supply disruption, or cause our customers to delay making payments for our services. If the current equity and credit markets deteriorate, it may make any necessary debt or equity financing more 71 difficult, more costly, and more dilutive.
As a result, our owned and licensed patent portfolio may not provide us with sufficient rights to exclude others from commercializing products similar or identical to ours. 70 If we do not obtain patent term extension for any product candidates we may develop, our business may be materially harmed.
As a result, our owned and licensed patent portfolio may not provide us with sufficient rights to exclude others from commercializing products similar or identical to ours. If we do not obtain patent term extension for any product candidates we may develop, our business may be materially harmed.
We may continue to be a smaller reporting company as long as either (i) the market value of our stock held by non-affiliates is less than $250 million or (ii) our annual revenue is less than $100 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700 million.
We may continue to be a smaller reporting company as long as either (i) the market value of our stock held by non-affiliates is less than $250.0 million or (ii) our annual revenue is less than $100.0 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700.0 million.
Even if a potential product displays a favorable efficacy and safety profile in preclinical studies and clinical trials, market acceptance of the product will not be fully known until after it is launched. The pricing, insurance coverage and reimbursement status of newly approved products is uncertain.
Even if a potential product displays a favorable efficacy and safety profile in preclinical studies and clinical trials, market acceptance of the product will not be fully known until after it is launched. 50 The pricing, insurance coverage and reimbursement status of newly approved products is uncertain.
A breakdown or breach of our technology systems could subject us to liability or interrupt the operation of our business. We are increasingly dependent upon technology systems and data to operate our business. In particular, the COVID-19 pandemic has caused us to modify our business practices, including increasing the prevalence of employees working remotely.
A breakdown or breach of our technology systems could subject us to liability or interrupt the operation of our business. We are increasingly dependent upon technology systems and data to operate our business. In particular, the COVID-19 pandemic caused us to modify our business practices, including increasing the prevalence of employees working remotely.
Despite the implementation of appropriate security measures, our internal computer and information systems 74 and those of our current and any future CROs, CMOs and other contractors or consultants may become vulnerable to damage from computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures.
Despite the implementation of appropriate security measures, our internal computer and information systems and those of our current and any future CROs, CMOs and other contractors or consultants may become vulnerable to damage from computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures.
For example, while our patent applications are pending, we may be subject to a third party preissuance submission of prior art to the United States Patent and Trademark Office (the “USPTO”) or become involved in interference or derivation proceedings, or equivalent 62 proceedings in foreign jurisdictions.
For example, while our patent applications are pending, we may be subject to a third party preissuance submission of prior art to the United States Patent and Trademark Office (the “USPTO”) or become involved in interference or derivation proceedings, or equivalent proceedings in foreign jurisdictions.
The FDA may withdraw Fast Track Designation if it believes that the designation is no longer supported by data from our clinical development program. Many drugs that have received Fast Track Designation have failed to obtain approval. 47 We may also seek accelerated approval for our product candidates.
The FDA may withdraw Fast Track Designation if it believes that the designation is no longer supported by data from our clinical development program. Many drugs that have received Fast Track Designation have failed to obtain approval. We may also seek accelerated approval for our product candidates.
STK-001, STK-002 and our future product candidates must be authorized for marketing by the FDA or certain 39 other foreign regulatory agencies, such as the European Medicines Agency (the “EMA”) or the MHRA , before we may commercialize any of our product candidates.
STK-001, STK-002 and our future product candidates must be authorized for marketing by the FDA or certain other foreign regulatory agencies, such as the European Medicines Agency (the “EMA”) or the MHRA, before we may commercialize any of our product candidates.
We are also a “smaller reporting company,” meaning that the market value of our stock held by non-affiliates was less than $700 million and our annual revenue was less than $100 million during the most recently completed fiscal year.
We are also a “smaller reporting company,” meaning that the market value of our stock held by non-affiliates was less than $700.0 million and our annual revenue was less than $100.0 million during the most recently completed fiscal year.
The expansion of our operations may lead to significant costs and may divert our management and business development resources. Any inability to manage growth could delay the execution of our business plans or disrupt our operations. 71 We must attract and retain highly skilled employees to succeed.
The expansion of our operations may lead to significant costs and may divert our management and business development resources. Any inability to manage growth could delay the execution of our business plans or disrupt our operations. We must attract and retain highly skilled employees to succeed.
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 addition, companies that perceive us to be a competitor may be unwilling 67 to assign or license rights to us.
Cyber-attacks could include the deployment of harmful malware and key loggers, ransomware, a denial-of-service attack, a malicious website, the use of social engineering and other means to affect the confidentiality, integrity and availability of our technology systems and data.
Cyber-attacks could include the deployment of harmful malware and key loggers, ransomware, a denial-of-service attack, a 72 malicious website, the use of social engineering and other means to affect the confidentiality, integrity and availability of our technology systems and data.
Our 79 management and other personnel will need to devote a substantial amount of time to these compliance initiatives. Moreover, we expect these rules and regulations to substantially increase our legal and financial compliance costs and to make some activities more time consuming and costly.
Our management and other personnel will need to devote a substantial amount of time to these compliance initiatives. Moreover, we expect these rules and regulations to substantially increase our legal and financial compliance costs and to make some activities more time consuming and costly.
We expect that the ACA, as well as other healthcare reform measures that may be adopted in the future, may result in more rigorous coverage criteria and in additional downward pressure on the price that we receive for any approved product.
We expect that the ACA, the IRA, as well as other healthcare reform measures that may be adopted in the future, may result in more rigorous coverage criteria and in additional downward pressure on the price that we receive for any approved product.
We may be exposed to, or threatened with, future litigation by third parties having patent or other intellectual property rights alleging that our product candidates and/or 65 proprietary technologies infringe, misappropriate or otherwise violate their intellectual property rights.
We may be exposed to, or threatened with, future litigation by third parties having patent or other intellectual property rights alleging that our product candidates and/or proprietary technologies infringe, misappropriate or otherwise violate their intellectual property rights.
In the United States, there have been and continue to be a number of legislative initiatives to contain healthcare costs. The pharmaceutical industry has been a particular focus of these efforts and has been significantly affected by major legislative initiatives.
In addition, in the United States, there have been and continue to be a number of legislative initiatives to contain healthcare costs. The pharmaceutical industry has been a particular focus of these efforts and has been significantly affected by major legislative initiatives.
Even if we are 53 successful in obtaining FDA approvals to commercialize our product candidates, we cannot guarantee that we will be able to secure reimbursement for all patients for whom treatment with our product candidates is indicated.
Even if we are successful in obtaining FDA approvals to commercialize our product candidates, we cannot guarantee that we will be able to secure reimbursement for all patients for whom treatment with our product candidates is indicated.
For example, we are a party to a license agreement with the University of Southampton, pursuant to which we in-license key patent and patent applications for our TANGO platform, STK-001, STK-002 and our future product candidates.
For example, we are a party to a license agreement with the University of Southampton, pursuant to which we in-license key patents and patent applications for our TANGO platform, STK-001, STK-002 and our future product candidates.
Additionally, designation of a drug for a rare pediatric disease does not guarantee that an NDA will meet the eligibility criteria for a rare pediatric disease priority review voucher at the time the application is approved.
Additionally, designation of a drug for a rare pediatric disease does not guarantee that an NDA will meet the 44 eligibility criteria for a rare pediatric disease priority review voucher at the time the application is approved.
Drugs designated as breakthrough therapies by the FDA are also eligible for priority review if supported by clinical data at the time of the submission of the NDA. Designation as a breakthrough therapy is at the discretion of the FDA.
Drugs designated as breakthrough therapies by the FDA are also eligible for priority review if supported by clinical data at the time of the submission of the NDA. 45 Designation as a breakthrough therapy is at the discretion of the FDA.
Even if patents do successfully issue, third parties may challenge their inventorship, validity, enforceability or scope, including through opposition, revocation, reexamination, post-grant and inter partes review proceedings.
Even if patents do successfully issue, third parties may challenge their inventorship, 60 validity, enforceability or scope, including through opposition, revocation, reexamination, post-grant and inter partes review proceedings.
Securities litigation against us could result in substantial costs and divert our management’s attention from other business concerns, which could seriously harm our business. 80 Item 1B. Unresolve d Staff Comments. None.
Securities litigation against us could result in substantial costs and divert our management’s attention from other business concerns, which could seriously harm our business. Item 1B. Unresolve d Staff Comments. None.
Under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, or the Code, if a corporation undergoes an “ownership change,” generally defined as a greater than 50% change (by value) in its equity ownership over a three-year period, the corporation’s ability to use its pre-change NOLs and other pre-change tax attributes (such as research tax credits) to offset its post-change income may be limited.
Under Sections 382 and 383 of the Internal Revenue Code of 1986 ("IRC"), as amended, or the Code, if a corporation undergoes an “ownership change,” 57 generally defined as a greater than 50% change (by value) in its equity ownership over a three-year period, the corporation’s ability to use its pre-change NOLs and other pre-change tax attributes (such as research tax credits) to offset its post-change income may be limited.
We also may need the cooperation of any co-owners of our intellectual property in order to enforce such intellectual property against third parties, and such cooperation may not be provided to us. 64 In addition, the in-licensing and acquisition of these technologies is a highly competitive area, and a number of more established companies are also pursuing strategies to license or acquire product candidates or technologies that we may consider attractive.
We also may need the cooperation of any co-owners of our intellectual property in order to enforce such intellectual property against third parties, and such cooperation may not be provided to us. 62 In addition, the in-licensing and acquisition of these technologies is a highly competitive area, and a number of more established companies are also pursuing strategies to license or acquire product candidates or technologies that we may consider attractive.
Additionally, new or advanced technologies developed by our competitors may render our current or future product candidates uneconomical or obsolete, and we may not be successful in marketing our product candidates against competitors.
Additionally, 52 new or advanced technologies developed by our competitors may render our current or future product candidates uneconomical or obsolete, and we may not be successful in marketing our product candidates against competitors.
The Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of the Nasdaq Global Select Market, or Nasdaq, and other applicable securities rules and regulations impose various requirements on public companies, including establishment and maintenance of effective disclosure and financial controls and corporate governance practices.
The Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of the Nasdaq Global Select Market (“Nasdaq”) and other applicable securities rules and regulations impose various requirements on public companies, including establishment and maintenance of effective disclosure and financial controls and corporate governance practices.
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.
In addition, we may need to obtain additional licenses from our existing licensor 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.
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; 61 • 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 existing or future 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; 59 • 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 example, we cannot be certain that activities such as the maintenance and prosecution by our licensors have been or will be conducted in compliance with applicable laws and regulations or will result in valid and enforceable patents and other intellectual property rights.
For example, we cannot be certain that activities such as the maintenance and prosecution by our existing or future licensors have been or will be conducted in compliance with applicable laws and regulations or will result in valid and enforceable patents and other intellectual property rights.
Any of the foregoing could have a material adverse effect on our business financial condition, results of operations and prospects. 67 We have limited foreign intellectual property rights and may not be able to protect our intellectual property rights throughout the world. We have limited intellectual property rights outside the United States.
Any of the foregoing could have a material adverse effect on our business financial condition, results of operations and prospects. 65 We have limited foreign intellectual property rights and may not be able to protect our intellectual property rights throughout the world. We have limited intellectual property rights outside the United States.
Likewise, our currently owned and in-licensed patents and patent applications, if issued as patents, directed to our proprietary technologies and our product candidates are expected to expire from 2035 through 2042, without taking into account any possible patent term adjustments or extensions.
Likewise, our currently owned and in-licensed patents and patent applications, if issued as patents, directed to our proprietary technologies and our product candidates are expected to expire from 2035 through 2044, without taking into account any possible patent term adjustments or extensions.
If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we 48 are not able to maintain regulatory compliance, we may lose any marketing approval that we may have obtained and we may not achieve or sustain profitability.
If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may not obtain or may lose any marketing approval that we may have obtained and we may not achieve or sustain profitability.
We were required to meet these standards in the course of preparing our financial statements as of and for the year ended December 31, 2022, and our management is required to report on the effectiveness of our internal control over financial reporting for such year and annually thereafter.
We were required to meet these standards in the course of preparing our financial statements as of and for the year ended December 31, 2023, and our management is required to report on the effectiveness of our internal control over financial reporting for such year and annually thereafter.
Cyberattacks could include wrongful conduct by hostile foreign governments, industrial espionage, wire fraud and other forms of cyber fraud, the deployment of harmful malware, denial-of-service, social engineering fraud or other means to threaten data confidentiality, integrity and availability.
Cyber-attacks could include wrongful conduct by hostile foreign governments, industrial espionage, wire fraud and other forms of cyber fraud, the deployment of harmful malware, denial-of-service, social engineering fraud or other means to threaten data confidentiality, integrity and availability.
We have entered into a collaboration with Acadia Pharmaceuticals to discover or develop certain novel RNA-based medicines for the potential treatment of severe and rare genetic neurodevelopmental diseases of the central nervous system (CNS).
We have entered into a collaboration with Acadia Pharmaceuticals to discover or develop certain novel RNA-based medicines for the potential treatment of severe and rare genetic neurodevelopmental diseases of the central nervous system (“CNS”).
The ability of the FDA and the MHRA to review and approve new products can be affected by a variety of factors, including budget and funding levels, ability to hire and retain key personnel, and statutory, regulatory, and policy changes.
The ability of the FDA and the MHRA to review and approve new products can be affected by a variety of factors, including budget and funding levels, government shutdowns, ability to hire and retain key personnel, and statutory, regulatory, and policy changes.
However, although we devote resources to protect our information systems, we realize that cyberattacks are a threat, and there can be no assurance that our efforts will prevent information security breaches that would result in business, legal, financial or reputational harm to us, or would have a material adverse effect on our results of operations and financial condition.
However, although we devote resources to protect our information systems, we realize that cyber-attacks are a threat, and there can be no assurance that our efforts will prevent information security breaches that would result in business, legal, financial or reputational harm to us, or would have a material adverse effect on our results of operations and financial condition.
If we are unable to demonstrate that any adverse events were caused by the administration process or related procedures, the FDA, the European Commission, the EMA, the UK MHRA or other regulatory authorities could order us to cease further development of, or deny approval of, our product candidates for any or all targeted indications.
If we are unable to demonstrate that any adverse events were caused by the administration process or related procedures, the FDA, the European Commission, the EMA, the U.K. MHRA or other regulatory authorities could order us to cease further development of, or deny approval of, our product candidates for any or all targeted indications.
If we are unable to do so, we may be unable to develop or commercialize the affected technology or product candidates. If we or our licensors fail to adequately protect our licensed intellectual property, our ability to commercialize product candidates could suffer.
If we are unable to do so, we may be unable to develop or commercialize the affected technology or product candidates. If we or our existing or future licensors fail to adequately protect our licensed intellectual property, our ability to commercialize product candidates could suffer.
We have also in-licensed two issued U.S. patents and at least three issued foreign patents that cover the mechanism of action of STK-001, use of the mechanism for treating diseases, and related compositions.
We have also in-licensed two issued U.S. patents and at least six issued foreign patents that cover the mechanism of action of STK-001, use of the mechanism for treating diseases, and related compositions.
A successful cyberattack could cause serious negative consequences for us, including, without limitation, the disruption of operations, the misappropriation of confidential business information, including financial information, trade secrets, financial loss and the disclosure of corporate strategic plans. To date, we have not experienced a material compromise of our data or information systems.
A successful cyber-attack could cause serious negative consequences for us, including, without limitation, the disruption of operations, the misappropriation of confidential business information, including financial information, trade secrets, financial loss and the disclosure of corporate strategic plans. To date, we have not experienced a material compromise of our data or information systems.
In addition to CMS and private payors, professional organizations such as the American Medical Association, or the AMA, can influence decisions about reimbursement for new products by determining standards for care.
In addition to CMS and private payors, professional organizations such as the American Medical Association can influence decisions about reimbursement for new products by determining standards for care.
We have obtained at least eight issued foreign patents covering STK-001, related compositions and its uses and are currently pursuing patent protection for STK-001, related compositions, and its uses in several economically significant countries.
We have obtained at least fifteen issued foreign patents covering STK-001, related compositions and its uses and are currently pursuing patent protection for STK-001, related compositions, and its uses in several economically significant countries.
A Fast Track Designation by the FDA, even if granted for any of our future product candidates, or any use of the accelerated approval pathway, may not lead to a faster development or regulatory review or approval process, and would not increase the likelihood that our product candidates will receive marketing approval.
A Fast Track Designation by the FDA, even if granted for STK-001, STK-002 or any of our future product candidates, or any use of the accelerated approval pathway, may not lead to a faster development or regulatory review or approval process, and would not increase the likelihood that our product candidates will receive marketing approval.
For example, in November 2023, we announced our decision to limit chronic dosing in the open-label extension studies to 30mg in SWALLOWTAIL in the U.S. and 45mg in LONGWING in the U.K.
For example, in November 2022, we announced our decision to limit chronic dosing in the open-label extension studies to 30mg in SWALLOWTAIL in the U.S. and 45mg in LONGWING in the U.K.
In addition, the stock market in general, and the markets for pharmaceutical, biopharmaceutical and biotechnology stocks in particular, have experienced extreme price and volume fluctuations that have been often unrelated or disproportionate to the operating performance of the issuer, including as a result of the COVID-19 pandemic and general economic conditions.
In addition, the stock market in general, and the markets for pharmaceutical, biopharmaceutical and biotechnology stocks in particular, have experienced extreme price and volume fluctuations that have been often unrelated or disproportionate to the operating performance of the issuer, including as a result of general economic conditions.
If we or our collaborators are unable to develop, obtain regulatory approval for and commercialize STK-001, STK-002 and our future product candidates, or if we experience significant delays in doing so, our business will be materially harmed. • Success in early preclinical studies or clinical trials may not be indicative of results obtained in later preclinical studies and clinical trials, including in our Dravet syndrome program or our ADOA program. • Even if we complete the necessary preclinical studies and clinical trials, we cannot predict when, or if, we will obtain regulatory approval to commercialize a product candidate and the approval may be for a narrower indication than we seek. • Certain of the diseases we seek to treat have low prevalence, and it may be difficult to identify patients with these diseases, which may lead to delays in enrollment for our trials or slower commercial revenue growth if STK-001, STK-002 or our future product candidates are approved. • If clinical trials of STK-001, STK-002 or any other product candidate that we develop fail to demonstrate safety and efficacy to the satisfaction of FDA or foreign regulatory authorities or do not otherwise produce favorable results, we may incur additional costs or experience delays in completing, or ultimately may be unable to complete, the development and commercialization of such product candidate. • We may not be successful in our efforts to use TANGO to expand our pipeline of product candidates and develop marketable products. • Any product candidate for which we obtain marketing approval will be subject to extensive post-marketing regulatory requirements and could be subject to post-marketing restrictions 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. • Our failure to obtain regulatory approval in international jurisdictions would prevent us from marketing our product candidates outside the United States. • STK-001, STK-002 or our future product candidates may cause undesirable and unforeseen side effects or be perceived by the public as unsafe, which could delay or prevent their advancement into clinical trials or regulatory approval, limit the commercial potential or result in significant negative consequences. • The ongoing COVID-19 pandemic may, directly or indirectly, adversely affect our business, results of operations and financial condition. • A Rare Pediatric Disease designation by the FDA does not guarantee that the NDA for the product will qualify for a priority review voucher upon approval, and it does not lead to a faster development or regulatory review process, or increase the likelihood that STK-001, STK-002 or our future product candidates will receive marketing approval. • A Fast Track Designation by the FDA, even if granted for any of our future product candidates, may not lead to a faster development or regulatory review or approval process, and does not increase the likelihood that our product candidates will receive marketing approval. 38 • A Breakthrough Therapy Designation by the FDA for STK-001, STK-002 or our future product candidates may not lead to a faster development or regulatory review or approval process, and it would not increase the likelihood that the product candidate will receive marketing approval. • Enacted and future legislation may increase the difficulty and cost for us to obtain marketing approval of and commercialize our product candidates and may affect the prices we may set. • The commercial success of our product candidates, including STK-001 and STK-002 will depend upon their degree of market acceptance by providers, patients, patient advocacy groups, third-party payors and the general medical community. • The pricing, insurance coverage and reimbursement status of newly approved products is uncertain.
If we or our collaborators are unable to develop, obtain regulatory approval for and commercialize STK-001, STK-002 and our future product candidates, or if we experience significant delays in doing so, our business will be materially harmed. • Success in early preclinical studies or clinical trials may not be indicative of results obtained in later preclinical studies and clinical trials, including in our Dravet syndrome program or our ADOA program. • Even if we complete the necessary preclinical studies and clinical trials, we cannot predict when, or if, we will obtain regulatory approval to commercialize a product candidate and the approval may be for a narrower indication than we seek. • Certain of the diseases we seek to treat have low prevalence, and it may be difficult to identify patients with these diseases, which may lead to delays in enrollment for our trials or slower commercial revenue growth if STK-001, STK-002 or our future product candidates are approved. • If clinical trials of STK-001, STK-002 or any other product candidate that we develop fail to demonstrate safety and efficacy to the satisfaction of FDA or foreign regulatory authorities or do not otherwise produce favorable results, we may incur additional costs or experience delays in completing, or ultimately may be unable to complete, the development and commercialization of such product candidate. • We may not be successful in our efforts to use TANGO to expand our pipeline of product candidates and develop marketable products. • Any product candidate for which we obtain marketing approval will be subject to extensive post-marketing regulatory requirements and could be subject to post-marketing restrictions 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. • Our failure to obtain regulatory approval in international jurisdictions would prevent us from marketing our product candidates outside the United States. • STK-001, STK-002 or our future product candidates may cause undesirable and unforeseen side effects or be perceived by the public as unsafe, which could delay or prevent their advancement into clinical trials or regulatory approval, limit the commercial potential or result in significant negative consequences. • A Rare Pediatric Disease designation by the FDA does not guarantee that the new drug application (“NDA”) for the product will qualify for a priority review voucher upon approval, and it does not lead to a faster development or regulatory review process, or increase the likelihood that STK-001, STK-002 or our future product candidates will receive marketing approval. 36 • A Fast Track Designation by the FDA, even if granted for STK-001, STK-002 or our future product candidates, may not lead to a faster development or regulatory review or approval process, and would not increase the likelihood that our product candidates will receive marketing approval. • A Breakthrough Therapy Designation by the FDA, even if granted for STK-001, STK-002 or our future product candidates may not lead to a faster development or regulatory review or approval process, and it would not increase the likelihood that the product candidates will receive marketing approval. • Enacted and future legislation may increase the difficulty and cost for us to obtain marketing approval of and commercialize our product candidates and may affect the prices we may set. • The commercial success of our product candidates, including STK-001 and STK-002 will depend upon their degree of market acceptance by providers, patients, patient advocacy groups, third-party payors and the general medical community. • The pricing, insurance coverage and reimbursement status of newly approved products is uncertain.
Brexit continues to create political and economic uncertainty, particularly in the United Kingdom and the EU. Prior to Brexit, a significant proportion of the regulatory framework in the United Kingdom was derived from EU directives and regulations. Following Brexit, the United Kingdom retained the EU regulatory regime with certain modifications as standalone UK legislation.
Brexit continues to create political and economic uncertainty, particularly in the United Kingdom and the EU. Prior to Brexit, a significant proportion of the regulatory framework in the United Kingdom was derived from EU directives and regulations. Following Brexit, the United Kingdom retained the EU regulatory regime with certain modifications as standalone U.K. legislation.
Under this legislation, the UK may adopt changed regulations that may diverge from the EU legislative regime for medicines, including their research, development and commercialization and has issued a consultation document with respect to future changes.
Under this legislation, the U.K. may adopt changed regulations that may diverge from the EU legislative regime for medicines, including their research, development and commercialization and has issued a consultation document with respect to future changes.
If we fail to comply with these obligations, our licensors may have the right to terminate our license, in which event we would not be able to develop or market our TANGO platform, STK-001, STK-002 or any other technology or product candidates covered by the intellectual property licensed under these agreements.
If we fail to comply with these obligations, our licensor may have the right to terminate our license, in which event we would not be able to develop or market our TANGO platform, STK-001, STK-002 or any other technology or product candidates covered by the intellectual property licensed under the agreement.
In addition, as a new business, we may encounter unforeseen expenses, difficulties, complications, delays and other known and unknown factors. We will need to transition from a company with a licensing and research focus to a company that is also capable of supporting clinical development and commercial activities.
In addition, as a new business, we may encounter unforeseen expenses, difficulties, complications, delays and other known and unknown factors. We will need to transition from a company with a licensing and research focus to a company that is also capable of supporting clinical development and commercial activities. We may not be successful in such a transition.
In December 2016, the 21 st Century Cures Act was signed into law, and was designed to advance medical innovation and empower the FDA with the authority to directly hire positions related to drug and device development and review.
In December 2016, the 21st Century Cures Act was signed into law, and was designed to advance medical innovation and empower the FDA with the authority to directly hire positions related to drug and device development and review.
The 21 st Century Cures Act is designed to streamline the agency’s hiring process and enable the FDA to compete for leadership talent by expanding the narrow ranges that are provided in the existing compensation structures.
The 21st Century Cures Act is designed to streamline the agency’s hiring process and enable the FDA to compete for leadership talent by expanding the narrow ranges that are provided in the existing compensation structures.
For example, our agreements with certain of our third-party research partners provide that improvements developed in the course of our relationship may be owned solely by either us or our third-party research partner, or jointly between us and the third party.
Moreover, our agreements with certain of our third-party research partners provide that improvements developed in the course of our relationship may be owned solely by either us or our third-party research partner, or jointly between us and the third party.
Restrictions under applicable U.S. federal and state healthcare laws and regulations include the following: • the federal Anti-Kickback Statute prohibits, among other things, persons and entities from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward either the referral of an individual for, or the purchase, order or recommendation of, any good or service, for which payment may be made under federal healthcare programs such as Medicare and Medicaid; • federal false claims laws, including the federal False Claims Act, imposes criminal and civil penalties, including through civil whistleblower or qui tam actions, against individuals or entities for knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government; • the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, imposes criminal and civil liability for, among other things, knowingly and willfully executing or attempting to execute a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters; • HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, or HITECH, and its implementing regulations, also imposes obligations, including mandatory contractual terms, on certain types of people and entities with respect to safeguarding the privacy, security and transmission of individually identifiable health information; • the federal Physician Payment Sunshine Act requires applicable manufacturers of covered 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 payments and other transfers of value to physicians, physician assistants, certain types of advance practice nurses and teaching hospitals, or to entities or individuals at the request of, or designated on behalf of, such providers, and to report annually certain ownership and investment interests held by physicians and their immediate family, which includes annual data collection and reporting obligations; and 51 • 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.
Restrictions under applicable U.S. federal and state healthcare laws and regulations include the following: • the federal Anti-Kickback Statute prohibits, among other things, persons and entities from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward, or in return for, either the referral of an individual for, or the purchase, order or recommendation of, any good or service, for which payment may be made under government healthcare programs such as Medicare and Medicaid, and 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; • federal false claims laws, including the federal False Claims Act, imposes criminal and civil penalties, including through civil whistleblower or qui tam actions, against individuals or entities for knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false or fraudulent (including claims for items and services resulting from a violation of the federal Anti-Kickback Statute) or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government, and certain marketing practices, including off-label promotion, may also violate false claims laws; • the federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) imposes criminal and civil liability for, among other things, knowingly and willfully executing or attempting to execute a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters; • HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act (“HITECH”) and its implementing regulations, also imposes obligations, including mandatory contractual terms, on certain types of people and entities with respect to safeguarding the privacy, security and transmission of individually identifiable health information; • the federal Physician Payment Sunshine Act requires applicable manufacturers of covered 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 payments and other transfers of value to physicians, physician assistants, certain types of advance practice nurses and teaching hospitals, or to entities or individuals at the request of, or designated on behalf of, such providers, and to report annually certain ownership and investment interests held by physicians and their immediate family, which includes annual data collection and reporting obligations; and • 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.
Congress of the FDA’s approval process may significantly delay or prevent marketing approval, as well as subject us to more stringent product labeling and post-marketing testing and other requirements. We may be unsuccessful in obtaining Orphan Drug Designation or transfer of designations obtained by others for future product candidates.
In addition, increased scrutiny by the U.S. Congress of the FDA’s approval process may significantly delay or prevent marketing approval, as well as subject us to more stringent product labeling and post-marketing testing and other requirements. We may be unsuccessful in obtaining Orphan Drug Designation or transfer of designations obtained by others for future product candidates.
In December 2017, U.S. federal tax legislation, commonly referred to as the Tax Cuts and Jobs Act, or the TCJA, was signed into law, significantly reforming the Code.
In December 2017, U.S. federal tax legislation, commonly referred to as the Tax Cuts and Jobs Act (the “TCJA”) was signed into law, significantly reforming the Code.
In the United States, the principal decisions about reimbursement by government authorities for new products are typically made by the Centers for Medicare & Medicaid Services (“CMS”) since CMS decides whether and to what extent a new product will be covered and reimbursed under Medicare. Private payors tend to follow CMS to a substantial degree.
In the United States, the principal decisions about reimbursement by government authorities for new products are typically made by the CMS since it decides whether and to what extent a new product will be covered and reimbursed under Medicare. Private payors tend to follow CMS to a substantial degree.
Our principal stockholders own a significant percentage of our stock and will be able to exert significant control over matters subject to stockholder approval. As of December 31, 2022 entities affiliated with Skorpios Trust beneficially owned 36.62% of the voting power of all outstanding shares of our common stock.
Our principal stockholders own a significant percentage of our stock and will be able to exert significant control over matters subject to stockholder approval. As of December 31, 2023 entities affiliated with Skorpios Trust beneficially owned 31.46% of the voting power of all outstanding shares of our common stock.
Therefore, the UK regulatory regime is currently similar to EU regulations, but the United Kingdom has enacted new legislation, the Medicines and Medical Devices Act.
Therefore, the U.K. regulatory regime is currently similar to EU regulations, but the United Kingdom has enacted new legislation, the Medicines and Medical Devices Act.
The success of STK-001, STK-002 and our future product candidates depends on multiple factors, including: • effective INDs and CTAs that allow commencement of our planned clinical trials or future clinical trials for our product candidates in relevant territories; • our ability to obtain approval from institutional review boards (“IRBs”) or ethics committees to conduct clinical trials at their respective sites; • potential delays in enrollment, site visits, evaluations, or dosing of patients participating in clinical trials as hospitals prioritize the treatment of COVID-19 patients or patients decide not to enroll in the study as a result of the COVID-19 pandemic; • the direct and indirect impact of COVID-19 on our business and operations, third party vendors, supply chain, and regulatory approvals; • successful completion of preclinical studies, including those compliant with Good Laboratory Practices (“GLP”) toxicology studies, biodistribution studies and minimum effective dose studies in animals; • our ability to reach agreements on acceptable terms with prospective third-party contract research organizations (“CROs”) and trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among CROs and trial sites; • successful enrollment and completion of clinical trials compliant with current Good Clinical Practices (“GCPs”); • positive results from our clinical programs that demonstrate safety and efficacy and provide an acceptable risk-benefit profile for our product candidates in the intended patient populations; • receipt of regulatory approvals from applicable regulatory authorities; • establishment of arrangements with third-party contract manufacturing organizations (“CMOs”) for key materials used in our manufacturing processes and to establish backup sources for clinical and large-scale commercial supply; • establishment and maintenance of patent and trade secret protection and regulatory exclusivity for our product candidates; • commercial launch of our product candidates, if and when approved, whether alone or in collaboration with others; • acceptance of our product candidates, if and when approved, by patients, patient advocacy groups, third-party payors and the general medical community; • our effective competition against other therapies available in the market; • establishment and maintenance of adequate reimbursement from third-party payors for our product candidates; • our ability to acquire or in-license additional product candidates; • prosecution, maintenance, enforcement and defense of intellectual property rights and claims; and • maintenance of a continued acceptable safety profile of our product candidates following approval.
The success of STK-001, STK-002 and our future product candidates depends on multiple factors, including: • effective INDs and CTAs that allow commencement of our planned clinical trials or future clinical trials for our product candidates in relevant territories; • our ability to obtain approval from institutional review boards (“IRBs”) or ethics committees to conduct clinical trials at their respective sites; • potential delays in enrollment, site visits, evaluations, or dosing of patients participating in clinical trials as hospitals face staffing shortages, whether due to labor relations or otherwise, or patients decide not to enroll in the study as a result of such staffing shortages; • the direct and indirect impact of general economic, industry and market conditions, including fluctuating interest rates, inflation, market volatility, potential recessions, a potential federal government shutdown, and any health pandemic on our business and operations, third party vendors, supply chain, and regulatory approvals; • successful completion of preclinical studies, including those compliant with Good Laboratory Practices (“GLP”) toxicology studies, biodistribution studies and minimum effective dose studies in animals; • our ability to reach agreements on acceptable terms with prospective third-party contract research organizations (“CROs”) and trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among CROs and trial sites; • successful enrollment and completion of clinical trials compliant with current Good Clinical Practices (“GCPs”); • positive results from our clinical programs that demonstrate safety and efficacy and provide an acceptable risk-benefit profile for our product candidates in the intended patient populations; • receipt of regulatory approvals from applicable regulatory authorities; • establishment of arrangements with third-party contract manufacturing organizations (“CMOs”) for key materials used in our manufacturing processes and to establish backup sources for clinical and large-scale commercial supply; • establishment and maintenance of patent and trade secret protection and regulatory exclusivity for our product candidates; • commercial launch of our product candidates, if and when approved, whether alone or in collaboration with others; • acceptance of our product candidates, if and when approved, by patients, patient advocacy groups, third-party payors and the general medical community; • our effective competition against other therapies available in the market; • establishment and maintenance of adequate reimbursement from third-party payors for our product candidates; • our ability to acquire or in-license additional product candidates; • prosecution, maintenance, enforcement and defense of intellectual property rights and claims; and • maintenance of a continued acceptable safety profile of our product candidates following approval.
A Breakthrough Therapy Designation by the FDA for STK-001, STK-002 or our future product candidates may not lead to a faster development or regulatory review or approval process, and it would not increase the likelihood that the product candidate will receive marketing approval.
A Breakthrough Therapy Designation by the FDA, even if granted for STK-001, STK-002 or any of our future product candidates, may not lead to a faster development or regulatory review or approval process, and it would not increase the likelihood that the product candidate will receive marketing approval.
Collaborations involving our product candidates currently pose, and will continue to pose, the following risks to us: • collaborators have significant discretion in determining the efforts and resources that they will apply to these collaborations; • collaborators may not pursue development and commercialization of our product candidates or may elect not to continue or renew development or commercialization programs based on preclinical studies or clinical trial results, changes in the collaborators’ strategic focus or available funding, or external factors such as an acquisition that diverts resources or creates competing priorities; • collaborators may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial or abandon a product candidate, repeat or conduct new clinical trials or require a new formulation of a product candidate for clinical testing; • collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our product candidates if the collaborators believe that competitive products are more likely to be successfully developed or can be commercialized under terms that are more economically attractive than ours; • collaborators with marketing and distribution rights to one or more products may not commit sufficient resources to the marketing and distribution of such product or products; • collaborators may not properly maintain or defend our intellectual property rights or may use our proprietary information in such a way as to invite litigation that could jeopardize or invalidate our intellectual property or proprietary information or expose us to litigation or potential liability; • collaborators may infringe the intellectual property rights of third parties, which may expose us to litigation and potential liability; • disputes may arise between the collaborators and us that result in the delay or termination of the research, development or commercialization of our product candidates or that result in costly litigation or arbitration that diverts management attention and resources; and • collaborations may be terminated and, if terminated, may result in a need for additional capital to pursue further development or commercialization of the applicable product candidates.
Revenue from research and development collaborations depends upon continuation of the collaborations, payments for research and development services and resulting options to acquire any licenses of successful product candidates, and the achievement of milestones, contingent payments and royalties, if any, derived from future products developed from our research. 54 Collaborations involving our product candidates currently pose, and will continue to pose, the following risks to us: • collaborators have significant discretion in determining the efforts and resources that they will apply to these collaborations; • collaborators may not pursue development and commercialization of our product candidates or may elect not to continue or renew development or commercialization programs based on preclinical studies or clinical trial results, changes in the collaborators’ strategic focus or available funding, or external factors such as an acquisition that diverts resources or creates competing priorities; • collaborators may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial or abandon a product candidate, repeat or conduct new clinical trials or require a new formulation of a product candidate for clinical testing; • collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our product candidates if the collaborators believe that competitive products are more likely to be successfully developed or can be commercialized under terms that are more economically attractive than ours; • collaborators with marketing and distribution rights to one or more products may not commit sufficient resources to the marketing and distribution of such product or products; • collaborators may not properly maintain or defend our intellectual property rights or may use our proprietary information in such a way as to invite litigation that could jeopardize or invalidate our intellectual property or proprietary information or expose us to litigation or potential liability; • collaborators may infringe the intellectual property rights of third parties, which may expose us to litigation and potential liability; • disputes may arise between the collaborators and us that result in the delay or termination of the research, development or commercialization of our product candidates or that result in costly litigation or arbitration that diverts management attention and resources; and • collaborations may be terminated and, if terminated, may result in a need for additional capital to pursue further development or commercialization of the applicable product candidates.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties. We currently occupy approximately 38,000 square feet of office and laboratory space in Bedford, Massachusetts, under a lease that expires December 31, 2024. We also occupy 4,842 square feet of office space in Cambridge, Massachusetts under a lease that expires on April 30, 2025.
Biggest changeItem 2. Pr operties. We currently occupy approximately 38,000 square feet of office and laboratory space in Bedford, Massachusetts, under a lease that expires December 31, 2026. We also occupy 4,842 square feet of office space in Cambridge, Massachusetts under a lease that expires on April 30, 2025.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. Legal Proceedings. From time to time, we may be involved in legal proceedings arising in the ordinary course of our business. We are not presently a party to any legal proceedings that, in the opinion of management, would have a material adverse effect on our business.
Biggest changeItem 3. Legal Proceedings. From time to time we may be subject to various claims, complaints and legal actions that arise in the normal course of business. We are not presently party to any legal proceedings that, in the opinion of management, the outcome of which could have a material adverse effect on our business.
Regardless of outcome, litigation can have an adverse impact on us due to defense and settlement costs, diversion of management resources, negative publicity and reputation harm, and other factors. Item 4. Mine Safety Disclosures. Not Applicable. 81 PART II
Regardless of outcome, litigation can have an adverse impact on us due to defense and settlement costs, diversion of management resources, negative publicity and reputation harm, and other factors.
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There can be no assurance that future legal proceedings arising in the ordinary course of business or otherwise will not have a material adverse effect on our business, financial condition, or results of operations. Item 4. Mine Safe ty Disclosures. Not Applicable. 81 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeConsequently, stockholders will need to sell shares of our common stock to realize a return on their investment, if any. Item 6. [Reserved] 82
Biggest changeConsequently, stockholders will need to sell shares of our common stock to realize a return on their investment, if any.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Unregistered Sales of Equity Securities and Use of Proceeds. Unregistered Sales of Equity Securities None. Use of Proceeds None. Holders of Record As of December 31, 2022, there were 15 holders of record of our common stock.
Item 5. Market for Registrant’s Common Equity, Related Stoc kholder Matters and Issuer Purchases of Equity Securities. Unregistered Sales of Equity Securities and Use of Proceeds. Unregistered Sales of Equity Securities None. Use of Proceeds None. Holders of Record As of December 31, 2023, there were 6 holders of record of our common stock.

Item 7. Management's Discussion & Analysis

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

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Biggest changeOther income (expense) Our other income (expense), includes (i) interest income earned on cash reserves in our operating money market fund, investment accounts and on our marketable securities investments and (ii) other items of income (expense), net. 87 Results of Operations for the Years Ended December 31, 2022 and 2021 The following table sets forth our results of operations: Year ended December 31, 2022 2021 (in thousands) Consolidated statements of operations and comprehensive loss: Revenue $ 12,405 $ — Operating expenses: Research and development 77,837 54,168 General and administrative 38,924 31,897 Total operating expenses 116,761 86,065 Loss from operations (104,356 ) (86,065 ) Other income (expense): Interest income (expense), net 3,122 120 Other income (expense), net 167 140 Total other income (expense) 3,289 260 Net loss (101,067 ) (85,805 ) Net loss per share—basic and diluted $ (2.60 ) $ (2.34 ) Weighted average common shares outstanding—basic and diluted 38,897,442 36,739,269 Comprehensive loss: Net loss $ (101,067 ) $ (85,805 ) Other comprehensive loss: Unrealized loss on marketable securities (1,007 ) (168 ) Total other comprehensive loss $ (1,007 ) $ (168 ) Comprehensive loss $ (102,074 ) $ (85,973 ) Research and development expenses Research and development expenses were $77.8 million for the year ended December 31, 2022 as compared to $54.2 million for the year ended December 31, 2021, an increase of $23.6 million.
Biggest changeResults of Operations for the Years Ended December 31, 2023 and 2022 The following table sets forth our results of operations: Year ended December 31, 2023 2022 (in thousands) Consolidated statements of operations Revenue $ 8,780 $ 12,405 Operating expenses: Research and development 82,231 77,837 General and administrative 41,322 38,924 Total operating expenses 123,553 116,761 Loss from operations (114,773 ) (104,356 ) Other income (expense): Interest income (expense), net 9,908 3,122 Other income (expense), net 166 167 Total other income (expense) 10,074 3,289 Net loss $ (104,699 ) $ (101,067 ) 87 Research and development expenses Research and development expenses were $82.2 million for the year ended December 31, 2023 as compared to $77.8 million for the year ended December 31, 2022, an increase of $4.4 million.
In connection with each target, we will collaborate with Acadia to identify potential treatments for further development and commercialization as licensed products. With respect to SYNGAP1, we have agreed with Acadia to co-develop and co-commercialize licensed products for such target globally, and in connection therewith we granted to Acadia worldwide, co-exclusive (with us) licenses for such licensed products.
In connection with each target, we will collaborate with Acadia to identify potential treatments for further development and commercialization as licensed products. With respect to SYNGAP1, we have agreed with Acadia to co-develop and co-commercialize licensed products for such target globally, and in connection therewith we granted to Acadia worldwide, co-exclusive (with us) licenses for such licensed products.
Acadia agreed to fund the research to identify potential licensed products for MECP2 and the neurodevelopmental target, and we will equally fund with Acadia the research to identify potential licensed products for SYNGAP1.
Acadia agreed to fund the research to identify potential licensed products for MECP2 and the neurodevelopmental target, and we will equally fund with Acadia the research to identify potential licensed products for SYNGAP1.
We are eligible to receive up to $907.5 million in potential total milestone payments based upon the achievement of certain development, regulatory, first commercial sales and sales milestone events across the programs for the three targets, assuming each milestone were achieved at least once.
We are eligible to receive up to $907.5 million in potential total milestone payments based upon the achievement of certain development, regulatory, first commercial sales and sales milestone events across the programs for the three targets, assuming each milestone were achieved at least once.
With respect to licensed products for MECP2 and the neurodevelopmental target, we are also eligible to receive tiered royalties at percentages ranging from the mid-single digits to the mid-teens on future net sales by Acadia of licensed products worldwide. Royalties payable under the agreement are subject to standard royalty reductions.
With respect to licensed products for MECP2 and the neurodevelopmental target, we are also eligible to receive tiered royalties at percentages ranging from the mid-single digits to the mid-teens on future net sales by Acadia of licensed products worldwide. Royalties payable under the agreement are subject to standard royalty reductions.
Financing activities Our financing activities during year ended December 31, 2022 consisted of $0.5 million from the exercise of stock options, $0.6 million in proceeds from our Employee Stock Purchase Plan and $45.3 million of net proceeds from the controlled equity offering sales agreements.
Our financing activities during year ended December 31, 2022 consisted of $0.5 million from the exercise of stock options, $0.6 million in proceeds from our Employee Stock Purchase Plan and $45.3 million of net proceeds from the controlled equity offering sales agreements.
In particular, we expect our expenses and losses to increase as we continue our development of, and seek regulatory approvals for, our product candidates, and begin to commercialize any approved products, as well as hire additional personnel, develop commercial infrastructure, pay fees to outside consultants, lawyers and accountants, and incur increased costs associated with being a public company such as expenses related to services associated with maintaining compliance with Nasdaq listing rules and SEC requirements, insurance and investor relations costs.
In particular, 83 we expect our expenses and losses to increase as we continue our development of, and seek regulatory approvals for, our product candidates, and begin to commercialize any approved products, as well as hire additional personnel, develop commercial infrastructure, pay fees to outside consultants, lawyers and accountants, and incur increased costs associated with being a public company such as expenses related to services associated with maintaining compliance with Nasdaq listing rules and SEC requirements, insurance and investor relations costs.
Research and development Research and development expenses consist primarily of costs incurred for the development of our discovery work and preclinical programs, which include: • personnel costs, which include salaries, benefits and stock-based compensation expense; 85 • expenses incurred under agreements with consultants, third-party contract organizations that conduct research and development activities on our behalf, costs related to production of preclinical material and laboratory and vendor expenses related to the execution of preclinical studies; • scientific consulting, collaboration and licensing fees; • laboratory supplies; and • facilities costs, depreciation and other expenses related to internal research and development activities.
Research and development Research and development expenses consist primarily of costs incurred for the development of our discovery work and preclinical programs, which include: • personnel costs, which include salaries, benefits and stock-based compensation expense; • expenses incurred under agreements with consultants, third-party contract organizations that conduct research and development activities on our behalf, costs related to production of preclinical material and laboratory and vendor expenses related to the execution of preclinical studies; • scientific consulting, collaboration and licensing fees; • laboratory supplies; and • facilities costs, depreciation and other expenses related to internal research and development activities.
We will continue to be a smaller reporting company for so long as either (i) the market value of our stock held by non-affiliates is less than $250 million or (ii) our annual revenue is less than $100 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700 million.
We will continue to be a smaller reporting company for so long as either (i) the market value of our stock held by non-affiliates is less than $250.0 million or (ii) our annual revenue is less than $100.0 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700.0 million.
Cash used to fund operating expenses is impacted by the timing of when we pay these expenses, as reflected in the change in our outstanding accounts payable and accrued expenses. Our product candidates may never achieve commercialization and we anticipate that we will continue to incur losses for the foreseeable future.
Cash used to fund operating expenses is impacted by the timing of when we pay these expenses, as reflected in the change in our outstanding accounts payable and accrued expenses. 88 Our product candidates may never achieve commercialization and we anticipate that we will continue to incur losses for the foreseeable future.
Promised goods and services are considered distinct 92 provided that: (i) the customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer , and (ii) the entity’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract.
Promised goods and services are considered distinct provided that: (i) the customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer, and (ii) the entity’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract.
As a practical alternative to estimating the standalone selling price when the goods or services are both (i) similar to the original goods and services in the contract and (ii) provided in accordance with the terms of the original contract, we allocate the total amount of consideration expected to be received from the customer to the total goods or services expected to be provided to the customer.
As a practical alternative to estimating the standalone selling price when the goods or services are both (i) similar to the original goods and services in the contract and (ii) provided in accordance with the terms of the original contract, we allocate the total amount of 92 consideration expected to be received from the customer to the total goods or services expected to be provided to the customer.
We are also a “smaller reporting company,” meaning that the market value of our stock held by non-affiliates was less than $700 million and our annual revenue is less than $100 million during the most recently completed fiscal year.
We are also a “smaller reporting company,” meaning that the market value of our stock held by non-affiliates was less than $700.0 million and our annual revenue is less than $100.0 million during the most recently completed fiscal year.
(“Acadia”) for the discovery, development and commercialization of novel RNA-based medicines for the treatment of severe and rare genetic neurodevelopmental diseases of the central nervous system (the “CNS”). The agreement focuses on the targets SYNGAP1, MECP2 (Rett syndrome), and an undisclosed neurodevelopmental target of mutual interest.
(“Acadia”) for the discovery, development and commercialization of novel RNA-based medicines for the treatment of severe and rare genetic neurodevelopmental diseases of the central nervous system (the “CNS”). The agreement focuses on the targets 84 SYNGAP1, MECP2 (Rett syndrome), and an undisclosed neurodevelopmental target of mutual interest.
With respect to MECP2 and the neurodevelopmental target, we granted to Acadia worldwide, exclusive licenses to develop and commercialize licensed products for such targets. Pursuant to the terms of the agreement, we received an upfront payment of $60 million from Acadia.
With respect to MECP2 and the neurodevelopmental target, we granted to Acadia worldwide, exclusive licenses to develop and commercialize licensed products for such targets. Pursuant to the terms of the agreement, we received an upfront payment of $60.0 million from Acadia.
With respect to MECP2 and the neurodevelopmental target, we granted to Acadia worldwide, exclusive licenses to develop and commercialize licensed products for such targets. Pursuant to the terms of the agreement, we received an upfront payment of $60 million from Acadia.
With respect to MECP2 and the neurodevelopmental target, we granted to Acadia worldwide, exclusive licenses to develop and commercialize licensed products for such targets. Pursuant to the terms of the agreement, we received an upfront payment of $60.0 million from Acadia.
Under ASC 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services.
Under ASC 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the 91 consideration that the entity expects to receive in exchange for those goods or services.
The Registration Statement was declared effective by the SEC on May 31, 2022, and contains two prospectuses: a base prospectus, which covers the offering, issuance and sale by us of up to a maximum aggregate offering price of $400,000,000 of our common stock, preferred stock, debt securities, warrants to purchase common stock, preferred stock or debt securities, subscription rights to purchase common stock, preferred stock or debt securities and/or units consisting of some or all of these securities; and a sales agreement prospectus covering the offering, issuance and sale by us of up to a maximum aggregate offering price of $150,000,000 of common stock that may be issued and sold under a Controlled Equity Offering Sales Agreement (“Sales Agreement”).
The Registration Statement was declared effective by the SEC on May 31, 2022, and contains two prospectuses: a base prospectus, which covers the offering, issuance and sale by us of up to a maximum aggregate offering price of $400.0 million of our common stock, preferred stock, debt securities, warrants to purchase common stock, preferred stock or debt securities, subscription rights to purchase common stock, preferred stock or debt securities and/or units consisting of some or all of these securities; and a sales agreement prospectus covering the offering, issuance and sale by us of up to a maximum aggregate offering price of $150.0 million of common stock that may be issued and sold under a Controlled Equity Offering Sales Agreement (“Sales Agreement”).
We will remain an emerging growth company until the earliest of (i) the last day of our first fiscal year (a) following the fifth anniversary of the completion of our IPO, (b) in which we have total annual gross revenues of at least $1.07 billion, or (c) when we are deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700 million as of the prior June 30 th and (ii) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.
We will remain an emerging growth company until the earliest of (i) the last day of our first fiscal year (a) following the fifth anniversary of the completion of our IPO, (b) in which we have total annual gross revenues of at least $1.235 billion, or (c) when we are deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700.0 million as of the prior June 30th, and (ii) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.
The duration, costs and timing of preclinical studies and clinical trials and development of our product candidates will depend on a variety of factors, including: • successful completion of preclinical studies and investigational new drug-enabling studies; • successful enrollment in, and completion of, clinical trials; • receipt of regulatory approvals from applicable regulatory authorities; • furthering our commercial manufacturing capabilities and arrangements with third-party manufacturers; 86 • obtaining and maintaining patent and trade secret protection and non-patent exclusivity; • launching commercial sales of our product candidates, if and when approved, whether alone or in collaboration with others; • acceptance of our product candidates, if and when approved, by patients, the medical community and third-party payors; • effectively competing with other therapies and treatment options; • a continued acceptable safety profile following approval; • enforcing and defending intellectual property and proprietary rights and claims; and • achieving desirable medicinal properties for the intended indications.
The duration, costs and timing of preclinical studies and clinical trials and development of our product candidates will depend on a variety of factors, including: • successful completion of preclinical studies and investigational new drug-enabling studies; • successful enrollment in, and completion of, clinical trials; • receipt of regulatory approvals from applicable regulatory authorities; • furthering our commercial manufacturing capabilities and arrangements with third-party manufacturers; • obtaining and maintaining patent and trade secret protection and non-patent exclusivity; • launching commercial sales of our product candidates, if and when approved, whether alone or in collaboration with others; • acceptance of our product candidates, if and when approved, by patients, the medical community and third-party payors; • effectively competing with other therapies and treatment options; • a continued acceptable safety profile following approval; • enforcing and defending intellectual property and proprietary rights and claims; and • achieving desirable medicinal properties for the intended indications. 86 A change in the outcome of any of these factors could mean a significant change in the costs and timing associated with the development of our current and future preclinical and clinical product candidates.
(“Acadia”) for the discovery, development and commercialization of novel RNA-based medicines for the treatment of severe and rare genetic neurodevelopmental diseases of the CNS. The agreement focuses on the targets SYNGAP1, MECP2 (Rett syndrome), and an undisclosed neurodevelopmental target of mutual interest.
(“Acadia”) for the discovery, development and commercialization of novel RNA-based medicines for the treatment of severe and rare genetic neurodevelopmental diseases of the central nervous system. The agreement focuses on the targets SYNGAP1, MECP2 (Rett syndrome), and an undisclosed neurodevelopmental target of mutual interest.
The simplified method deems the expected term to be the midpoint between the vesting date and the contractual life of the stock-based awards. • Expected volatility — We completed our IPO in June 2019 and accordingly, we lack sufficient company-specific historical and implied volatility information for our shares traded in the public markets.
The simplified method deems the expected term to be the midpoint between the vesting date and the contractual life of the stock options. • Expected volatility — We completed our IPO in June 2019 and accordingly, we lack sufficient company-specific historical and implied volatility information for our shares traded in the public markets commensurate with the expected term of our stock options.
We have incurred losses since our inception in June 2014 and, as of December 31, 2022 and 2021, we had accumulated deficits of $297.2 million and $196.1 million, respectively. Our primary use of cash is to fund operating expenses, which consist primarily of research and development expenditures, and to a lesser extent, general and administrative expenditures.
We have incurred losses since our inception in June 2014 and, as of December 31, 2023 and 2022, we had accumulated deficits of $401.8 million and $297.2 million, respectively. Our primary use of cash is to fund operating expenses, which consist primarily of research and development expenditures, and to a lesser extent, general and administrative expenditures.
Contractual Obligations and Commitments The following table summarizes our contractual obligations as of December 31, 2022 and the effects that such obligations are expected to have on our liquidity and cash flows in future periods: Payments Due by Period Total Less Than 1 Year 1 to 3 Years 4 to 5 Years More than 5 Years (in thousands) Operating lease obligations $ 5,313 $ 2,532 $ 2,781 $ — $ — Total $ 5,313 $ 2,532 $ 2,781 $ — $ — In August 2018, we entered into an agreement to lease approximately 23,000 square feet of space for a term of three years.
Contractual Obligations and Commitments The following table summarizes our contractual obligations as of December 31, 2023 and the effects that such obligations are expected to have on our liquidity and cash flows in future periods: Payments Due by Period Total Less Than 1 Year 1 to 3 Years 4 to 5 Years More than 5 Years (in thousands) Operating lease obligations $ 7,833 $ 2,608 $ 5,225 $ — $ — Total $ 7,833 $ 2,608 $ 5,225 $ — $ — In August 2018, we entered into an agreement to lease approximately 23,000 square feet of space for a term of three years.
The increases in general and administrative expenses were primarily attributable to an increase of $5.1 million in personnel costs resulting from an increase in headcount and stock compensation expense resulting from an increase in the annual options award and an increase of $1.9 million in third-party services to support our in-house personnel in various aspects of developing and supporting the business including human resources, information technology, audit, tax, public relations, communications and other general and administrative activities.
The increases in general and administrative expenses were primarily attributable to an increase of $2.2 million in personnel costs, including increases in stock-based compensation expense, from increases in headcount and the annual options award and an increase of $0.2 million in third-party services to support our in-house personnel in various aspects of developing and supporting the business including human resources, information technology, audit, tax, public relations, communications and other general and administrative activities.
Liquidity and Capital Resources Since our inception through December 31, 2022, our operations have been financed by net proceeds of $490.5 million from the sale of convertible notes payable and our convertible preferred stock, our initial public offering, follow-on offering, proceeds from the controlled equity offering sales agreements and the upfront payment from Acadia.
Liquidity and Capital Resources Since our inception through December 31, 2023, our operations have been financed by net proceeds of $542.6 million from the sale of convertible notes payable and our convertible preferred stock, our initial public offering, follow-on offering, proceeds from the controlled equity offering sales agreements and the upfront payment from Acadia.
As of December 31, 2022, we had $230.2 million in cash, cash equivalents, marketable securities, and restricted cash. Cash in excess of immediate requirements is invested in accordance with our investment policy, primarily with a view to liquidity and capital preservation.
As of December 31, 2023, we had $201.4 million in cash, cash equivalents and marketable securities. Cash in excess of immediate requirements is invested in accordance with our investment policy, primarily with a view to liquidity and capital preservation.
Other income (expense) The change in our other income (expense) for the year ended December 31, 2022 as compared to the year ended December 31, 2021 primarily reflects an increase in marketable securities balances as well as increased interest rates.
Other income (expense) The change in our other income (expense) for the year ended December 31, 2023 as compared to the year ended December 31, 2022 primarily reflects an increase in cash balances throughout the year as well as increased interest rates.
Lease terms are triple net lease commencing at $0.9 million per year, then with 3% annual base rent increases plus operating expenses, real estate taxes, utilities and janitorial fees. The lease commencement date was December 10, 2018.
Lease terms are triple net lease commencing at $0.9 million per year, then with 3% annual base rent increases plus operating expenses, real estate taxes, utilities and janitorial fees.
The following table presents the weighted-average assumptions used to estimate the fair value of share-based awards granted: Year ended December 31, 2022 2021 Risk-free interest rate 1.82-4.15% 0.78-1.51% Expected dividend yield 0% 0% Expected life 5.5-6.25 years 5.5-6.25 years Expected volatility 70-71% 70-73% We will continue to use judgment in evaluating the assumptions utilized for our share-based compensation expense calculations on a prospective basis.
The following table presents the weighted-average assumptions used to estimate the fair value of share-based awards granted: Year ended December 31, 2023 2022 Risk-free interest rate 3.57-3.94% 1.82-4.15% Expected dividend yield 0% 0% Expected life 5.5-6.25 years 5.5-6.25 years Expected volatility 70-73% 70-71% We will continue to use judgment in evaluating the assumptions utilized for the grant-date fair value of our stock options on a prospective basis.
Based upon our current operating plan, we believe that our cash, cash equivalents, marketable securities, and restricted cash of $230.2 million as of December 31, 2022, together with the proceeds since December 31, 2022 from the Sales Agreement of $44.7 million, will enable us to fund our operating expenses and capital expenditure requirements to the end of 2025.
Based upon our current operating plan, we believe that our cash, cash equivalents and marketable securities of $201.4 million as of December 31, 2023, together with the proceeds since December 31, 2023 from the Sales Agreement of $1.3 million, will enable us to fund our operating expenses and capital expenditure requirements to the end of 2025.
Investing activities Our investing activities during the year ended December 31, 2022 have consisted of purchases of property and equipment and net purchases of marketable securities. Our investing activities during the year ended December 31, 2021 have consisted of purchases of property and equipment and net purchases of marketable securities.
Investing activities Our investing activities during the years ended December 31, 2023 and 2022 have consisted of purchases of property and equipment and purchases and sales of marketable securities.
The comparable companies were chosen based on their similar size, stage in the life cycle or area of specialty. • Risk-free interest rate —The risk-free interest rate is based on the U.S.
The comparable companies were chosen based on their similar size, stage in the life cycle or area of specialty.
Amounts allocated to a material right are not recognized or begin to be recognized as revenue until, at the earliest, the option is exercised. 93 Milestone payments: At the inception of each arrangement that includes milestone payments, we evaluate whether a significant reversal of cumulative revenue provided in conjunction with achieving the milestones is probable and estimate the amount to be included in the transaction price using the most likely amount method.
Milestone payments: At the inception of each arrangement that includes milestone payments, we evaluate whether a significant reversal of cumulative revenue provided in conjunction with achieving the milestones is probable and estimate the amount to be included in the transaction price using the most likely amount method.
Other Information Net operating loss carryforwards As of December 31, 2022 and 2021, the Company had federal net operating loss carryforwards of $210.9 million and $191.1 million, respectively, which may be available to reduce future taxable income, and expire at various dates beginning in 2034, for those net operating loss carryforwards generated prior to 2018.
Other Information Net operating loss carryforwards As of December 31, 2023, and 2022, the Company had federal NOL carryforwards of $189.5 million and $210.9 million, respectively, which may be available to reduce future taxable income. Federal NOLs generated prior to December 31, 2018 expire at various dates beginning in 2035 and NOLs generated after December 31, 2018 carryforward indefinitely.
We are also pursuing treatment for a second haploinsufficient disease, autosomal dominant optic atrophy (“ADOA”), the most common inherited optic nerve disorder.
We are also pursuing treatment for a second haploinsufficient disease, autosomal dominant optic atrophy (“ADOA”), the most common inherited optic nerve disorder. STK-002 is our lead clinical candidate for the treatment of ADOA.
The lease includes one renewal option for an additional two years. Lease terms commence at $0.2 million per year, with 2.5% annual base rent increases plus operating expenses, real estate taxes, utilities and janitorial fees. We occupied this space in May 2019.
In December 2018, we entered into an agreement to lease 2,485 square feet of space for a term of three years. The lease includes one renewal option for an additional two years. Lease terms commence at $0.2 million per year, with 2.5% annual base rent increases plus operating expenses, real estate taxes, utilities and janitorial fees.
Specifically, as a smaller reporting company we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K and, similar to emerging growth companies, smaller reporting companies have reduced disclosure obligations regarding executive compensation. 96 Recently I ssued A ccounting P ronouncements In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.
Specifically, as a smaller reporting company we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K and, similar to emerging growth companies, smaller reporting companies have reduced disclosure obligations regarding executive compensation.
Our primary use of cash is to fund operating expenses, which consist primarily of research and development expenditures, and to a lesser extent, general and administrative expenditures. Cash used to fund operating expenses is impacted by the timing of when we pay these expenses, as reflected in the change in our outstanding accounts payable and accrued expenses.
Cash used to fund operating expenses is impacted by the timing of when we pay these expenses, as reflected in the change in our outstanding accounts payable and accrued expenses.
The grant date fair value of the stock-based awards is recognized on a straight-line basis over the requisite service period, which is generally the vesting period of the respective awards. 94 The Black-Scholes option-pricing model requires the use of subjective assumptions to determine the fair value of stock-based awards.
For stock options, we estimate the grant date fair value, and the resulting stock-based compensation, using the Black-Scholes option-pricing model. The grant date fair value of the stock-based awards is recognized on a straight-line basis over the requisite service period, which is generally the vesting period of the respective awards.
However, due to the nature of estimates, we cannot assure you that we will not make changes to our estimates in the future as we become aware of additional information about the status or conduct of our clinical trials and other research activities.
However, due to the nature of estimates, we cannot assure you that we will not make changes to our estimates in the future as we become aware of additional information about the status or conduct of our clinical trials and other research activities. 93 Stock-Based Compensation Stock options We recognize compensation costs related to awards granted to employees and directors, based on the estimated fair value of the awards on the date of grant.
The increases in expense reflect the accelerating pace of research and development activities and the increases in personnel, facilities and, third party services to support those activities. 88 General and administrative expenses General and administrative expenses were $38.9 million for the year ended December 31, 2022 as compared to $31.9 million for the year ended December 31, 2021, an increase of $7.0 million.
The increase in expenses reflects the accelerating pace of research and development activities and the increases in personnel needed to support those activities. General and administrative expenses General and administrative expenses were $41.3 million for the year ended December 31, 2023 as compared to $38.9 million for the year ended December 31, 2022, an increase of $2.4 million.
Net operating losses generated in 2018 and beyond have no expiration. As of December 31, 2022 and 2021, the Company had state net operating loss carry forwards of $212.8 million and $191.4 million, respectively, which may be available to reduce future taxable income and expire at various dates beginning in 2035.
As of December 31, 2023, and 2022, the Company had state NOLs of $199.4 million and $212.8 million, respectively, which may be available to reduce future taxable income. The state NOLs expire at various dates beginning in 2035.
In September 2021, we entered into an agreement to extend the initial term of the 23,000 square foot lease for a period of three years ending December 31, 2024. In addition, this agreement provides for the lease of an additional 15,000 square feet of rentable space beginning on April 1, 2022 and ending on December 31, 2024.
In addition, this agreement provides for the lease of an additional 15,000 square feet of rentable space beginning on April 1, 2022 and ending on December 31, 2024.
Initial monthly lease payments are approximately $0.1 million with respect to the 23,000 square feet space, and $0.1 million with respect to the 15,000 square feet space, and in each case subject to annual rent escalations. In December 2018, we entered into an agreement to lease 2,485 square feet of space for a term of three years.
Initial monthly lease payments are approximately $0.1 million with respect to the 23,000 square feet space, and $0.1 million with respect to the 15,000 square feet space, and in each case subject to annual rent escalations.
The $150,000,000 of common stock that may be offered, issued and sold under the sales agreement prospectus is included in the $400,000,000 of securities that may be offered, issued and sold by us under the base prospectus. As of December 31, 2022, we had not issued any shares pursuant to the Sales Agreement.
The $150.0 million of common stock that may be offered, issued and sold under the sales agreement prospectus is included in the $400.0 million of securities that may be offered, issued and sold by us under the base prospectus.
The table below summarizes our research and development expenses: Year Ended December 31, 2022 2021 STK-001 $ 25,327 $ 18,778 STK-002 9,087 3,436 SYNGAP1 405 148 MECP2 745 243 Personnel-related expenses 29,028 22,603 Third-party services 3,409 990 Scientific consulting 794 579 Facilities and other research and development expenses 9,042 7,391 Total research and development expenses $ 77,837 $ 54,168 The increase in research and development expenses were primarily attributable to an increase of $6.4 million in personnel costs resulting from an increase in headcount, an increase of $6.5 million in expenses related to our STK-001 program and $5.7 million related to our STK-002 program, which is comprised of third-party services and scientific consulting fees, an increase of $0.8 million in external third party expense related to SYNGAP1 and MECP2 and an increase of $4.2 million in expense related to facilities and other costs and non-project specific consulting and third-party services, materials and other costs.
The table below summarizes our research and development expenses: Year Ended December 31, 2023 2022 (in thousands) STK-001 $ 27,078 $ 25,327 STK-002 7,997 9,087 SYNGAP1 554 405 MECP2 994 745 Personnel-related expenses 31,485 29,028 Third-party services 2,085 3,409 Scientific consulting 1,093 794 Facilities and other research and development expenses 10,945 9,042 Total research and development expenses $ 82,231 $ 77,837 The increase in research and development expenses were primarily attributable to an increase of $2.5 million in personnel costs resulting from annual compensation increases and increases in stock-based compensation expense, $1.9 million in facilities and other research and development costs, an increase of $1.8 million in expenses related to our STK-001 program, which is comprised of third-party services and scientific consulting fees, offset by a decrease of $1.1 million in expenses related to our STK-002 program, which is comprised of third-party services and scientific consulting fees, and a decrease of $0.7 million in external third-party expenses related to SYNGAP1, MECP2, and non-project specific consulting and third-party services.
In June 2021, we amended the agreement to extend the initial term of the 2,485 square foot lease for a period of three years ending April 30, 2025. In addition, the amendment provided for the lease of an additional 2,357 square feet of rentable 91 space beginning on July 6, 2021 and ending on April 30, 2025.
In addition, the amendment provided for the lease of an additional 2,357 square feet of rentable space beginning on July 6, 2021 and ending on April 30, 2025. The amended lease provides us with the option to extend the term of the lease for an additional two years with a base annual rent increase of 3%.
Such opt-out would reduce development and commercialization milestones but would provide us with royalties on an escalating basis attributable to net sales milestones. See Note 8—License and Collaboration Agreement with Acadia Pharmaceuticals, Inc. of the notes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
See Note 8—License and Collaboration Agreement with Acadia Pharmaceuticals, Inc. of the notes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
As of December 31, 2022, we were unable to estimate the timing or likelihood of achieving the milestones or making future product sales.
Commitments Our commitments primarily consist of obligations under our agreement with the University of Southampton. As of December 31, 2023, we were unable to estimate the timing or likelihood of achieving the milestones or making future product sales.
As of December 31, 2022 and December 31, 2021, we had $230.2 million and $220.4 million, respectively, in cash, cash equivalents, marketable securities, and restricted cash. Since inception, we have had operating losses, the majority of which are attributable to research and development activities.
As of December 31, 2023 and 2022 we had $201.4 million and $229.6 million, respectively, in cash, cash equivalents and marketable securities. Since inception, we have had operating losses, the majority of which are attributable to research and development activities. Our net losses were $104.7 million and $101.1 million for the years ended December 31, 2023 and 2022, respectively.
In addition, at December 31, 2022 and 2021, the Company had federal research and development tax credit carryforwards of $9.2 million and $5.4 million, respectively, and state research and development tax credit carry forwards of $4.3 million and $3.0 million, respectively.
As of December 31, 2023 and 2022, the Company had federal research and development tax credit (“R&D Credit”) carryforwards of $12.8 million and $9.2 million, respectively, and state R&D Credit carryforwards of $5.9 million and $4.3 million, respectively.
Our financing activities during the year ended December 31, 2021 consisted of $0.8 million in proceeds from the issuance of common stock upon exercise of stock options and $0.5 million in proceeds from our Employee Stock Purchase Plan.
Financing activities Our financing activities during year ended December 31, 2023 consisted of $0.4 million from the exercise of stock options, $0.6 million in proceeds from our Employee Stock Purchase Plan and $52.1 million of net proceeds from the controlled equity offering sales agreements.
In accordance with ASC 740, Accounting for Income Taxes, management of the Company has evaluated the positive and negative evidence bearing upon the realizability of its deferred tax assets, which are comprised principally of net operating loss carryforwards.
In accordance with ASC 740, Accounting for Income Taxes , management of the Company has evaluated the positive and negative evidence bearing upon the realizability of its deferred tax assets and has determined that it is more likely than not that the Company will not recognize the net benefits of federal and state deferred tax assets.
During the year ended December 31, 2021, cash used in operating activities was $66.9 million and was attributable to a net loss of $85.8 million partially offset by $0.1 million of amortization and accretion of marketable securities, and by non-cash charges of $18.6 million for share-based compensation, depreciation, and reduction in the carrying amount of right of use assets.
This was primarily attributable to a net loss of $104.7 million and by a net change of $6.0 million in our net operating assets and liabilities, offset by non-cash charges of $29.6 million for stock-based compensation, depreciation, amortization and accretion of marketable securities, and reduction in the carrying amount of right of use assets.
Our primary uses of capital are, and we expect will continue to be, compensation and related expenses, third-party clinical research and development services, costs relating to the build-out of our headquarters and manufacturing facility, license payments or milestone obligations that may arise, laboratory and related supplies, clinical costs, manufacturing costs, legal and other regulatory expenses and general overhead costs. 89 Based upon our current operating plan, we believe that our cash, cash equivalents, marketable securities, and restricted cash of $2 3 0. 2 million as of December 31, 202 2 , together with the proceeds since December 31, 202 2 from the Sales Agreement of $ 44.7 million, will enable us to fund our operating expenses and capital expenditure requirements to the end of 2025 .
Our primary uses of capital are, and we expect will continue to be, compensation and related expenses, third-party clinical research and development services, costs relating to the build-out of our headquarters and manufacturing facility, license payments or milestone obligations that may arise, laboratory and related supplies, clinical costs, manufacturing costs, legal and other regulatory expenses and general overhead costs.
The table below summarizes our research and development expenses incurred by development program: Year ended December 31, 2022 2021 (in thousands) STK-001 $ 25,327 $ 18,778 STK-002 9,087 3,436 SYNGAP1 405 148 MECP2 745 243 Non-program specific and unallocated research and development expenses 42,273 31,563 Total research and development expenses $ 77,837 $ 54,168 We expense all research and development costs in the periods in which they are incurred.
We use internal resources to manage our development activities and our employees work across multiple development programs and, therefore, we do not track their costs by program. 85 The table below summarizes our research and development expenses incurred by development program: Year ended December 31, 2023 2022 (in thousands) STK-001 $ 27,078 $ 25,327 STK-002 7,997 9,087 SYNGAP1 554 405 MECP2 994 745 Non-program specific and unallocated research and development expenses 45,608 42,273 Total research and development expenses $ 82,231 $ 77,837 We expense all research and development costs in the periods in which they are incurred.
The change in the valuation allowance was an increase of $31.8 million and $28.8 million in 2022 and 2021, respectively.
A full valuation allowance of $133.3 million and $97.9 million was established at December 31, 2023 and 2022, respectively. The change in the valuation allowance was an increase of $35.4 million and $31.8 million in 2023 and 2022, respectively.
This ASU is effective for interim and annual periods beginning after December 15, 2020, and early adoption is permitted. The Company adopted this standard on January 1, 2021 and the adoption of this update did not have a material impact on its consolidated financial statements.
The standard is effective for annual reporting periods beginning after December 15, 2023, and interim periods within years beginning after December 15, 2024, with early adoption permitted. The Company is currently assessing the impact that the adoption will have on its consolidated financial statements.
Since December 31, 2022, we sold approximately 4.6 million shares of our common stock 83 and received $44.7 million after deducting commissions related to the Sales Agreement. We may terminate this at-the-market program at any time, pursuant to its terms.
As of December 31, 2023, we had issued approximately 6.3 million shares of common stock pursuant to the Sales Agreement for net proceeds of $52.1 million. We may terminate this at-the-market program at any time, pursuant to its terms.
Cash flows The following table summarizes our cash flows: Year ended December 31, 2022 2021 (in thousands) Net cash (used in) provided by: Operating activities $ (31,866 ) $ (66,907 ) Investing activities (45,882 ) (76,426 ) Financing activities 46,409 1,284 Net decrease in cash, cash equivalents and restricted cash $ (31,339 ) $ (142,049 ) 90 Operating activities During the year ended December 31, 2022, cash used in operating activities was $31.9 million.
Because of the numerous risks and uncertainties associated with the development and commercialization of our product candidates, we are unable to estimate the amounts of increased capital outlays and operating expenditures associated with our current and anticipated product development programs. 89 Cash flows The following table summarizes our cash flows: Year ended December 31, 2023 2022 (in thousands) Net cash provided by (used in): Operating activities $ (81,067 ) $ (31,866 ) Investing activities 105,946 (45,882 ) Financing activities 53,007 46,409 Net increase (decrease) in cash, cash equivalents and restricted cash $ 77,886 $ (31,339 ) Operating activities During the year ended December 31, 2023, cash used in operating activities was $81.1 million.
Since becoming a public company we have used our stock price to determine fair value of our common stock. • Expected term —The expected term represents the period that stock-based awards are expected to be outstanding. The expected term for option grants is determined using the simplified method.
The Black-Scholes option-pricing model requires the use of subjective assumptions to determine the fair value of stock options. These key subjective assumptions include: • Expected term —The expected term represents the period that stock options are expected to be outstanding. The expected term is determined using the simplified method.
For SYNGAP1 licensed products that we are co-developing and co-commercializing, we will be responsible for 50% of the development and commercialization costs and will receive 50% of the profits from global commercialization. 84 Business Update Regarding COVID-19 We continue to monitor the impact of the COVID-19 pandemic in an effort to mitigate interruptions to our clinical programs, research efforts and other business activities and to monitor the safety and well-being of our employees, patients and communities, as well as its impact on the U.S. economy and financial markets.
For SYNGAP1 licensed products that we are co-developing and co-commercializing, we will be responsible for 50% of the development and commercialization costs and will receive 50% of the profits from global commercialization. We are provided with a co-development and co-commercialization opt out option relating to the SYNGAP1 target indication at our discretion.
Removed
Our initial focus is haploinsufficiencies and diseases of the central nervous system and the eye, although proof of concept has been demonstrated in other organs, tissues, and systems, supporting our belief in the broad potential for our proprietary approach.
Added
We have announced end of study data from our two Phase 1/2a open-label studies of STK-001, MONARCH in the United States and ADMIRAL in the United Kingdom. We also have SWALLOWTAIL in the U.S. and LONGWING in the U.K., which are Open Label Extension (“OLE”) studies of STK-001 for children and adolescents with Dravet syndrome.
Removed
TANGO is based on the pioneering work conducted on pre-mRNA splicing and ASOs in the laboratory of one of our co-founders, Adrian R. Krainer, Ph.D., of Cold Spring Harbor Laboratory (“CSHL”) in New York.
Added
Patients who participated in the MONARCH study in the United States or the ADMIRAL study in the United Kingdom and met study entry criteria are eligible to continue treatment in SWALLOWTAIL or LONGWING, respectively, both of which are designed to evaluate the long-term safety and tolerability of repeat doses of STK-001.
Removed
Inspired by the clinical success of SPINRAZA (nusinersen), an ASO medicine for the treatment of spinal muscular atrophy that was co-invented by Professor Krainer, our company was founded to develop a general antisense approach to upregulate protein expression. We were incorporated in June 2014.
Added
STK-002 is designed to upregulate OPA1 protein expression by leveraging the non-mutant (wild-type) copy of the OPA1 gene to restore OPA1 protein expression with the aim to stop or slow vision loss in patients with ADOA.
Removed
In July 2015 and April 2016, we entered into worldwide license agreements with Cold Spring Harbor Laboratory (“CSHL”), and the University of Southampton, respectively, with respect to certain licensed patents and applications relating to TANGO. TANGO exploits non-productive splicing events to effect targeted enhancement of protein expression.
Added
We have received authorization in the United Kingdom to proceed with a Phase 1 open-label study (OSPREY) of STK-002, and we expect the study to start in 2024. In May 2022, we filed a universal Shelf Registration statement on Form S-3 (the “Registration Statement”) with the SEC.
Removed
Since our inception through June 21, 2019, our operations had been financed primarily from the sale of convertible notes payable and our convertible preferred stock.
Added
As of December 31, 2023, we had an accumulated deficit of $401.8 million and as of December 31, 2022, we had an accumulated deficit of $297.2 million. Our primary use of cash is to fund operating expenses, which consist primarily of research and development expenditures, and to a lesser extent, general and administrative expenditures.
Removed
On June 21, 2019, we completed an initial public offering (“IPO”), of our common stock and issued and sold 9,074,776 shares of common stock at a public offering price of $18.00 per share, which included 1,183,666 shares sold upon full exercise of the underwriters’ option to purchase additional shares of common stock resulting in net proceeds of $151.9 million after deducting underwriting discounts and commissions but before deducting offering costs of approximately $2.5 million.
Added
Such opt-out would reduce development and commercialization milestones but would provide us with royalties on an escalating basis attributable to net sales milestones. Financial Operations Overview Revenue We currently do not have any products approved for sale and have not generated any revenue since inception through December 31, 2023.
Removed
In July 2020, we filed a universal Shelf Registration statement on Form S-3 (the “Prior Registration Statement”) with the Securities and Exchange Commission (the “SEC”). On May 31, 2022, the Prior Registration Statement was deactivated upon the effectiveness of the Registration Statement (as defined below).
Added
Such opt-out would reduce development and commercialization milestones but would provide us with royalties on an escalating basis attributable to net sales milestones. For the year ended, December 31, 2023, we recognized revenue related to the Acadia collaboration of $8.8 million and for the year ended, December 31, 2022, we recognized revenue related to the Acadia collaboration of $12.4 million.
Removed
As of such date, we had issued approximately 2.2 million shares of common stock under the Prior Registration Statement for net proceeds of $45.3 million. In May 2022, we filed an additional universal Shelf Registration statement on Form S-3 (the “Registration Statement”) with the SEC.
Added
Other income (expense) Our other income (expense), includes (i) interest income earned on cash reserves in our operating money market fund, investment accounts and on our marketable securities investments and (ii) other items of income (expense), net.
Removed
Our net losses were $101.1 million and $85.8 million for the years ended December 31, 2022 and 2021, respectively. As of December 31, 2022, we had an accumulated deficit of $297.2 million and as of December 31, 2021, we had an accumulated deficit of $196.1 million.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeOur primary exposure to market risk is interest rate sensitivity, which is affected by changes in the general level of U.S. interest rates. A hypothetical 100 basis point change in interest rates would affect the fair market value of our cash equivalents and marketable securities by approximately $2.3 million.
Biggest changeOur primary exposure to market risk is interest rate sensitivity, which is affected by changes in the general level of U.S. interest rates. Because of the short-term maturities of our cash and cash equivalents, we do not believe that an immediate 10% increase in interest rates would have any significant impact on the realized value of our investments.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk. Interest rate risk We are exposed to market risks in the ordinary course, primarily including interest sensitivities. As of December 31, 2022, we had cash, cash equivalents, marketable securities, and restricted cash of $230.2 million and $220.4 million as of December 31, 2021.
Item 7A. Quantitative and Qualitat ive Disclosures About Market Risk. Interest rate risk We are exposed to market risks in the ordinary course, primarily including interest sensitivities. As of December 31, 2023, we had cash, cash equivalents and marketable securities of $201.4 million and $229.6 million as of December 31, 2022.
Inflation risk Inflation generally affects us by increasing our clinical trial costs. We do not believe that inflation has had a material effect on our business, financial condition or results of operations during the years ended December 31, 2022 or 2021.
We do not believe that inflation has had a material effect on our business, financial condition or results of operations during the years ended December 31, 2023 and 2022.
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Accordingly, we do not believe we are exposed to material market risk with respect to our cash and cash equivalents. Inflation risk Inflation generally affects us by increasing our clinical trial costs.

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