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What changed in Forte Biosciences, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Forte Biosciences, 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.

+310 added−269 removedSource: 10-K (2024-03-18) vs 10-K (2023-03-31)

Top changes in Forte Biosciences, Inc.'s 2023 10-K

310 paragraphs added · 269 removed · 213 edited across 5 sections

Item 1. Business

Business — how the company describes what it does

34 edited+20 added−17 removed121 unchanged
Biggest changeManufacturing and Supply Forte has outsourced the manufacturing of FB-102 to facilities at third party contract manufacturing organizations (CMOs) and the preclinical testing and development to clinical research organizations (CROs). These facilities and associated equipment are designed and operated to be consistent with all applicable laws and regulations.
Biggest changeAs such, while the ATM Facility remains in place, Forte remains restricted in its ability to access additional funding from the sale of securities under Form S-3. 3 Manufacturing and Supply Forte has outsourced the manufacturing of FB-102 to facilities at third party contract manufacturing organizations (CMOs) and the preclinical testing and development to clinical research organizations (CROs).
The process generally involves the following: • Completion of extensive preclinical studies in accordance with applicable regulations, including studies conducted in accordance with good laboratory practice (“GLP”), requirements; • Submission to the FDA of an Initial New Drug (“IND”) application, which must become effective before human clinical trials may begin; • Approval by an Institutional Review Board (“IRB”), or independent ethics committee at each clinical trial site before each trial may be initiated; 4 • Performance of adequate and well-controlled human clinical trials in accordance with applicable IND regulations, good clinical practice (“GCP”) requirements and other clinical trial-related regulations to establish the safety and efficacy of the investigational product for each proposed indication; • Submission to the FDA of a BLA; • A determination by the FDA within 60 days of its receipt of a BLA to accept the filing for review; • Satisfactory completion of an FDA pre-approval inspection of the manufacturing facility or facilities where the biologic will be produced to assess compliance with cGMP requirements to assure that the facilities, methods and controls are adequate to preserve the biologic’s identity, strength, quality and purity; • Potential FDA audit of the clinical trial sites that generated the data in support of the BLA; and • FDA review and approval of the BLA, including consideration of the views of any FDA advisory committee, prior to any commercial marketing or sale of the biologic in the United States.
The process generally involves the following: 4 • Completion of extensive preclinical studies in accordance with applicable regulations, including studies conducted in accordance with good laboratory practice (“GLP”), requirements; • Submission to the FDA of an Initial New Drug (“IND”) application, which must become effective before human clinical trials may begin; • Approval by an Institutional Review Board (“IRB”), or independent ethics committee at each clinical trial site before each trial may be initiated; • Performance of adequate and well-controlled human clinical trials in accordance with applicable IND regulations, good clinical practice (“GCP”) requirements and other clinical trial-related regulations to establish the safety and efficacy of the investigational product for each proposed indication; • Submission to the FDA of a BLA; • A determination by the FDA within 60 days of its receipt of a BLA to accept the filing for review; • Satisfactory completion of an FDA pre-approval inspection of the manufacturing facility or facilities where the biologic will be produced to assess compliance with cGMP requirements to assure that the facilities, methods and controls are adequate to preserve the biologic’s identity, strength, quality and purity; • Potential FDA audit of the clinical trial sites that generated the data in support of the BLA; and • FDA review and approval of the BLA, including consideration of the views of any FDA advisory committee, prior to any commercial marketing or sale of the biologic in the United States.
The Affordable Care Act (“ACA”), for example, contains provisions that subject biological products to potential competition by lower-cost biosimilars and may reduce the profitability of drug products through increased rebates for drugs reimbursed by Medicaid 8 programs, address a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are inhaled, infused, instilled, implanted or injected, increase the minimum Medicaid rebates owed by manufacturers under the Medicaid Drug Rebate Program and extends the rebate program to individuals enrolled in Medicaid managed care organizations, establish annual fees and taxes on manufacturers of certain branded prescription drugs, and create a new Medicare Part D coverage gap discount program, in which manufacturers must agree to offer 70% (increased pursuant to the Bipartisan Budget Act of 2018, effective as of 2019) point-of-sale discounts off negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period, as a condition for the manufacturer’s outpatient drugs to be covered under Medicare Part D.
The Affordable Care Act (“ACA”), for example, contains provisions that subject biological products to potential competition by lower-cost biosimilars and may reduce the profitability of drug products through increased rebates for drugs reimbursed by Medicaid programs, address a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are inhaled, infused, instilled, implanted or injected, increase the minimum Medicaid rebates owed by manufacturers under the Medicaid Drug Rebate Program and extends the rebate program to individuals enrolled in Medicaid managed care organizations, establish annual fees and taxes on manufacturers of certain branded prescription drugs, and create a new Medicare Part D coverage gap discount program, in which manufacturers must agree to offer 70% (increased pursuant to the Bipartisan Budget Act of 2018, effective as of 2019) point-of-sale discounts off negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period, as a condition for the manufacturer’s outpatient drugs to be covered under Medicare Part D.
During Phase 2 clinical trials, safety and further pharmacokinetic and pharmacodynamic information is collected, possible adverse effects and safety risks are identified, and a preliminary evaluation of efficacy is conducted. 5 • Phase 3 clinical trials generally involve a large number of patients at multiple sites and are designed to provide the data necessary to demonstrate the effectiveness of the product for its intended use, its safety in use and to establish the overall benefit/risk relationship of the product and provide an adequate basis for product labeling.
During Phase 2 clinical trials, safety and further pharmacokinetic and pharmacodynamic information is collected, possible adverse effects and safety risks are identified, and a preliminary evaluation of efficacy is conducted. • Phase 3 clinical trials generally involve a large number of patients at multiple sites and are designed to provide the data necessary to demonstrate the effectiveness of the product for its intended use, its safety in use and to establish the overall benefit/risk relationship of the product and provide an adequate basis for product labeling.
Interchangeability requires that a biological product be biosimilar to the reference product and that the product can be expected to produce the same clinical results as the reference product in any given patient and, for products administered multiple times to an individual, that the product and the reference product may be alternated or switched after 10 one has been previously administered without increasing safety risks or risks of diminished efficacy relative to exclusive use of the reference biological product without such alternation or switch.
Interchangeability requires that a biological product be biosimilar to the reference product and that the product can be expected to produce the same clinical results as the reference product in any given patient and, for products administered multiple times to an individual, that the product and the reference product may be alternated or switched after one has been previously administered without increasing safety risks or risks of diminished efficacy relative to exclusive use of the reference biological product without such alternation or switch.
The FDA does not always meet its PDUFA goal dates for standard and priority BLAs, and the review process is often extended by FDA requests for additional information or clarification. Before approving a BLA, the FDA will conduct a pre-approval inspection of the manufacturing facilities for the new product to determine whether they comply with cGMP requirements.
The FDA does not always meet its PDUFA goal dates for standard and priority BLAs, and the review process is often extended by FDA requests for additional information or clarification. 6 Before approving a BLA, the FDA will conduct a pre-approval inspection of the manufacturing facilities for the new product to determine whether they comply with cGMP requirements.
Clinical trials generally are conducted in three sequential phases, known as Phase 1, Phase 2 and Phase 3, which may overlap. • Phase 1 clinical trials generally involve a small number of healthy volunteers or disease-affected patients who are initially exposed to a single dose and then multiple doses of the product candidate.
Clinical trials generally are conducted in three sequential phases, known as Phase 1, Phase 2 and Phase 3, which may overlap. 5 • Phase 1 clinical trials generally involve a small number of healthy volunteers or disease-affected patients who are initially exposed to a single dose and then multiple doses of the product candidate.
None of Forte’s employees are represented by labor unions or covered by collective bargaining agreements. Forte considers its relationship with its employees to be good. Our human capital resources objectives include, as applicable, identifying, recruiting, retaining, incentivizing and integrating our existing and new employees, advisors and consultants.
None of Forte’s employees are represented by labor unions or covered by collective bargaining agreements. Forte considers its relationship with its employees to be good. 12 Our human capital resources objectives include, as applicable, identifying, recruiting, retaining, incentivizing and integrating our existing and new employees, advisors and consultants.
In the future, Forte may apply for restoration of a patent term for Forte’s currently owned or licensed patents to add patent life beyond its current expiration date, depending on the expected length of the clinical trials and other factors involved in the filing of the relevant BLA.
In the 10 future, Forte may apply for restoration of a patent term for Forte’s currently owned or licensed patents to add patent life beyond its current expiration date, depending on the expected length of the clinical trials and other factors involved in the filing of the relevant BLA.
Coverage and Reimbursement 11 Sales of Forte’s approved products will depend, in part, on the extent to which Forte’s approved products, will be covered by third-party payors, such as government health programs, commercial insurers and managed healthcare organizations, as well as the level of reimbursement such that those third-party payors provide for Forte’s products.
Coverage and Reimbursement Sales of Forte’s approved products will depend, in part, on the extent to which Forte’s approved products, will be covered by third-party payors, such as government health programs, commercial insurers and managed healthcare organizations, as well as the level of reimbursement such that those third-party payors provide for Forte’s products.
Forte expects that current laws, as well as other healthcare reform measures that may be adopted in the future, may result in more rigorous coverage criteria and additional downward pressure on the price that Forte, or any of its collaborators, may receive for any approved products.
Forte expects that current laws, as well as other healthcare reform measures that may be adopted in the future, may result in more rigorous 8 coverage criteria and additional downward pressure on the price that Forte, or any of its collaborators, may receive for any approved products.
In August 2022, Congress passed the Inflation Reduction Act of 2022, which includes prescription drug provisions that have significant implications for the pharmaceutical industry and Medicare beneficiaries, including allowing the federal government to negotiate a maximum fair price for certain high-priced single source Medicare drugs, imposing penalties and excise tax for manufacturers that fail to comply with the drug price negotiation requirements, requiring inflation rebates for all Medicare Part B and Part D drugs, with limited exceptions, if their drug prices increase faster than inflation, and redesigning Medicare Part D to reduce out-of-pocket prescription drug costs for beneficiaries, among other changes.
In August 2022, Congress passed the Inflation Reduction Act of 2022, or IRA, which includes prescription drug provisions that have significant implications for the pharmaceutical industry and Medicare beneficiaries, including allowing the federal government to negotiate a maximum fair price for certain high-priced single source Medicare drugs, imposing penalties and excise tax for manufacturers that fail to comply with the drug price negotiation requirements, requiring inflation rebates for all Medicare Part B and Part D drugs, with limited exceptions, if their drug prices increase faster than inflation, and redesigning Medicare Part D to reduce out-of-pocket prescription drug costs for beneficiaries, among other changes.
The FDA will not approve the product unless it determines that the 6 manufacturing processes and facilities comply with cGMP requirements to assure consistent production of the product within required specifications. The FDA also may audit data from clinical trials to ensure compliance with GCP requirements.
The FDA will not approve the product unless it determines that the manufacturing processes and facilities comply with cGMP requirements to assure consistent production of the product within required specifications. The FDA also may audit data from clinical trials to ensure compliance with GCP requirements.
Manufacturers and other entities involved in the manufacture and distribution of approved biologics are required to register 7 their establishments with the FDA and certain state agencies and are subject to periodic unannounced inspections by the FDA and certain state agencies for compliance with cGMP requirements and other laws.
Manufacturers and other entities involved in the manufacture and distribution of approved biologics are required to register their establishments with the FDA and certain state agencies and are subject to periodic unannounced inspections by the FDA and certain state agencies for compliance with cGMP requirements and other laws.
These manufacturers must comply with cGMP regulations that require, among other things, quality control and quality assurance, the maintenance of records and documentation and the obligation to investigate and correct any deviations from cGMP.
These manufacturers must comply with cGMP regulations that require, among other things, quality 7 control and quality assurance, the maintenance of records and documentation and the obligation to investigate and correct any deviations from cGMP.
Corporate Information and History On June 15, 2020, Forte completed a business combination (the “Merger”) with Tocagen, Inc. (“Tocagen”), a publicly traded biotechnology company, with Forte being the surviving business. Prior to the Merger, Forte was a privately held company incorporated in Delaware on May 3, 2017.
Corporate Information and History On June 15, 2020, Forte completed a business combination (the “Merger”) with Tocagen, Inc. (“Tocagen”), a publicly traded biotechnology company, with Forte being the surviving business. Prior to the Merger, Forte was a privately held company incorporated in Delaware on May 3, 2017. Forte's legal predecessor, Tocagen, was incorporated in Delaware in August 2007.
Publication of discounts by third-party payors or authorities may lead to further pressure on the prices or reimbursement levels within the country of publication and other countries. Employees and Human Capital As of March 24, 2023, we had 6 full-time employees, primarily engaged in research and development, manufacturing and administration.
Publication of discounts by third-party payors or authorities may lead to further pressure on the prices or reimbursement levels within the country of publication and other countries. Employees and Human Capital As of March 15, 2024, we had 9 full-time employees, primarily engaged in research and development, manufacturing and administration.
These changes included aggregate reductions to Medicare payments to providers of up to 2% per fiscal year, effective April 1, 2013, which, due to subsequent legislative amendments, will remain in effect through 2031, with the exception of a temporary suspension implemented under various COVID-19 relief legislation from May 1, 2020 through March 31, 2022, unless additional congressional action is taken.
These changes included aggregate reductions to Medicare payments to providers of up to 2% per fiscal year, effective April 1, 2013, which, due to subsequent legislative amendments, will remain in effect through 2031, with the exception of a temporary suspension implemented under various COVID-19 relief legislation from May 1, 2020 through 2032, unless Congress takes additional action.
We own one US patent for administering a combination of Gram-positive and Gram-negative bacteria along with metabolites for treatment of a wide variety of skin conditions. The patent’s estimated expiration date is 2039. This patent is not material to Forte’s FB-102 program. We also own four pending US patent applications related to the FB-102 program.
Intellectual Property We own one US patent for administering a combination of Gram-positive and Gram-negative bacteria along with metabolites for treatment of a wide variety of skin conditions. The patent’s estimated expiration date is 2039. This patent is not material to Forte’s FB-102 program.
The estimated expiration dates of these patents are 2043-2044. Government Regulation Government authorities in the United States at the federal, state and local level and in other countries regulate, among other things, the research, development, testing, manufacture, quality control, approval, labeling, packaging, storage, record-keeping, promotion, advertising, distribution, post-approval monitoring and reporting, marketing, export and import of drug and biological products.
Government Regulation Government authorities in the United States at the federal, state and local level and in other countries regulate, among other things, the research, development, testing, manufacture, quality control, approval, labeling, packaging, storage, record-keeping, promotion, advertising, distribution, post-approval monitoring and reporting, marketing, export and import of drug and biological products.
Forte's legal predecessor, Tocagen, was incorporated in Delaware in August 2007. 12 Our principal executive office is located at 3060 Pegasus Park Drive, Building 6, Dallas TX 75247 and our telephone number is (310) 618-6994. Our corporate website is located at www.fortebiorx.com.
Our principal executive office is located at 3060 Pegasus Park Drive, Building 6, Dallas TX 75247 and our telephone number is (310) 618-6994. Our corporate website is located at www.fortebiorx.com.
Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. Our commercial opportunities will be reduced or eliminated if our competitors develop and commercialize similar products that are safer, more effective, have fewer side effects or are less expensive than any products that we and/or our collaborators may develop.
Our commercial opportunities will be reduced or eliminated if our competitors develop and commercialize similar products that are safer, more effective, have fewer side effects or are less expensive than any products that we and/or our collaborators may develop.
Item 1. Business Overview Forte Biosciences, Inc. and its subsidiaries ( www.fortebiorx.com ) (“Forte”, “we”, “our”) is a biopharmaceutical company that is advancing through preclinical trials its product candidate , FB-102, which is a proprietary therapeutic molecule with potentially broad autoimmune applications in such indications as graft-versus-host disease (“GvHD”), vitiligo and alopecia areata (“AA”) which have multi-billion dollar market sizes.
Item 1. Business Overview Forte Biosciences, Inc. and its subsidiaries ( www.fortebiorx.com ) (“Forte”, “we”, “our”) is a clinical-stage biopharmaceutical company whose lead product candidate, FB-102, is currently in a Phase 1 trial. FB-102 is a proprietary molecule with potentially broad autoimmune and autoimmune-related applications including in such indications as graft-versus-host disease (“GvHD”), vitiligo and alopecia areata (“AA”).
Various laws, regulations and executive orders also restrict the use and dissemination outside of the United States, or the sharing with certain non-U.S. nationals, of information classified for national security purposes, as well as certain products and technical data relating to those products.
Certain payments made in connection with clinical trials and other work have been deemed to be improper payments to government officials and have led to FCPA enforcement actions. 11 Various laws, regulations and executive orders also restrict the use and dissemination outside of the United States, or the sharing with certain non-U.S. nationals, of information classified for national security purposes, as well as certain products and technical data relating to those products.
Elimination of this cap may require pharmaceutical manufacturers to pay more in rebates than it receives on the sale of products, which could have a material impact on our business.
Under the American Rescue Plan Act of 2021, the statutory cap on Medicaid Drug Rebate Program rebates that manufacturers pay to state Medicaid programs was eliminated. Elimination of this cap may require pharmaceutical manufacturers to pay more in rebates than it receives on the sale of products, which could have a material impact on our business.
The impact of these regulations and any future healthcare measures and agency rules implemented by the Biden administration on us and the pharmaceutical industry as a whole is currently unknown. The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability, or commercialize our product candidates if approved.
The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability, or commercialize our product candidates if approved.
The global vitiligo treatment market size was estimated at $1.2 billion in 2018 and is projected to reach $1.9 billion by 2026 (Fortune Business Insights). AA is characterized by nonscarring, unpredictable and patchy hair loss generally on the scalp but also in other areas of the body as a result of immune cells attacking and damaging hair follicles.
The global vitiligo treatment market size was estimated at $1.2 billion in 2018 and is projected to reach $1.9 billion by 2026 (Fortune Business Insights). AA is a disease in which immune cells attack and damage hair follicles and is mediated primarily by CD8+ T cells and NK cells.
Additionally, appropriate packaging must be selected and tested, and stability studies must be conducted to demonstrate that the product candidates do not undergo unacceptable deterioration over their shelf life.
Additionally, appropriate packaging must be selected and tested, and stability studies must be conducted to demonstrate that the product candidates do not undergo unacceptable deterioration over their shelf life. FDA Review Process Following completion of the clinical trials, data are analyzed to assess whether the investigational product is safe and effective for the proposed indicated use or uses.
Competition 3 The biotechnology and pharmaceutical industries are characterized by rapidly advancing technologies, strong competition and an emphasis on proprietary products. We believe that the key competitive factors affecting the success of any product candidate will include efficacy, safety profile, method of administration, cost, level of promotional activity and intellectual property protection.
We believe that the key competitive factors affecting the success of any product candidate will include efficacy, safety profile, method of administration, cost, level of promotional activity and intellectual property protection. We face competition from many different sources, including commercial pharmaceutical and biotechnology enterprises, academic institutions, government agencies and private and public research institutions.
The failure to comply with any of these laws or regulatory requirements subjects firms to possible legal or regulatory action.
The distribution of pharmaceutical products is subject to additional requirements and regulations, including extensive record-keeping, licensing, storage and security requirements intended to prevent the unauthorized sale of pharmaceutical products. The failure to comply with any of these laws or regulatory requirements subjects firms to possible legal or regulatory action.
However, from time to time, we source critical raw materials and services from one or a limited number of suppliers with potentially long lead times or limited manufacturing and testing slot availability. There is a risk that if such supplies or services were interrupted, it could materially harm the manufacturing and preclinical development of FB-102.
These facilities and associated equipment are designed and operated to be consistent with all applicable laws and regulations. However, from time to time, we source critical raw materials and services from one or a limited number of suppliers with potentially long lead times or limited manufacturing and testing slot availability.
We face competition from many different sources, including commercial pharmaceutical and biotechnology enterprises, academic institutions, government agencies and private and public research institutions. Many of our competitors have significantly greater financial resources and expertise in research and development, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals and marketing approved products than we do.
Many of our competitors have significantly greater financial resources and expertise in research and development, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals and marketing approved products than we do. Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies.
Packaging and Distribution in the United States If Forte’s products are made available to authorized users of the Federal Supply Schedule of the General Services Administration, additional laws and requirements apply. Products must meet applicable child-resistant packaging requirements under the U.S. Poison Prevention Packaging Act.
The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability or commercialize our product candidates. Packaging and Distribution in the United States If Forte’s products are made available to authorized users of the Federal Supply Schedule of the General Services Administration, additional laws and requirements apply.
Manufacturing, sales, promotion and other activities also are potentially subject to federal and state consumer protection and unfair competition laws. 9 The distribution of pharmaceutical products is subject to additional requirements and regulations, including extensive record-keeping, licensing, storage and security requirements intended to prevent the unauthorized sale of pharmaceutical products.
Products must meet applicable child-resistant packaging requirements under the U.S. Poison Prevention Packaging Act. Manufacturing, sales, promotion and other activities also are potentially subject to federal and state consumer protection and unfair competition laws.
Removed
FB-102 is an antagonist of autoimmune disease pathways with the potential for a durable response. GvHD is a complication associated with allogeneic hematopoietic stem cell transplantation (HSCT) in which the transplanted cells initiate an immune response against the transplant recipient. . There are 2 main types of GvHD – acute GvHD and chronic GvHD.
Added
The Company’s FB-102 program aims to address key pathways implicated in these indications with a CD122 antagonist. CD122 is a subunit of IL-2/IL-15 receptors which are key regulators of NK cells and T cell subsets.
Removed
The severity of symptoms ranges from mild to fatal. Acute GvHD usually occurs within 100 days of a transplant. Symptoms of the acute GvHD affect the skin, GI tract or liver. Chronic GvHD symptoms can occur any time after a transplant, but usually start within 2 years.
Added
The primary objective of the Phase 1 trial is to assess the safety, tolerability and pharmacokinetics of single and multiple ascending doses of FB-102 under intravenous and subcutaneous administration. Three cohorts of single ascending doses were successfully completed in March 2024. Cohorts of multiple ascending doses have commenced.
Removed
Symptoms of chronic GvHD affect the skin, mouth, liver, lungs, GI tract, muscles or joints. There remains a significant unmet need for safe and effective therapies for GvHD. Chronic GvHD prevalence and severity has increased in recent decades as the use of HSCT has increased. Estimates range from 30% to 70% of patients who undergo allogeneic HSCT experience chronic GvHD.
Added
GvHD is a complication that may occur after an allogeneic transplant and is where donor's T-cells attack the patient's healthy cells . There are 2 main types of GvHD – acute GvHD and chronic GvHD. The severity of symptoms range from mild to fatal.
Removed
It is estimated that 10-15% of tissue transplants are rejected, and US 33,000 tissues transplants were performed in the US in 2020. The global GvHD treatment market size was estimated at $1.6 billion in 2021 and is projected to reach $2.8 billion by 2027.
Added
US prevalence of acute GvHD is estimated at approximately 5,000 cases and occurs in up to 50% of allogeneic stem cell transplant recipients. Onset of acute GvHD typically occurs within 3 months of transplant. Symptoms occur in the skin (rash), GI tract (vomiting, diarrhea) and liver (jaundice).
Removed
Vitiligo is characterized by the loss of melanocytes which are cells that produce skin pigmentation ​ and results in discolored patches appearing in the skin, hair and mucous membrane ​. Vitiligo is where natural killer cells (“NK cells”) and cytotoxic T lymphocytes (“CD8+”) attack melanocytes. Current treatments include black box warnings.
Added
US prevalence of chronic GvHD is estimated at approximately 14,000 cases and occurs in up to 40% of recipients. In addition to symptoms in the skin, GI tract and liver, chronic GvHD may also manifest itself in the lungs, mucosal surfaces (eyes, mouth, GU tract), muscle and joints (connective tissue).
Removed
There remains a significant unmet need for safe and effective therapies for vitiligo. It is estimated by the National Institutes of Health (“NIH”) that vitiligo affects 2 million people in the U.S with world- wide prevalence at 0.5% to 2% of the population.
Added
Vitiligo is a disease of the skin mediated primarily by NK and CD8+ T cells that attack melanocytes leading to patchy depigmentation of the skin. It is estimated that vitiligo affects 2 million people in the U.S (NIH).
Removed
Most individuals experience the onset of AA by the age of 40 and nearly half experience the onset by age 20. There remains a significant unmet need for safe and effective therapies for AA​. It is estimated by the NIH that AA affects 700,000 people in the US with moderate to severe at 300,000 people.
Added
The global alopecia treatment market was valued at $2.7 billion in 2018, and is projected to reach $3.9 billion by 2026, resulting in a CAGR of 4.6% from 2019 to 2026 (Allied Mkt Research)​. We had approximately $37.1 million in cash and cash equivalents as of December 31, 2023.
Removed
The global alopecia treatment market size was estimated at $2.7 billion in 2020 or 0.5% to 2% of the population and is projected to reach $4.9 billion by 2028. While JAK inhibitors have demonstrated efficacy in GvHD, vitiligo and AA, black box warnings have dampened enthusiasm for JAK inhibitors.
Added
On July 31, 2023, the Company issued 15,166,957 shares of the Company’s common stock at a purchase price of $1.006 per Share, and 9,689,293 pre-funded warrants to purchase shares of common stock at a purchase price of $1.005 per pre-funded warrant ("Private Placement").
Removed
As a result, there remains a significant unmet need for safe and effective therapies. FB-102 has potentially other autoimmune applications including celiac disease, eosinophilic esophagitis and Type 1 diabetes. Forte expects FB-102 to be in the clinic late 2023 or early 2024. We had $41.1 million in cash and cash equivalents as of December 31, 2022.
Added
The pre-funded warrants have an exercise price of $0.001 per share of common stock, are immediately exercisable and remain exercisable until exercised in full. The gross proceeds of the Private Placement were approximately $25 million and the Company incurred $272 thousand in issuance costs.
Removed
Intellectual Property In December 2017, Forte entered into an exclusive license agreement with the DHHS, as amended in May 2020.
Added
Certain executive officers, senior management, and board members of the Company participated in this Private Placement, purchasing approximately $1.16 million of shares of common stock at a purchase price of $1.01 per share. In connection with the Private Placement, the Company filed a registration statement on Form S-3 that was declared effective on September 8, 2023.
Removed
Under the agreement, the DHHS granted Forte an exclusive, sublicensable and worldwide license to certain rights in patents under which we may develop and commercialize pharmaceutical and biological compositions comprising Gram-negative bacteria for the topical treatment of dermatological diseases and conditions. The Company terminated its license agreement with DHHS effective April 2, 2022.
Added
In June 2021, Forte filed a shelf registration statement on Form S-3 that went effective in June 2021 which allowed Forte to raise up to $300 million in additional capital.
Removed
Since the start of the COVID-19 pandemic, FDA has issued various COVID-19 related guidance documents, including guidance on conducting clinical trials during the pandemic and on the good manufacturing practice considerations for responding to COVID-19 infection and other topics.
Added
On March 31, 2022, Forte entered into an “at-the-market” equity offering program (“ATM Facility”) whereby Forte may from time to time offer and sell shares of its common stock up to an aggregate offering price of $25.0 million during the term of the ATM Facility.
Removed
We may be required to make further adjustments to our clinical trials or business operations based on current or future guidance and regulatory requirements as a result of the COVID-19 pandemic. President Biden announced that the administration intends to end the COVID-19 national and public health emergencies on May 11, 2023.
Added
On April 1, 2022, Forte filed a prospectus supplement to the June 2021 Form S-3 for the offer and sale of the shares under the ATM Facility covering sales of up to $7.0 million of shares of common stock.
Removed
The full impact of the termination of the public health emergencies on FDA and other regulatory policies and operations are unclear. FDA Review Process Following completion of the clinical trials, data are analyzed to assess whether the investigational product is safe and effective for the proposed indicated use or uses.
Added
On August 12, 2022, Forte filed an additional prospectus supplement relating to offer and sell an additional $2.7 million of shares of common stock.
Removed
Under current legislation, the actual reduction in Medicare payments will vary from 1% in 2022 to up to 4% in the final fiscal year of this sequester.
Added
Forte is currently eligible to sell securities under Form S-3 only if and to the extent the aggregate market value of securities sold by Forte pursuant to General Instruction I.B.6 of Form S-3 during the twelve-month period immediately prior to, and including, the date of any such sale, does not exceed one-third of the aggregate market value of Forte’s common stock held by non-affiliates (as determined by General Instruction I.B.6 of Form S-3), and Forte will remain subject to such limitation for so long as the aggregate market value of Forte’s common stock held by non-affiliates is less than $75 million (as determined by General Instruction I.B.6 of Form S-3).
Removed
Under the American Rescue Plan Act of 2021, effective January 1, 2024, the statutory cap on Medicaid Drug Rebate Program rebates that manufacturers pay to state Medicaid programs will be eliminated.
Added
There is a risk that if such supplies or services were interrupted, it could materially harm the manufacturing and development of FB-102. Competition The biotechnology and pharmaceutical industries are characterized by rapidly advancing technologies, strong competition and an emphasis on proprietary products.
Removed
Certain payments made in connection with clinical trials and other work have been deemed to be improper payments to government officials and have led to FCPA enforcement actions.
Added
We also own two pending PCT applications, one pending application in Taiwan, one pending application in Argentina, and three pending US patent applications related to the FB-102 program. The estimated expiration dates of these patents are 2043-2044.
Added
Various industry stakeholders, including certain pharmaceutical companies and the Pharmaceutical Research and Manufacturers of America, have initiated lawsuits against the federal government asserting that the price negotiation provisions of the IRA are unconstitutional.
Added
The impact of these judicial challenges, legislative, executive, and administrative actions and any future healthcare measures and agency rules implemented by the government on us and the pharmaceutical industry as a whole is unclear.
Added
For example, FDA recently authorized the state of Florida to import certain prescription drugs from Canada for a period of two years to help 9 reduce drug costs, provided that Florida’s Agency for Health Care Administration meets the requirements set forth by the FDA. Other states may follow Florida.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

140 edited+52 added−19 removed439 unchanged
Biggest changeAs such, while the ATM Facility remains in place, it is not currently a source of additional funding for Forte and Forte remains restricted in its ability to access additional funding from the sale of securities under Form S-3.
Biggest changeAs such, while the ATM Facility remains in place, Forte remains restricted in its ability to access additional funding from the sale of securities under Form S-3. 17 In addition, in July 2023, the Company completed the Private Placement financing pursuant to which the Company sold (i) 15,166,957 shares of Common Stock, and (ii) 9,689,293 Pre-Funded Warrants to purchase Common Stock at a purchase price of $1.005 per Pre-Funded Warrant.
Forte anticipates that its expenses will increase substantially if, and as, it: • conducts preclinical studies and clinical trials for FB-102 and any future product candidates; • continues to discover and develop additional applications for FB-102 and any future product candidates; • maintains, expands and protects its intellectual property portfolio; 15 • hires or contracts additional clinical, scientific, manufacturing and commercial personnel to support its product development and commercialization efforts; • validates a manufacturing process and specifications for FB-102 and any future product candidates; • establishes in-house manufacturing capabilities; • establishes a commercial manufacturing source and secures supply chain capacity sufficient to provide clinical trial material and commercial quantities of any product candidate for which Forte may obtain regulatory approval; • acquires or in-licenses other product candidates and technologies; • seeks various regulatory approvals; • establishes a sales, marketing and distribution infrastructure to commercialize any product candidate for which Forte may obtain regulatory approval; and • adds operational, compliance, financial and management information systems and personnel to support being a public company.
Forte anticipates that its expenses will increase substantially if, and as, it: • conducts additional preclinical studies and clinical trials for FB-102 and any future product candidates; • continues to discover and develop additional applications for FB-102 and any future product candidates; 15 • maintains, expands and protects its intellectual property portfolio; • hires or contracts additional clinical, scientific, manufacturing and commercial personnel to support its product development and commercialization efforts; • validates a manufacturing process and specifications for FB-102 and any future product candidates; • establishes in-house manufacturing capabilities; • establishes a commercial manufacturing source and secures supply chain capacity sufficient to provide clinical trial material and commercial quantities of any product candidate for which Forte may obtain regulatory approval; • acquires or in-licenses other product candidates and technologies; • seeks various regulatory approvals; • establishes a sales, marketing and distribution infrastructure to commercialize any product candidate for which Forte may obtain regulatory approval; and • adds operational, compliance, financial and management information systems and personnel to support being a public company.
Forte may seek regulatory approval of its product candidate outside of the United States and, if so, Forte expects that it will be subject to additional risks related to operating in foreign countries if Forte obtains the necessary approvals, including: • differing regulatory requirements in foreign countries; • unexpected changes in tariffs, trade barriers, price and exchange controls, import or export controls, and other regulatory requirements; • economic weakness, including inflation, or political instability in particular foreign economies and markets; • compliance with tax, employment, immigration and labor laws for employees living or traveling abroad; • foreign taxes, including withholding of payroll taxes; • foreign currency fluctuations, which could result in increased operating expenses and reduced revenue, and other obligations incident to doing business in another country; • difficulties staffing and managing foreign operations; • workforce uncertainty in countries where labor unrest is more common than in the United States; • potential liability under the Foreign Corrupt Practices Act (“FCPA”), or comparable foreign regulations; • challenges enforcing its contractual and intellectual property rights, especially in those foreign countries that do not respect and protect intellectual property rights to the same extent as the United States; • production shortages resulting from any events affecting raw material supply or manufacturing capabilities abroad; and • business interruptions resulting from geo-political actions, including war, terrorism and public health crises, such as COVID-19 and its variants.
Forte may seek regulatory approval of its product candidate outside of the United States and, if so, Forte expects that it will be subject to additional risks related to operating in foreign countries if Forte obtains the necessary approvals, including: • differing regulatory requirements in foreign countries; 25 • unexpected changes in tariffs, trade barriers, price and exchange controls, import or export controls, and other regulatory requirements; • economic weakness, including inflation, or political instability in particular foreign economies and markets; • compliance with tax, employment, immigration and labor laws for employees living or traveling abroad; • foreign taxes, including withholding of payroll taxes; • foreign currency fluctuations, which could result in increased operating expenses and reduced revenue, and other obligations incident to doing business in another country; • difficulties staffing and managing foreign operations; • workforce uncertainty in countries where labor unrest is more common than in the United States; • potential liability under the Foreign Corrupt Practices Act (“FCPA”), or comparable foreign regulations; • challenges enforcing its contractual and intellectual property rights, especially in those foreign countries that do not respect and protect intellectual property rights to the same extent as the United States; • production shortages resulting from any events affecting raw material supply or manufacturing capabilities abroad; and • business interruptions resulting from geo-political actions, including war, terrorism and public health crises, such as COVID-19 and its variants.
Relationships Forte enters into may pose a number of risks, including the following: • third parties have, and future third-party collaborators may have, significant discretion in determining the efforts and resources that they will apply; • current and future third parties may not perform their obligations as expected; • current and future third parties may not pursue development and commercialization of any product candidate that achieve regulatory approval or may elect not to continue or renew development or commercialization programs based on clinical trial results, changes in the third parties’ strategic focus or available funding, or external factors, such as a strategic merger that may divert resources or create competing priorities; • third parties 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; • current and future third parties could independently develop, or develop with third parties, products that compete directly or indirectly with Forte’s products and product candidate if the third parties believe that the competitive products are more likely to be successfully developed or can be commercialized under terms that are more economically attractive than ours; • product candidates discovered in collaboration with Forte may be viewed by its current or future third parties as competitive with their own product candidate or products, which may cause such third parties to cease to devote resources to the commercialization of its product candidate; • current and future third parties may fail to comply with applicable regulatory requirements regarding the development, manufacture, distribution or marketing of a product candidate or product; • current and future third parties with marketing and distribution rights to one or more of Forte’s product candidates that achieve regulatory approval may not commit sufficient resources to the marketing and distribution of such product or products; • disagreements with current or future third parties, including disagreements over proprietary rights, contract interpretation or the preferred course of development, might cause delays or terminations of the research, development or commercialization of product candidate, might lead to additional responsibilities for Forte with respect to product candidate, or might result in litigation or arbitration, any of which would be time-consuming and expensive; 47 • current and future third parties may not properly maintain or defend its intellectual property rights or may use its proprietary information in such a way as to invite litigation that could jeopardize or invalidate its intellectual property or proprietary information or expose Forte to potential litigation; • current and future third parties may infringe the intellectual property rights of third parties, which may expose Forte to litigation and potential liability; • if a current or future third parties of ours is involved in a business combination, the collaborator might deemphasize or terminate the development or commercialization of any product candidate licensed to it by Forte; and • current and future relationships may be terminated by the collaborator, and, if terminated, Forte could be required to raise additional capital to pursue further development or commercialization of the applicable product candidate.
Relationships Forte enters into may pose a number of risks, including the following: • third parties have, and future third-party collaborators may have, significant discretion in determining the efforts and resources that they will apply; • current and future third parties may not perform their obligations as expected; • current and future third parties may not pursue development and commercialization of any product candidate that achieve regulatory approval or may elect not to continue or renew development or commercialization programs based on clinical trial results, changes in the third parties’ strategic focus or available funding, or external factors, such as a strategic merger that may divert resources or create competing priorities; • third parties 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; • current and future third parties could independently develop, or develop with third parties, products that compete directly or indirectly with Forte’s products and product candidate if the third parties believe that the competitive products are more likely to be successfully developed or can be commercialized under terms that are more economically attractive than ours; • product candidates discovered in collaboration with Forte may be viewed by its current or future third parties as competitive with their own product candidate or products, which may cause such third parties to cease to devote resources to the commercialization of its product candidate; • current and future third parties may fail to comply with applicable regulatory requirements regarding the development, manufacture, distribution or marketing of a product candidate or product; 46 • current and future third parties with marketing and distribution rights to one or more of Forte’s product candidates that achieve regulatory approval may not commit sufficient resources to the marketing and distribution of such product or products; • disagreements with current or future third parties, including disagreements over proprietary rights, contract interpretation or the preferred course of development, might cause delays or terminations of the research, development or commercialization of product candidate, might lead to additional responsibilities for Forte with respect to product candidate, or might result in litigation or arbitration, any of which would be time-consuming and expensive; • current and future third parties may not properly maintain or defend its intellectual property rights or may use its proprietary information in such a way as to invite litigation that could jeopardize or invalidate its intellectual property or proprietary information or expose Forte to potential litigation; • current and future third parties may infringe the intellectual property rights of third parties, which may expose Forte to litigation and potential liability; • if a current or future third parties of ours is involved in a business combination, the collaborator might deemphasize or terminate the development or commercialization of any product candidate licensed to it by Forte; and • current and future relationships may be terminated by the collaborator, and, if terminated, Forte could be required to raise additional capital to pursue further development or commercialization of the applicable product candidate.
There are a number of statutory exceptions and regulatory safe harbors protecting some common activities from prosecution, but the exceptions and safe harbors are drawn narrowly and require strict compliance in order to offer protection; • federal civil and criminal false claims laws, including the FCA, and civil monetary penalty laws, which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, false or fraudulent claims for payment to, or approval by Medicare, Medicaid, or other federal healthcare programs, knowingly making, using or causing to be made or used a false record or statement material to a false or fraudulent claim or an obligation to pay or transmit money to the federal government, or knowingly concealing or knowingly and improperly avoiding or decreasing or concealing an obligation to pay money to the federal government.
There are a number of statutory exceptions and regulatory safe harbors protecting some common activities from prosecution, but the exceptions and safe harbors are drawn narrowly and require strict compliance in order to offer protection; • federal civil and criminal false claims laws, including the FCA, and civil monetary penalty laws, which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, false or fraudulent claims for payment to, or approval by Medicare, Medicaid, or other federal healthcare programs, knowingly making, using or causing to be made or used a false record or statement material to a false or fraudulent claim or an obligation to pay or 29 transmit money to the federal government, or knowingly concealing or knowingly and improperly avoiding or decreasing or concealing an obligation to pay money to the federal government.
The degree of market acceptance of any of Forte’s product candidates, if approved for commercial sale, will depend on a number of factors, including: • efficacy, safety and potential advantages compared to alternative treatments; • the labeled uses or limitations for use, including age limitations or contraindications, for its product candidate compared to alternative treatments; • convenience and ease of administration compared to alternative treatments; • the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies; • public perception of new therapies; • the strength of marketing and distribution support; • the ability to offer its products, if approved, for sale at competitive prices; • the ability to obtain sufficient third-party insurance coverage and adequate reimbursement; and 23 • the prevalence and severity of any side effects.
The degree of market acceptance of any of Forte’s product candidates, if approved for commercial sale, will depend on a number of factors, including: • efficacy, safety and potential advantages compared to alternative treatments; • the labeled uses or limitations for use, including age limitations or contraindications, for its product candidate compared to alternative treatments; • convenience and ease of administration compared to alternative treatments; • the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies; • public perception of new therapies; • the strength of marketing and distribution support; • the ability to offer its products, if approved, for sale at competitive prices; • the ability to obtain sufficient third-party insurance coverage and adequate reimbursement; and • the prevalence and severity of any side effects.
Forte may be unable to successfully develop, obtain regulatory approval for and commercialize any product candidates. • Interim top-line and preliminary data from future clinical trials that Forte announces or publishes from time to time may change as more patient data become available and are subject to audit and verification procedures that could result in material changes in the final data. • The market opportunities for FB-102 may be limited and Forte’s estimates of the incidence and prevalence of its target patient populations may be inaccurate. 13 • Forte is very early in its development efforts.
Forte may be unable to successfully develop, obtain regulatory approval for and commercialize any product candidates. • Interim top-line and preliminary data from future clinical trials that Forte announces or publishes from time to time may change as more patient data become available and are subject to audit and verification procedures that could result in material changes in the final data. • The market opportunities for FB-102 may be limited and Forte’s estimates of the incidence and prevalence of its target patient populations may be inaccurate. • Forte is very early in its development efforts.
Forte’s future funding requirements, both near and long-term, will depend on many factors, including, but not limited to: • the initiation, progress, timing, costs and results of preclinical studies and clinical trials for FB-102 and any future product candidates and any need to conduct additional such studies as may be required by a regulator; • the clinical development plans Forte establishes for FB-102 and any future product candidates; • the terms of any collaboration agreements Forte may choose to initiate or conclude; 16 • the outcome, timing and cost of meeting regulatory requirements established by the U.S.
Forte’s future funding requirements, both near and long-term, will depend on many factors, including, but not limited to: • the initiation, progress, timing, costs and results of additional preclinical studies and clinical trials for FB-102 and any future product candidates and any need to conduct additional such studies as may be required by a regulator; • the clinical development plans Forte establishes for FB-102 and any future product candidates; • the terms of any collaboration agreements Forte may choose to initiate or conclude; • the outcome, timing and cost of meeting regulatory requirements established by the U.S.
Forte is currently eligible to sell securities under Form S-3 only if and to the extent the aggregate market value of securities sold by Forte pursuant to General Instruction I.B.6 of Form S-3 during the twelve-month period immediately prior to, and including, the date of any such sale, does not exceed one-third of the aggregate market value of Forte’s common stock held by non-affiliates (as determined by General Instruction I.B.6 of Form S-3), and Forte will remain subject to such limitation for so long as the aggregate market value of Forte’s common stock held by non-affiliates is less than $75 million (as determined by General Instruction I.B.6 of 17 Form S-3).
Forte is currently eligible to sell securities under Form S-3 only if and to the extent the aggregate market value of securities sold by Forte pursuant to General Instruction I.B.6 of Form S-3 during the twelve-month period immediately prior to, and including, the date of any such sale, does not exceed one-third of the aggregate market value of Forte’s common stock held by non-affiliates (as determined by General Instruction I.B.6 of Form S-3), and Forte will remain subject to such limitation for so long as the aggregate market value of Forte’s common stock held by non-affiliates is less than $75 million (as determined by General Instruction I.B.6 of Form S-3).
Forte may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of any product candidate. • Forte’s planned preclinical studies or future clinical trials or those of its future collaborators may reveal significant adverse events and may result in a safety profile that could inhibit regulatory approval or market acceptance of any of its product candidates. • Positive results from early preclinical studies are not necessarily predictive of the results of any future clinical trials of product candidates.
Forte may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of any product candidate. 13 • Forte’s planned preclinical studies or future clinical trials or those of its future collaborators may reveal significant adverse events and may result in a safety profile that could inhibit regulatory approval or market acceptance of any of its product candidates. • Positive results from early preclinical and clinical studies are not necessarily predictive of the results of any future clinical trials of product candidates.
Even if we are able to establish agreements with third-party manufacturers, reliance on third-party manufacturers entails additional risks, including: • the failure of the third party to manufacture our product candidates according to our schedule and specifications, or at all, including if our third-party contractors give greater priority to the supply of other products over our product candidates or otherwise do not satisfactorily perform according to the terms of the agreements between us and them; • the reduction or termination of production or deliveries by suppliers, or the raising or prices or renegotiation of terms; • the termination or nonrenewal of arrangements or agreements by our third-party contractors at a time that is costly or inconvenient for us; • the breach by the third-party contractors of our agreements with them; • the failure of third-party contractors to comply with applicable regulatory requirements, including cGMPs; • the breach by the third-party contractors of our agreements with them; • the failure of the third party to manufacture our product candidates according to our specifications; • the mislabeling of clinical supplies, potentially resulting in the wrong dose amounts being supplied or active drug or placebo not being properly identified; 46 • clinical supplies not being delivered to clinical sites on time, leading to clinical trial interruptions, or of drug supplies not being distributed to commercial vendors in a timely manner, resulting in lost sales; and • the misappropriation of our proprietary information, including our trade secrets and know-how.
Even if we are able to establish agreements with third-party manufacturers, reliance on third-party manufacturers entails additional risks, including: • the failure of the third party to manufacture our product candidates according to our schedule and specifications, or at all, including if our third-party contractors give greater priority to the supply of other products over our product candidates or otherwise do not satisfactorily perform according to the terms of the agreements between us and them; • the reduction or termination of production or deliveries by suppliers, or the raising or prices or renegotiation of terms; • the termination or nonrenewal of arrangements or agreements by our third-party contractors at a time that is costly or inconvenient for us; • the breach by the third-party contractors of our agreements with them; 45 • the failure of third-party contractors to comply with applicable regulatory requirements, including cGMPs; • the breach by the third-party contractors of our agreements with them; • the failure of the third party to manufacture our product candidates according to our specifications; • the mislabeling of clinical supplies, potentially resulting in the wrong dose amounts being supplied or active drug or placebo not being properly identified; • clinical supplies not being delivered to clinical sites on time, leading to clinical trial interruptions, or of drug supplies not being distributed to commercial vendors in a timely manner, resulting in lost sales; and • the misappropriation of our proprietary information, including our trade secrets and know-how.
Misconduct by these parties could include intentional, reckless and/or negligent conduct that fails to comply with the laws of the FDA and other similar foreign regulatory bodies, provide true, complete and accurate 25 information to the FDA and other similar foreign regulatory bodies, comply with manufacturing standards Forte has established, comply with healthcare fraud and abuse laws in the United States and similar foreign fraudulent misconduct laws or report financial information or data accurately or to disclose unauthorized activities to us.
Misconduct by these parties could include intentional, reckless and/or negligent conduct that fails to comply with the laws of the FDA and other similar foreign regulatory bodies, provide true, complete and accurate information to the FDA and other similar foreign regulatory bodies, comply with manufacturing standards Forte has established, comply with healthcare fraud and abuse laws in the United States and similar foreign fraudulent misconduct laws or report financial information or data accurately or to disclose unauthorized activities to us.
An adverse result in any litigation proceeding could put one or more of its owned future patents at risk of being invalidated or interpreted narrowly. Even if Forte establishes infringement, the court may decide not to grant an injunction against further infringing activity and instead award only monetary damages, which may or may not be an adequate remedy.
An adverse result in any litigation proceeding could put one or more of its owned future patents at risk of being invalidated or interpreted narrowly. Even if Forte establishes infringement, the court may decide not to grant an 43 injunction against further infringing activity and instead award only monetary damages, which may or may not be an adequate remedy.
In the event that any third-party claims that Forte infringes their patents or that Forte is otherwise employing their proprietary technology without authorization and initiates litigation against us, even if Forte believes such claims are without merit, a court of competent jurisdiction could hold that such patents are valid, enforceable and 43 infringed by Forte’s product candidates or other technologies.
In the event that any third-party claims that Forte infringes their patents or that Forte is otherwise employing their proprietary technology without authorization and initiates litigation against us, even if Forte believes such claims are without merit, a court of competent jurisdiction could hold that such patents are valid, enforceable and infringed by Forte’s product candidates or other technologies.
Moreover, because of the extensive time required for development, testing and regulatory review of a potential product, it is possible that, before any particular product candidate can be commercialized, any related patent that may issue to Forte may expire or remain in force for only a short period following commercialization, thereby reducing any advantage of the patent.
Moreover, because of the extensive time required for development, testing and 36 regulatory review of a potential product, it is possible that, before any particular product candidate can be commercialized, any related patent that may issue to Forte may expire or remain in force for only a short period following commercialization, thereby reducing any advantage of the patent.
Termination of these agreements could cause Forte to lose the rights to certain patents or other intellectual property, or the underlying patents could fail to provide the intended exclusivity, and competitors or other third parties may have the freedom to seek 38 regulatory approval of, and to market, products similar to or identical to ours and we may be required to cease our development and commercialization of certain of our product candidates.
Termination of these agreements could cause Forte to lose the rights to certain patents or other intellectual property, or the underlying patents could fail to provide the intended exclusivity, and competitors or other third parties may have the freedom to seek regulatory approval of, and to market, products similar to or identical to ours and we may be required to cease our development and commercialization of certain of our product candidates.
Any action for violation of these laws, even if successfully defended, could cause a pharmaceutical manufacturer to incur significant legal expenses and divert management’s attention from the operation of the business. Prohibitions or restrictions on sales or withdrawal of future marketed products could materially affect business in an adverse way.
Any action for violation of these laws, even if successfully defended, could cause a pharmaceutical 30 manufacturer to incur significant legal expenses and divert management’s attention from the operation of the business. Prohibitions or restrictions on sales or withdrawal of future marketed products could materially affect business in an adverse way.
Some of the factors that may cause the market price of Forte’s common stock to fluctuate include: • any strategic decisions that Forte pursues or announces, including Forte’s decision to focus on the development of FB-102; • Forte’s ability to obtain regulatory approvals for any product candidates it develops, and delays or failures to obtain such approvals; • failure of any of Forte’s product candidates, if approved, to achieve commercial success; 48 • Forte’s failure to maintain its existing third-party license and supply agreements; • failure by Forte or its licensors to prosecute, maintain, or enforce its intellectual property rights; • changes in laws or regulations applicable to product candidates Forte develops; • any inability to obtain adequate supply of any product candidates Forte develops or the inability to do so at acceptable prices; • adverse regulatory authority decisions; • introduction of new products, services or technologies by Forte’s competitors; • failure to meet or exceed financial and development projections Forte may provide to the public; • failure to meet or exceed the financial and development projections of the investment community; • the perception of the pharmaceutical industry by the public, legislatures, regulators and the investment community; • announcements of significant acquisitions, strategic collaborations, joint ventures or capital commitments by Forte or its competitors; • disputes or other developments relating to proprietary rights, including patents, litigation matters, and Forte’s ability to obtain patent protection for its technologies; • additions or departures of key personnel; • significant lawsuits, including patent or stockholder litigation; • claims or litigation related to the Rights Plan; • if securities or industry analysts do not publish research or reports about Forte’s business, or if they issue an adverse or misleading opinion regarding its business and stock; • changes in the market valuations of similar companies; • general market or macroeconomic conditions; • sales of Forte’s common stock by Forte or its stockholders in the future; • trading volume of Forte’s common stock; • announcements by commercial partners or competitors of new commercial products, clinical progress or the lack thereof, significant contracts, commercial relationships or capital commitments; • adverse publicity generally, including with respect to other products and potential products in such markets; • the introduction of technological innovations or new therapies that compete with potential products of Forte; • changes in the structure of health care payment systems; and • period-to-period fluctuations in Forte’s financial results.
Some of the factors that may cause the market price of Forte’s common stock to fluctuate include: • any strategic decisions that Forte pursues or announces, including Forte’s decision to focus on the development of FB-102; • Forte’s ability to obtain regulatory approvals for any product candidates it develops, and delays or failures to obtain such approvals; • failure of any of Forte’s product candidates, if approved, to achieve commercial success; • Forte’s failure to maintain its existing third-party license and supply agreements; • failure by Forte or its licensors to prosecute, maintain, or enforce its intellectual property rights; • changes in laws or regulations applicable to product candidates Forte develops; • any inability to obtain adequate supply of any product candidates Forte develops or the inability to do so at acceptable prices; • adverse regulatory authority decisions; • introduction of new products, services or technologies by Forte’s competitors; • failure to meet or exceed financial and development projections Forte may provide to the public; • failure to meet or exceed the financial and development projections of the investment community; • the perception of the pharmaceutical industry by the public, legislatures, regulators and the investment community; • announcements of significant acquisitions, strategic collaborations, joint ventures or capital commitments by Forte or its competitors; • disputes or other developments relating to proprietary rights, including patents, litigation matters, and Forte’s ability to obtain patent protection for its technologies; 48 • additions or departures of key personnel; • significant lawsuits, including patent or stockholder litigation; • claims or litigation related to the Rights Plan; • if securities or industry analysts do not publish research or reports about Forte’s business, or if they issue an adverse or misleading opinion regarding its business and stock; • changes in the market valuations of similar companies; • general market or macroeconomic conditions; • the ability for Forte’s common stock to continue to be listed on Nasdaq; • sales of Forte’s common stock by Forte or its stockholders in the future; • trading volume of Forte’s common stock; • announcements by commercial partners or competitors of new commercial products, clinical progress or the lack thereof, significant contracts, commercial relationships or capital commitments; • adverse publicity generally, including with respect to other products and potential products in such markets; • the introduction of technological innovations or new therapies that compete with potential products of Forte; • changes in the structure of health care payment systems; and • period-to-period fluctuations in Forte’s financial results.
Such changes may include changes in: • FDA regulations; • laws related to product candidate labeling; • advertising and marketing laws and practices; • laws and programs restricting the sale and advertising of certain products; • increased regulatory scrutiny of, and increased litigation involving, product claims and concerns regarding the actual or possible effects or side effects of its product candidate; and • state and federal consumer protection and disclosure laws.
Such changes may include changes in: • FDA regulations; • laws related to product candidate labeling; • advertising and marketing laws and practices; • laws and programs restricting the sale and advertising of certain products; 28 • increased regulatory scrutiny of, and increased litigation involving, product claims and concerns regarding the actual or possible effects or side effects of its product candidate; and • state and federal consumer protection and disclosure laws.
Any delays in its future clinical development programs may harm its business, financial condition and prospects significantly. Forte’s planned preclinical studies or future clinical trials or those of its future collaborators may reveal significant adverse events and may result in a safety profile that could inhibit regulatory approval or market acceptance of any of its product candidates.
Any delays in its future clinical development programs may harm its business, financial condition and prospects significantly. Forte’s planned additional preclinical studies or future clinical trials or those of its future collaborators may reveal significant adverse events and may result in a safety profile that could inhibit regulatory approval or market acceptance of any of its product candidates.
Such claims could have a material adverse effect on Forte’s business, financial condition, results of operations, and prospects. 42 Third-party claims of intellectual property infringement, misappropriation or other violation against Forte or its collaborators may prevent or delay the development and commercialization of any product candidates Forte develops and other technologies.
Such claims could have a material adverse effect on Forte’s business, financial condition, results of operations, and prospects. Third-party claims of intellectual property infringement, misappropriation or other violation against Forte or its collaborators may prevent or delay the development and commercialization of any product candidates Forte develops and other technologies.
As such, we monitor third party patents in the fields in which Forte is developing its product candidate. In addition, because patent applications can take many years to issue, there may be currently pending patent applications that may later result in issued patents that future Forte product candidates or other technologies may infringe.
As such, we monitor third-party patents in the fields in which Forte is developing its product candidate. In addition, because patent applications can take many years to issue, there may be currently 42 pending patent applications that may later result in issued patents that future Forte product candidates or other technologies may infringe.
The third parties we rely on for these services may also have relationships with other entities, some of which may be our competitors, for whom they may also be conducting clinical trials or other drug development activities, which could affect their performance on our behalf. Some of these third parties may terminate their engagements with us at any time.
The third parties we rely on for these services may also have relationships with other entities, some of 44 which may be our competitors, for whom they may also be conducting clinical trials or other drug development activities, which could affect their performance on our behalf. Some of these third parties may terminate their engagements with us at any time.
The success of FB-102 will depend on several factors, including the following: • successful completion of preclinical studies; • successful enrollment in, and completion of, clinical trials; • receipt of regulatory approvals from applicable regulatory authorities for FB-102; • establishing cGMP-compliant clinical supply and commercial manufacturing operations or making arrangements with third-party manufacturers for clinical supply and commercial manufacturing; • obtaining and maintaining patent and trade secret protection or regulatory exclusivity for FB-102; • launching commercial sales of FB-102, if and when approved or allowed for marketing, whether alone or in collaboration with others; • acceptance of FB-102, if and when approved, by patients, the medical community and third-party payors; • obtaining and maintaining third-party insurance coverage and adequate reimbursement; • enforcing and defending intellectual property rights and claims; 28 • the marketing of FB-102; and • maintaining a continued acceptable safety profile of FB-102 following approval or commercialization.
The success of FB-102 will depend on several factors, including the following: • successful completion of additional preclinical and clinical studies; • successful enrollment in, and completion of, clinical trials; • receipt of regulatory approvals from applicable regulatory authorities for FB-102; • establishing cGMP-compliant clinical supply and commercial manufacturing operations or making arrangements with third-party manufacturers for clinical supply and commercial manufacturing; • obtaining and maintaining patent and trade secret protection or regulatory exclusivity for FB-102; • launching commercial sales of FB-102, if and when approved or allowed for marketing, whether alone or in collaboration with others; • acceptance of FB-102, if and when approved, by patients, the medical community and third-party payors; • obtaining and maintaining third-party insurance coverage and adequate reimbursement; • enforcing and defending intellectual property rights and claims; • the marketing of FB-102; and • maintaining a continued acceptable safety profile of FB-102 following approval or commercialization.
This will require Forte to be successful in a range of challenging activities, including completing preclinical studies and clinical trials, obtaining marketing approval for FB-102 or any future product candidates, manufacturing, marketing and selling products for which Forte may obtain marketing approval and satisfying any post-marketing requirements.
This will require Forte to be successful in a range of challenging activities, including completing additional preclinical studies and clinical trials, obtaining marketing approval for FB-102 or any future product candidates, manufacturing, marketing and selling products for which Forte may obtain marketing approval and satisfying any post-marketing requirements.
If a court were to find the choice of forum provision contained in the bylaws to be inapplicable or unenforceable in an action, Forte may incur additional costs associated with resolving such action in other jurisdictions. Forte does not anticipate paying any cash dividends in the foreseeable future.
If a court were 50 to find the choice of forum provision contained in the bylaws to be inapplicable or unenforceable in an action, Forte may incur additional costs associated with resolving such action in other jurisdictions. Forte does not anticipate paying any cash dividends in the foreseeable future.
Forte cannot be certain, however, that the claims in its future patent applications covering the composition of matter of any product candidates will be considered patentable by the United States Patent and Trademark Office (“USPTO”), or by patent offices in foreign 36 countries, or that the claims in any of its issued patents will be considered valid and enforceable by courts in the United States or foreign countries.
Forte cannot be certain, however, that the claims in its future patent applications covering the composition of matter of any product candidates will be considered patentable by the United States Patent and Trademark Office (“USPTO”), or by patent offices in foreign countries, or that the claims in any of its issued patents will be considered valid and enforceable by courts in the United States or foreign countries.
Forte may be subject to a third party preissuance submission of prior art to the USPTO or to foreign patent authorities or become involved in opposition, derivation, 37 revocation, reexamination, post-grant and inter partes review, or interference proceedings or other similar proceedings challenging future patent rights.
Forte may be subject to a third party preissuance submission of prior art to the USPTO or to foreign patent authorities or become involved in opposition, derivation, revocation, reexamination, post-grant and inter partes review, or interference proceedings or other similar proceedings challenging future patent rights.
Many countries have compulsory licensing laws under which a patent owner may be compelled to grant licenses to third parties. In addition, many countries limit the enforceability of patents against government agencies or government contractors. In these countries, the patent owner may have limited remedies, which could materially diminish the value of such patent.
Many countries have compulsory licensing laws under which a patent owner may be compelled to grant licenses to third parties. In addition, many countries limit the enforceability of patents against government agencies or government contractors. In these 38 countries, the patent owner may have limited remedies, which could materially diminish the value of such patent.
If Forte is unable to protect the confidentiality of its trade secrets, its business and competitive position would be harmed. 41 In addition to seeking patents for its product candidate and other technologies, Forte also relies on trade secrets and confidentiality agreements to protect its unpatented know-how, technology, and other proprietary information and to maintain its competitive position.
If Forte is unable to protect the confidentiality of its trade secrets, its business and competitive position would be harmed. In addition to seeking patents for its product candidate and other technologies, Forte also relies on trade secrets and confidentiality agreements to protect its unpatented know-how, technology, and other proprietary information and to maintain its competitive position.
Loss of access to these facilities may result in increased costs, delays in the development of its product candidate or interruption of its business operations. Any natural 24 disasters could further disrupt its operations and have a material and adverse effect on its business, financial condition, results of operations and prospects.
Loss of access to these facilities may result in increased costs, delays in the development of its product candidate or interruption of its business operations. Any natural disasters could further disrupt its operations and have a material and adverse effect on its business, financial condition, results of operations and prospects.
Undesirable side effects caused by any of its product candidates could cause Forte to interrupt, delay or halt preclinical studies or could cause Forte or regulatory authorities to interrupt, delay or halt clinical trials and could result in a more restrictive clinical label or the delay or denial of regulatory approval by the FDA or other regulatory authorities for its product candidate.
Undesirable side effects caused by any of its product candidates could cause Forte to interrupt, delay or halt additional preclinical studies or could cause Forte or regulatory authorities to interrupt, delay or halt clinical trials and could result in a more restrictive clinical label or the delay or denial of regulatory approval by the FDA or other regulatory authorities for its product candidate.
If any of its scientific advisors, employees, contractors and consultants who are parties to these agreements breaches or violates the terms of any of these agreements, Forte may not have adequate remedies for any such breach or violation, and Forte could lose its trade secrets as a result.
If any of its scientific advisors, employees, contractors and consultants who are parties to 41 these agreements breaches or violates the terms of any of these agreements, Forte may not have adequate remedies for any such breach or violation, and Forte could lose its trade secrets as a result.
Securing regulatory approval requires the submission of extensive preclinical and clinical data and supporting information to the various regulatory authorities for each therapeutic indication to establish the drug candidate’s safety, efficacy, purity, and potency. Securing regulatory approval also requires the submission of information about the drug manufacturing process to, and inspection of manufacturing facilities by, the relevant regulatory authority.
Securing regulatory approval requires the submission of extensive preclinical and 31 clinical data and supporting information to the various regulatory authorities for each therapeutic indication to establish the drug candidate’s safety, efficacy, purity, and potency. Securing regulatory approval also requires the submission of information about the drug manufacturing process to, and inspection of manufacturing facilities by, the relevant regulatory authority.
The field of therapeutics targeting autoimmune diseases is competitive and dynamic. Due to the focused research and development that is taking place by several companies, including Forte and its competitors, in this field, the intellectual property landscape is in flux, and it may remain uncertain in the future.
The field of therapeutics targeting autoimmune and autoimmune-related diseases is competitive and dynamic. Due to the focused research and development that is taking place by several companies, including Forte and its competitors, in this field, the intellectual property landscape is in flux, and it may remain uncertain in the future.
In addition, there is a risk that one or more of our current service providers, manufacturers and other partners may not survive an economic downturn, which could directly affect our ability to attain our operating goals on schedule and on budget.
In addition, there is a risk that one or more of our current service providers, manufacturers and 49 other partners may not survive an economic downturn, which could directly affect our ability to attain our operating goals on schedule and on budget.
The company will have broad discretion in the use of proceeds from any capital raising efforts, including private placement financings, and may invest or spend the proceeds in ways with which its stockholders do not agree and in ways that may not increase the value of their investments.
The company will have broad discretion in the use of proceeds from any capital raising efforts, including the Private Placement and any future private placement financings, and may invest or spend the proceeds in ways with which its stockholders do not agree and in ways that may not increase the value of their investments.
Forte has and will continue to have broad discretion over the use of proceeds from any capital raising efforts, including private placement financings and public offerings completed in 2020 and an “at-the-market” equity offering program commenced in 2022.
Forte has and will continue to have broad discretion over the use of proceeds from any capital raising efforts, including private placement financings and public offerings completed in 2020 and 2023 and an “at the market” equity offering program commenced in 2022.
Forte's future issued patents covering product candidates Forte develops could be found invalid or unenforceable if challenged in court or before administrative bodies in the United States or abroad. 40 In patent litigation in the United States, defendant counterclaims alleging invalidity or unenforceability are commonplace.
Forte's future issued patents covering product candidates Forte develops could be found invalid or unenforceable if challenged in court or before administrative bodies in the United States or abroad. In patent litigation in the United States, defendant counterclaims alleging invalidity or unenforceability are commonplace.
Nevertheless, we are responsible for ensuring that each of our studies and trials is conducted in accordance with 45 applicable protocol, legal and regulatory requirements and scientific standards, and our reliance on third parties does not relieve us of our regulatory responsibilities.
Nevertheless, we are responsible for ensuring that each of our studies and trials is conducted in accordance with applicable protocol, legal and regulatory requirements and scientific standards, and our reliance on third parties does not relieve us of our regulatory responsibilities.
The Rights Plan may make it more difficult or discourage a merger, amalgamation, arrangement, take-over bid, tender or exchange offer or other business combination involving the Company 50 that is not approved by the board of directors.
The Rights Plan may make it more difficult or discourage a merger, amalgamation, arrangement, take-over bid, tender or exchange offer or other business combination involving the Company that is not approved by the board of directors.
Moreover, preclinical and clinical data are often susceptible to varying interpretations and analyses and many companies that believed their product candidate performed satisfactorily in preclinical studies and clinical trials nonetheless failed to obtain FDA or similar regulatory approval.
Moreover, preclinical and clinical data are often susceptible to varying 21 interpretations and analyses and many companies that believed their product candidate performed satisfactorily in preclinical studies and clinical trials nonetheless failed to obtain FDA or similar regulatory approval.
The FDA and comparable authorities 32 in other countries have substantial discretion in the approval process and may refuse to accept any application or may decide that its data are insufficient for approval and require additional preclinical, clinical or other studies.
The FDA and comparable authorities in other countries have substantial discretion in the approval process and may refuse to accept any application or may decide that its data are insufficient for approval and require additional preclinical, clinical or other studies.
If Forte is forced to 39 grant a license to third parties with respect to any future patents relevant to its business, its competitive position may be impaired, and its business, financial condition, results of operations, and prospects may be adversely affected.
If Forte is forced to grant a license to third parties with respect to any future patents relevant to its business, its competitive position may be impaired, and its business, financial condition, results of operations, and prospects may be adversely affected.
Any of these occurrences may harm Forte’s business, financial condition and prospects significantly. 33 Further, clinical studies or trials by their nature utilize a sample of the potential patient population.
Any of these occurrences may harm Forte’s business, financial condition and prospects significantly. Further, clinical studies or trials by their nature utilize a sample of the potential patient population.
Assuming that other requirements for patentability are met, prior to March 2013, in the United States, the first to invent the claimed invention was entitled to the patent, while outside the United States, the first to file a patent application was entitled to the patent.
Assuming that other 39 requirements for patentability are met, prior to March 2013, in the United States, the first to invent the claimed invention was entitled to the patent, while outside the United States, the first to file a patent application was entitled to the patent.
Investment in product development in the healthcare industry, including of biopharmaceutical products, is highly speculative because it entails substantial upfront capital expenditures and significant risk that any potential product candidate will fail to demonstrate adequate effect or an acceptable safety profile, gain regulatory approval and become commercially viable. Forte’s current lead product candidate, FB-102, is currently in preclinical development.
Investment in product development in the healthcare industry, including of biopharmaceutical products, is highly speculative because it entails substantial upfront capital expenditures and significant risk that any potential product candidate will fail to demonstrate adequate effect or an acceptable safety profile, gain regulatory approval and become commercially viable. Forte’s current lead product candidate, FB-102, is currently in clinical development.
These risks include, among others, the following: • Forte’s business is almost entirely dependent on the success of developing FB-102, which may not be successful. • Results from early preclinical studies may not be predictive of results from later stage studies or clinical trials. • Forte has no approved products and has a limited operating history, which may make it difficult to evaluate its technology and product development capabilities and predict its future performance. • Forte has incurred net losses in every year since its inception and anticipates that it will continue to incur net losses in the future. • Forte will require additional capital to fund its operations and if Forte fails to obtain necessary financing, Forte will not be able to complete the development and commercialization of its current lead product candidate, FB-102, or any future product candidates. • Forte’s ability to successfully develop any product candidate is highly uncertain. • Clinical development is a lengthy and expensive process, with an uncertain outcome.
These risks include, among others, the following: • Forte’s business is almost entirely dependent on the success of developing FB-102, which may not be successful. • Results from early preclinical and clinical studies may not be predictive of results from later stage studies or clinical trials. • Forte has no approved products and has a limited operating history, which may make it difficult to evaluate its technology and product development capabilities and predict its future performance. • Forte has incurred net losses in every year since its inception and anticipates that it will continue to incur net losses in the future. • Even after the Private Placement, Forte will require additional capital to fund its operations and if Forte fails to obtain necessary financing, Forte will not be able to complete the development and commercialization of its current lead product candidate, FB-102, or any future product candidates. • Forte’s ability to successfully develop any product candidate is highly uncertain. • Clinical development is a lengthy and expensive process, with an uncertain outcome.
Food and Drug Administration (“FDA”), and other comparable foreign regulatory authorities; • delay or failure in obtaining the necessary approvals from regulators or institutional review boards (“IRBs”) in order to commence a clinical trial at a prospective trial site, or their suspension or termination of a clinical trial once commenced; • failure of third-party contractors, such as contract research organizations (“CROs”), or investigators to comply with regulatory requirements, including Good Clinical Practice (“GCP”); • governmental or regulatory delays and changes in regulation or policy relating to the development and commercialization of its product candidate by the FDA or other comparable foreign regulatory authorities; • undertaking and completing additional pre-clinical studies to generate data required to support the continued clinical development of a product candidate; • inability to enroll sufficient patients to complete a protocol; • difficulty in having patients complete a trial or return for post-treatment follow-up; • clinical sites deviating from trial protocol or dropping out of a trial; • problems with biopharmaceutical product candidate storage, stability and distribution; • its inability to add new or additional clinical trial sites; • varying interpretations of the data generated from its preclinical or clinical trials; • Forte’s inability to manufacture, or obtain from third parties, adequate supply of biopharmaceutical product candidate sufficient to complete its preclinical studies and clinical trials; • the costs of establishing, maintaining, and overseeing a quality system compliant with current good manufacturing practice requirements (“cGMPs”) and a supply chain for the development and manufacture of its product candidate; • the cost of defending intellectual property disputes, including patent infringement actions brought by third parties against Forte, FB-102; • the effect of competing technological and market developments; • the cost and timing of establishing, expanding and scaling manufacturing capabilities; • the effect of potential worsening global economic conditions and the recent disruptions to, and volatility in, the credit and financial markets in the United States and worldwide resulting from the ongoing COVID‑19 pandemic, the conflicts in Eastern Europe, and otherwise; • the effect of inflationary pressure on the United States capital markets and our ability to raise capital, including any impact of adverse developments affecting the financial services industry, such as those based on liquidity constraints or concerns; • the cost of establishing sales, marketing and distribution capabilities for any product candidate for which Forte may receive regulatory approval in regions where Forte chooses to commercialize its products on its own; and • potential unforeseen business disruptions or market fluctuations that delay its product development or clinical trials and increase its costs or expenses, such as business or operational disruptions, delays, or system failures due to malware, unauthorized access, terrorism, war, natural disasters, strikes, geopolitical conflicts, restrictions on trade, import or export restrictions, or public health crises, such as the current COVID-19 outbreak.
Food and Drug Administration (“FDA”), and other comparable foreign regulatory authorities; 16 • delay or failure in obtaining the necessary approvals from regulators or institutional review boards (“IRBs”) in order to commence a clinical trial at a prospective trial site, or their suspension or termination of a clinical trial once commenced; • failure of third-party contractors, such as contract research organizations (“CROs”), or investigators to comply with regulatory requirements, including Good Clinical Practice (“GCP”); • governmental or regulatory delays and changes in regulation or policy relating to the development and commercialization of its product candidate by the FDA or other comparable foreign regulatory authorities; • undertaking and completing additional preclinical studies to generate data required to support the continued clinical development of a product candidate; • inability to enroll sufficient patients to complete a protocol; • difficulty in having patients complete a trial or return for post-treatment follow-up; • clinical sites deviating from trial protocol or dropping out of a trial; • problems with biopharmaceutical product candidate storage, stability and distribution; • its inability to add new or additional clinical trial sites; • varying interpretations of the data generated from its preclinical or clinical trials; • Forte’s inability to manufacture, or obtain from third parties, adequate supply of biopharmaceutical product candidate sufficient to complete its preclinical studies and clinical trials; • the costs of establishing, maintaining, and overseeing a quality system compliant with current good manufacturing practice requirements (“cGMPs”) and a supply chain for the development and manufacture of its product candidate; • the cost of defending intellectual property disputes, including patent infringement actions brought by third parties against Forte, FB-102; • the effect of competing technological and market developments; • the cost and timing of establishing, expanding and scaling manufacturing capabilities; • the effect of potential worsening global economic conditions and the recent disruptions to, and volatility in, the credit and financial markets in the United States and worldwide resulting from a potential resurgence of the COVID‑19 pandemic, the military conflicts in Eastern Europe and the Middle East, recent and any potential future financial institution failures, and otherwise; • the effect of inflationary pressure on the United States capital markets and our ability to raise capital, including any impact of adverse developments affecting the financial services industry, such as those based on liquidity constraints or concerns; • the cost of establishing sales, marketing and distribution capabilities for any product candidate for which Forte may receive regulatory approval in regions where Forte chooses to commercialize its products on its own; and • potential unforeseen business disruptions or market fluctuations that delay its product development or clinical trials and increase its costs or expenses, such as business or operational disruptions, delays, or system failures due to malware, unauthorized access, terrorism, war, natural disasters, strikes, geopolitical conflicts, restrictions on trade, import or export restrictions, or public health crises, such as the COVID-19 outbreak.
Forte also cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative or executive action, either in the United States or abroad.
Forte cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative or executive action, either in the United States or abroad.
If 27 the current equity and credit markets deteriorate, or do not improve, it may make any necessary debt or equity financing more difficult, more costly, and more dilutive.
If the current equity and credit markets deteriorate, or do not improve, it may make any necessary debt or equity financing more difficult, more costly, and more dilutive.
These factors could involve financial institutions or financial services industry companies with which we have financial or business relationships, but could also include factors involving financial markets or the financial services industry generally.
These factors could involve financial institutions or financial services industry companies with which we 27 have financial or business relationships but could also include factors involving financial markets or the financial services industry generally.
Any unplanned event, such as flood, fire, tornado, explosion, earthquake, extreme weather condition, medical epidemics, such as the COVID-19 outbreak, power shortage, telecommunication failure or other natural or manmade accidents or incidents that result in it being unable to fully utilize its facilities, or the manufacturing facilities of its third-party contract manufacturers, may have a material and adverse effect on its ability to operate its business, particularly on a daily basis, and have significant negative consequences on its financial and operating conditions.
Any unplanned event, such as flood, fire, tornado, explosion, earthquake, extreme weather condition, medical epidemics, such as the COVID-19 outbreak, power shortage, telecommunication failure or other natural or man-made accidents or incidents that result in it being unable to fully utilize its facilities, or the manufacturing facilities of its third-party contract manufacturers, may have a material and adverse effect on its ability to operate its business, particularly on a daily basis, and have significant negative consequences on its financial and operating conditions.
Forte has no products approved for commercial sale and has not generated any revenue from product sales to date, and Forte will continue to incur significant research and development and other expenses related to its ongoing operations. As a result, Forte is not profitable and has incurred losses in each period since its inception in 2017.
Forte has no products approved for commercial sale and has not generated any revenue from product sales to date, and Forte will continue to incur significant research and development and other expenses related to its ongoing operations. As a result, Forte is not profitable and has incurred losses in each year since its inception in 2017.
To proceed with its development plans and ultimately commercialization of FB-102, Forte will be required to conduct preclinical studies and clinical trials.
To proceed with its development plans and ultimately commercialization of FB-102, Forte will be required to conduct additional preclinical studies and clinical trials.
Forte’s current operations are located in Texas, and Forte or the third parties upon whom Forte depends may be adversely affected by natural disasters or the COVID-19 outbreak or other pandemics, and its business continuity and disaster recovery plans may not adequately protect Forte from a serious disaster. Forte’s current operations are located in Texas.
Forte’s current operations are located in Texas, and Forte or the third parties upon whom Forte depends may be adversely affected by natural disasters or the resurgence of the COVID-19 outbreak or other pandemics, and its business continuity and disaster recovery plans may not adequately protect Forte from a serious disaster. Forte’s current operations are located in Texas.
We do not currently have the infrastructure or internal capability to manufacture supplies of our product candidates for use in development and commercialization. We plan to rely, and expect to continue to rely, on third-party manufacturers for the production of our product candidates for preclinical studies and clinical trials under the guidance of members of our organization.
We do not currently have the infrastructure or internal capability to manufacture supplies of our product candidates for use in development and commercialization. We have relied and expect to continue to rely, on third-party manufacturers for the production of our product candidates for preclinical studies and clinical trials under the guidance of members of our organization.
If Forte is unable to establish marketing and sales capabilities or enter into agreements with third parties to market and sell its product candidate, Forte may not be able to generate product revenue. Forte currently has no sales, marketing or distribution capabilities and has no experience in marketing products.
Forte currently has no marketing and sales organization and has no experience in marketing products. If Forte is unable to establish marketing and sales capabilities or enter into agreements with third parties to market and sell its product candidate, Forte may not be able to generate product revenue.
General Risks The market price of Forte’s common stock is expected to be volatile. In the past, following periods of volatility in the market price of a company’s securities, stockholders have often instituted class action securities litigation against those companies. The market price of Forte’s common stock could be subject to significant fluctuations.
The market price of Forte’s common stock is expected to be volatile. In the past, following periods of volatility in the market price of a company’s securities, stockholders have often instituted class action securities litigation against those companies. The market price of Forte’s common stock could be subject to significant fluctuations.
A number of companies in the pharmaceutical industry, including those with greater resources and experience than us, have suffered significant setbacks in clinical trials, even after obtaining promising results in pre-clinical studies and early clinical trials.
A number of companies in the pharmaceutical industry, including those with greater resources and experience than us, have suffered significant setbacks in clinical trials, even after obtaining promising results in preclinical studies and early clinical trials.
Forte has incurred net losses in every year since its inception and anticipates that it will continue to incur net losses in the future. Forte is a preclinical stage healthcare company with a limited operating history.
Forte has incurred net losses in every year since its inception and anticipates that it will continue to incur net losses in the future. Forte is a clinical-stage healthcare company with a limited operating history.
If a prolonged government shutdown or other disruption occurs, including due to travel restrictions, foreign COVID-19-related policies, staffing 29 shortages, or if global health or other concerns continue to prevent the FDA or other regulatory authorities from conducting their regular inspections, reviews, or other regulatory activities in a timely manner, it could significantly impact the ability of the FDA to timely review and process its regulatory submissions, which could have a material adverse effect on its business, including its ability to access the public markets and obtain necessary capital in order to properly capitalize and continue its operations.
If a prolonged government shutdown or other disruption occurs, including due to government shutdowns, furloughs, budget constraints, travel restrictions, foreign COVID-19-related policies, staffing shortages, or if global health or other concerns continue to prevent the FDA or other regulatory authorities from conducting their regular inspections, reviews, or other regulatory activities in a timely manner, it could significantly impact the ability of the FDA to timely review and process its regulatory submissions, which could have a material adverse effect on its business, including its ability to access the public markets and obtain necessary capital in order to properly capitalize and continue its operations.
HITECH also created new tiers of civil monetary penalties, amended HIPAA to make civil and criminal penalties directly applicable to business associates, and gave state attorneys general 30 new authority to file civil actions for damages or injunctions in federal courts to enforce the federal HIPAA laws and seek attorneys’ fees and costs associated with pursuing federal civil actions; • the federal Physician Payments Sunshine Act, created under the Patient Protection and Affordable Care Act, and its implementing regulations, which require applicable manufacturers of certain drugs, devices, biologicals and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) to report annually to the United States Department of Health and Human Services information related to payments or other transfers of value made to covered recipients, including U.S. physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors) , certain non-physician healthcare professionals (such as physician assistants and nurse practitioners, among others), and teaching hospitals, as well as information regarding ownership and investment interests held by physicians and their immediate family members; • federal consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harm consumers; • analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, which may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers, and may be broader in scope than their federal equivalents; state and foreign laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers; state and foreign laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; and state and foreign laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts; and • GDPR and other ex-U.S. protections.
HITECH also created new tiers of civil monetary penalties, amended HIPAA to make civil and criminal penalties directly applicable to business associates, and gave state attorneys general new authority to file civil actions for damages or injunctions in federal courts to enforce the federal HIPAA laws and seek attorneys’ fees and costs associated with pursuing federal civil actions; • the federal Physician Payments 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 annually report to CMS information regarding payments and other transfers of value to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain non-physician healthcare professionals (such as physician assistants and nurse practitioners, among others), and teaching hospitals as well as information regarding ownership and investment interests held by physicians and their immediate family members; • federal consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harm consumers; • analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, which may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers, and may be broader in scope than their federal equivalents; state and foreign laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers; state and foreign laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; and state and foreign laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts; and • GDPR and other ex-U.S. protections.
If we are unable to complete further development of, obtain approval for and commercialize FB-102 for one or more indications in a timely manner, our business will be harmed. After we discontinued clinical development of FB-401, Forte’s long-term prospects are highly dependent on future acceptance and revenues from a single product, FB-102.
If we are unable to complete further development of, obtain approval for and commercialize FB-102 for one or more indications in a timely manner, our business will be harmed. Forte’s long-term prospects are highly dependent on future acceptance and revenues from a single product, FB-102.
Forte will require additional capital to fund its operations and if Forte fails to obtain necessary financing, Forte will not be able to complete the development and commercialization of its current lead product candidate, FB-102, or any future product candidates. Forte’s operations have consumed substantial amounts of cash since inception.
Even after the Private Placement, Forte will require additional capital to fund its operations and if Forte fails to obtain necessary financing, Forte will not be able to complete the development and commercialization of its current lead product candidate, FB-102, or any future product candidates. Forte’s operations have consumed substantial amounts of cash since inception.
During the audit process related to Forte’s fiscal year ended December 31, 2022, management identified a material weakness in Forte’s controls related to the review of the annual income tax provision which had been prepared by a third-party accounting firm.
During the audit process related to Forte’s fiscal year ended December 31, 2022, management identified a material weakness in Forte’s controls related to the review of the annual income tax provision which had been prepared by a third-party accounting firm that has since been remediated.
As of December 31, 2022, Forte had $41.1 million of cash and cash equivalents on hand. Based on its current operating plan, Forte believes that its current cash available will enable it to fund its operating expenses and capital expenditure requirements through at least twelve months from the issuance date of this Form 10-K.
As of December 31, 2023, Forte had approximately $37.1 million of cash and cash equivalents on hand. Based on its current operating plan, Forte believes that its current cash available will enable it to fund its operating expenses and capital expenditure requirements through at least twelve months from the issuance date of this Form 10-K.
FB-102 will require significant additional preclinical and clinical development before Forte seeks regulatory approval of any product candidate.
FB-102 will require significant additional clinical development before Forte seeks regulatory approval of any product candidate.
Sanctions imposed by the United States and other countries in response to such conflicts, including the one in Ukraine, may also adversely impact the financial markets and the global economy, and any economic countermeasures by affected countries and others could exacerbate market and economic instability.
Sanctions imposed by the United States and other countries in response to such military conflicts, including in Ukraine and the Middle East, may also adversely impact the financial markets and the global economy, and any economic countermeasures by affected countries and others could exacerbate market and economic instability.
In addition, our ability to raise additional funds may be adversely impacted by potential worsening global economic conditions and the recent disruptions to, and volatility in, the credit and financial markets in the United States and worldwide resulting from the ongoing COVID‑19 pandemic, the conflicts in Eastern Europe, the effect of inflationary pressure on the United States capital markets, adverse developments affecting the financial services industry (such as the closure of Silicon Valley Bank in March 2023 and any similar bank closures) and otherwise.
In addition, our ability to raise additional funds may be adversely impacted by potential worsening global economic conditions and the recent disruptions to, and volatility in, the credit and financial markets in the United States and worldwide resulting from the military conflicts in Eastern Europe and the Middle East, the effect of inflationary pressure on the United States capital markets, adverse developments affecting the financial services industry (such as the closure of Silicon Valley Bank in March 2023 and any similar bank closures) and otherwise.
Similarly, even if Forte is able to complete preclinical development and any future 21 clinical trials of FB-102 or any other product candidates according to its current development timeline, the positive results from such preclinical studies or future clinical trials may not be replicated in subsequent clinical trial results.
Similarly, even if Forte is able to complete its current Phase 1 clinical trial and any future clinical trials of FB-102 or any other product candidates according to its current development timeline, the positive results from such clinical trial or future clinical trials may not be replicated in subsequent clinical trial results.
Product candidates that appear promising in the early phases of development may fail to reach the market for several reasons, including: • preclinical study or clinical study results may show the product candidate to be less effective than desired or to have harmful or problematic side effects or toxicities; • clinical trial results may show the product candidate to be less effective than expected (e.g., a clinical trial could fail to meet its primary endpoint(s)) or to have unacceptable side effects or toxicities; • failure to execute the clinical trials caused by slow enrollment in clinical trials, patients dropping out of clinical trials, length of time to achieve clinical trial endpoints, additional time requirements for data analysis, inability to validate the manufacturing process or to achieve cGMP compliance for the product candidate or inability to identify a suitable bioanalytical assay method agreeable to applicable regulators; • failure to receive the necessary regulatory approvals or a delay in receiving such approvals, delays in preparation responding to an FDA request for additional clinical data or unexpected safety or manufacturing issues; • manufacturing costs, formulation issues, manufacturing deficiencies or other factors that that make FB-102 or any future product candidate uneconomical; and • proprietary rights of others and their competing products and technologies that may prevent FB-102 or any future product candidate from being commercialized. 18 The length of time necessary to complete clinical trials and to submit an application for marketing approval of a drug product candidate for a final decision by a regulatory authority may be difficult to predict for FB-102 or any future product candidate, in large part because of its limited regulatory history.
Product candidates that appear promising in the early phases of development may fail to reach the market for several reasons, including: • preclinical study or clinical study results may show the product candidate to be less effective than desired or to have harmful or problematic side effects or toxicities; • clinical trial results may show the product candidate to be less effective than expected (e.g., a clinical trial could fail to meet its primary endpoint(s)) or to have unacceptable side effects or toxicities; • failure to execute the clinical trials caused by slow enrollment in clinical trials, patients dropping out of clinical trials, length of time to achieve clinical trial endpoints, additional time requirements for data analysis, inability to validate the manufacturing process or to achieve cGMP compliance for the product candidate or inability to identify a suitable bioanalytical assay method agreeable to applicable regulators; • failure to receive the necessary regulatory approvals or a delay in receiving such approvals, delays in preparation responding to an FDA request for additional clinical data or unexpected safety or manufacturing issues; • manufacturing costs, formulation issues, manufacturing deficiencies or other factors that that make FB-102 or any future product candidate uneconomical; and • proprietary rights of others and their competing products and technologies that may prevent FB-102 or any future product candidate from being commercialized.
If Forte’s remediation of the material weakness is not effective, or if Forte experiences additional material weaknesses in the future or otherwise fails to maintain an effective system of internal controls in the future, we may not be able to accurately or timely report our financial condition or results of operations, which may adversely affect investor confidence in us and, as a result, the value of our common stock. • A variety of risks associated with public health threats and epidemics, including the COVID-19 pandemic and related public health emergency could materially adversely affect Forte’s business.
If Forte experiences material weaknesses in the future or otherwise fails to maintain an effective system of internal controls in the future, we may not be able to accurately or timely report our financial condition or results of operations, which may adversely affect investor confidence in us and, as a result, the value of our common stock. • A variety of risks associated with public health threats and epidemics, including any resurgence of the COVID-19 pandemic or the emergence of another public health emergency could materially adversely affect Forte’s business.
Following the announcement of the FB-401 trial results, the Company ceased further development of FB-401 and conducted an extensive process to evaluate strategic alternatives. Following such process, the Company determined to focus on developing its FB-102 program, which is currently in preclinical development.
Following the announcement of the FB-401 trial results, the Company ceased further development of FB-401 and conducted an extensive process to evaluate strategic alternatives. Following such process, the Company determined to focus on developing its FB-102 program, which is currently in a Phase 1 clinical trial.
We plan to contract with third parties for the manufacture of our product candidates for preclinical studies and expect to continue to do so for additional preclinical studies, clinical trials and ultimately for commercialization.
We have contracted with third parties for the manufacture of our product candidates for preclinical studies and expect to continue to do so for additional preclinical studies, clinical trials and ultimately for commercialization.
Given the early stage of FB-102, which is currently in preclinical development, and the highly uncertain nature of preclinical drug development, Forte may never be able to develop or commercialize a marketable product.
Given the early stage of FB-102, which is currently in a Phase 1 clinical trial, and the highly uncertain nature of early stage drug development, Forte may never be able to develop or commercialize a marketable product.
Any of these events could limit the commercial potential of our product candidate and have a material adverse effect on our business, prospects, financial condition and results of operations. Forte’s prospects are highly dependent on a single product candidate, FB-102, as we discontinued FB-401 in 2021.
Any of these events could limit the commercial potential of our product candidate and have a material adverse effect on our business, prospects, financial condition and results of operations. Forte’s prospects are highly dependent on a single product candidate, FB-102.
The policies of the FDA and of other regulatory authorities may change and additional government regulations may be enacted that could prevent, limit or delay regulatory approval of any product candidate Forte develops. The government may also implement additional measures in response to the COVID-19 pandemic.
The policies of the FDA and of other regulatory authorities may change and additional government regulations may be enacted that could prevent, limit or delay regulatory approval of any product candidate Forte develops. For example, the government may implement additional measures in response to any resurgence of the COVID-19 pandemic or other public health emergencies.
As its research, development, manufacturing and commercialization plans and strategies develop to focus on the development of FB-102 and any future product candidates, and as Forte continues to transition into operating as a public company, Forte expects to need additional managerial, operational, sales, marketing, financial and other personnel.
As of March 15, 2024, Forte had 9 full-time employees. As its research, development, manufacturing and commercialization plans and strategies develop to focus on the development of FB-102 and any future product candidates, and as Forte continues to transition into operating as a public company, Forte expects to need additional managerial, operational, sales, marketing, financial and other personnel.
As of December 31, 2022, Forte’s executive officers, directors, holders of 5% or more of its capital stock and their respective affiliates beneficially owned a significant percentage of its outstanding voting stock. These stockholders, acting together, may be able 52 to impact matters requiring stockholder approval.
As of December 31, 2023 and following the July 2023 Private Placement, Forte’s executive officers, directors, holders of 5% or more of its capital stock and their respective affiliates beneficially owned a significant percentage of its outstanding voting stock. These stockholders, acting together, may be able to impact matters requiring stockholder approval.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties. We entered into a lease in December 2021 for office space in Dallas, Texas. The lease agreement is cancellable by the Company with a 30-day notice. We believe that our existing facilities are adequate to meet our current business requirements and that if additional space is required, it will be available on commercially reasonable terms.
Biggest changeWe believe that our existing facilities are adequate to meet our current business requirements and that if additional space is required, it will be available on commercially reasonable terms. In addition, we believe that our existing facilities are in good condition, adequate and suitable for their intended purposes.
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In addition, we believe that our existing facilities are in good condition, adequate and suitable for their intended purposes.
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Item 2. Properties. We entered into lease agreements in December 2021 for office space in Dallas, Texas and in April 2023 for laboratory space in San Diego, California. These lease agreements are cancellable by the Company with a 30-day notice.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changePurchases of Equity Securities by the Issuer and Affiliated Purchasers There were no repurchases of shares of common stock made during the year ended December 31, 2022. Sales of Unregistered Securities There were no sales of unregistered securities by us during the year ended December 31, 2022. Item 6. R eserved 54
Biggest changePurchases of Equity Securities by the Issuer and Affiliated Purchasers There were no repurchases of shares of common stock made during the year ended December 31, 2023.
Holders of Record As of March 24, 2023, there were 229 registered stockholders of record. We are unable to estimate the actual number of stockholders as our shares are also held by brokers and other institutions on behalf of our stockholders. Dividend Policy We have never declared or paid cash dividends on our capital stock.
Holders of Record As of March 11, 2024, there were 227 registered stockholders of record. We are unable to estimate the actual number of stockholders as our shares are also held by brokers and other institutions on behalf of our stockholders. Dividend Policy We have never declared or paid cash dividends on our capital stock.
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Sales of Unregistered Securities During the year ended December 31, 2023, there have been no unregistered sales of securities other than previously disclosed by us in our Current Report on Form 8-K, as filed with the SEC on August 1, 2023. Item 6. R eserved 54

Item 7. Management's Discussion & Analysis

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

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Biggest changeOur general and administrative expenses may increase in the future due to increases in professional and advisory fees as we build out our infrastructure to develop FB-102. 58 Other Income (Expenses), net The change in other income (expenses), net for the year ended December 31, 2022, compared with the same period in the prior year was primarily driven by an increase in interest income of $150 thousand as a result of higher interest rates, reductions in foreign currency transaction and remeasurement losses of $52 thousand related to contracts denominated in currencies other than the U.S. dollar due to differences between the exchange rates on the billing and payment dates, and reduced franchise taxes of $37 thousand.
Biggest changeOur general and administrative expenses may increase due to increases in professional and advisory fees and as we build out our infrastructure to develop FB-102. Interest Income Interest income consists of interest earned on our cash, cash equivalents and short-term investments balances. Other Expense, net Other expense, net, consists of franchise taxes and foreign exchange gains and losses.
Changes in the assumptions can materially affect the fair value and ultimately how much stock-based compensation expense is recognized. The volatility input is subjective and generally requires significant analysis and judgment to develop and involves inherent uncertainties and the application of significant judgment. If we use significantly different assumptions or estimates, our equity-based compensation could be materially different.
Changes in the assumptions can materially affect the fair value and ultimately how much stock-based compensation expense is recognized. The volatility input is subjective and generally requires significant analysis and judgment to develop and involves inherent uncertainties and the application of significant judgment. If we use significantly different assumptions or estimates, our stock-based compensation expense could be materially different.
Our future capital requirements are difficult to forecast and will depend on many factors, including but not limited to: •the initiation and progress of preclinical studies and any clinical trials for our product candidates; •the terms and timing of any strategic alliance, licensing and other arrangements that we may establish; •the number of programs we pursue; •the outcome, timing and cost of regulatory approvals; •the cost and timing of hiring new employees to support our continued growth; 59 •the costs involved in patent filing, prosecution, and enforcement; and •the costs and timing of having clinical supplies of our product candidates manufactured.
Our future capital requirements are difficult to forecast and will depend on many factors, including but not limited to: • the initiation and progress of additional clinical trials and preclinical studies for our product candidate; • the terms and timing of any strategic alliance, licensing and other arrangements that we may establish; • the number of programs we pursue; • the outcome, timing and cost of regulatory approvals; • the cost and timing of hiring new employees to support our continued growth; • the costs involved in patent filing, prosecution, and enforcement; and • the costs and timing of having clinical supplies of our product candidates manufactured.
On March 31, 2022, we entered into an “at-the-market” equity offering program (“ATM Facility”) whereby we may from time to time offer and sell shares of our common stock up to an aggregate offering price of $25.0 million during the term of the ATM Facility.
On March 31, 2022, we entered into an “at-the-market” equity offering program (“ATM Facility”) whereby we may from time to time offer and sell shares of its common stock up to an aggregate offering price of $25.0 million during the term of the ATM Facility.
On April 1, 2022, we filed a prospectus supplement to the June 2021 Form S-3 relating to the offer and sale of shares under the ATM Facility covering sales of up to $7.0 million of shares of common stock.
On April 1, 2022, we filed a prospectus supplement to the June 2021 Form S-3 for the offer and sale of the shares under the ATM Facility covering sales of up to $7.0 million of shares of common stock.
As discussed above, we are currently eligible to sell securities under Form S-3 only if and to the extent the aggregate market value of securities sold by us pursuant to General Instruction I.B.6 of Form S-3 during the twelve-month period immediately prior to, and including, the date of any such sale, does not exceed one-third of the aggregate market value of our common stock held by non-affiliates (as determined by General Instruction I.B.6 of Form S-3), and we will remain subject to such limitation for so long as the aggregate market value of our common stock held by non-affiliates is less than $75 million (as determined by General Instruction I.B.6 of Form S-3).
The Company is currently eligible to sell securities under Form S-3 only if and to the extent the aggregate market value of securities sold by the Company pursuant to General Instruction I.B.6 of Form S-3 during the twelve-month period immediately prior to, and including, the date of any such sale, does not exceed one-third of the aggregate market value of our common stock held by non-affiliates (as determined by General Instruction I.B.6 of Form S-3), and we will remain subject to such limitation for so long as the aggregate market value of our common stock held by non-affiliates is less than $75 million (as determined by General Instruction I.B.6 of Form S-3).
Our general and administrative expenses may increase due to increases in professional and advisory fees and as we build out our infrastructure to develop FB-102.
Our general and administrative expenses may increase in the future due to increases in professional and advisory fees as we build out our infrastructure to develop FB-102.
On March 31, 2022, we entered into an “at-the-market” equity offering program (“ATM Facility”) whereby we may from time to time offer and sell shares of our common stock up to an aggregate offering price of $25.0 million during the term of the ATM Facility.
On March 31, 2022, Forte entered into an “at-the-market” equity offering program (“ATM Facility”) whereby Forte may from time to time offer and sell shares of its common stock up to an aggregate offering price of $25.0 million during the term of the ATM Facility.
Liquidity and Capital Resources We have no products approved for commercial sale and have not generated any revenue from product sales or out-licenses. We have never been profitable and have incurred operating losses in each year since inception. Our net loss was approximately $13.9 million for the year ended December 31, 2022.
Liquidity and Capital Resources We have no products approved for commercial sale and have not generated any revenue from product sales or out-licenses. We have never been profitable and have incurred operating losses in each year since inception. Our net loss was approximately $31.5 million for the year ended December 31, 2023.
In June 2021, we filed a shelf registration statement on Form S-3 that went effective in June 2021 which will allow us to raise up to $300 million in additional capital.
In June 2021, we filed a shelf registration statement on Form S-3 that went effective in June 2021 which allowed us to raise up to $300 million in additional capital.
On April 1, 2022, we filed a prospectus supplement to the June 2021 Form S-3 relating to the offer and sale of shares under the ATM Facility covering sales of up to $7.0 million of shares of common stock.
On April 1, 2022, Forte filed a prospectus supplement to the June 2021 Form S-3 for the offer and sale of the shares under the ATM Facility covering sales of up to $7.0 million of shares of common stock.
As discussed above, we are currently eligible to sell securities under Form S-3 only if and to the extent the aggregate market value of securities sold by us pursuant to General Instruction I.B.6 of Form S-3 during the twelve-month period immediately prior to, and including, the date of any such sale, does not exceed one-third of the aggregate market value of our common stock held by non-affiliates (as determined by General Instruction I.B.6 of Form S-3), and we will remain subject to such limitation for so long as the aggregate market value of our common stock held by non-affiliates is less than $75 million (as determined by General Instruction I.B.6 of Form S-3).
Forte is currently eligible to sell securities under Form S-3 only if and to the extent the aggregate market value of securities sold by Forte pursuant to General Instruction I.B.6 of Form S-3 during the twelve-month period immediately prior to, and including, the date of any such sale, does not exceed one-third of the aggregate market value of Forte’s common stock held by non-affiliates (as determined by General Instruction I.B.6 of Form S-3), and Forte will remain subject to such limitation for so long as the aggregate market value of Forte’s common stock held by non-affiliates is less than $75 million (as determined by General Instruction I.B.6 of Form S-3).
In addition, our ability to raise additional funds may be adversely impacted by potential worsening global economic conditions and the recent disruptions to, and volatility in, the credit and financial markets in the United States and worldwide resulting from the ongoing COVID‑19 pandemic, the conflicts in Eastern Europe, and otherwise.
In addition, our ability to raise additional funds may be adversely impacted by potential worsening global economic conditions and the recent disruptions to, and volatility in, the credit and financial markets in the United States and worldwide resulting from the conflicts in Eastern Europe, 59 and otherwise.
Accordingly, we have not recorded any liabilities for these indemnification rights and agreements as of December 31, 2022 and 2021. Contractual Obligations See Note 4 to the Consolidated Financial Statements included elsewhere in this Form 10-K. 60
Accordingly, we have not recorded any liabilities for these indemnification rights and agreements as of December 31, 2023 and 2022. Contractual Obligations See Note 6 Commitments and Contingencies to the Consolidated Financial Statements included elsewhere in this Form 10-K. 60
On August 12, 2022, we filed an additional prospectus supplement relating to the offer and sale of shares for an additional $2.7 million of shares of common stock.
On August 12, 2022, we filed an additional prospectus supplement relating to offer and sell an additional $2.7 million of shares of common stock.
We issued 6.1 million shares of common stock for gross proceeds of approximately $7.7 million under the ATM Facility from July 1, 2022 through December 31, 2022 and incurred $595,000 in issuance costs related to the ATM Facility and shelf registration statement. We had cash and cash equivalents of approximately $41.1 million as of December 31, 2022.
We issued 6.1 million shares of common stock for gross proceeds of approximately $7.7 million under the ATM Facility from July 1, 2022 through December 31, 2022 and incurred $595 thousand in issuance costs related to the ATM Facility and shelf registration statement.
We are not obligated to sell any shares under the ATM Facility. The ATM Facility may be terminated at any time upon ten days’ prior notice, or at any time in certain circumstances, including the occurrence of a material adverse effect on us.
The ATM Facility may be terminated at any time upon ten days’ prior notice, or at any time in certain circumstances, including the occurrence of a material adverse effect on us.
On August 12, 2022, we filed an additional prospectus supplement relating to the offer and sale of shares for an additional $2.7 million of shares of common stock.
On August 12, 2022, Forte filed an additional prospectus supplement relating to offer and sell an additional $2.7 million of shares of common stock.
Financing Activities Net cash provided by financing activities for the year ended December 31, 2022 consisted of $7.2 million in net proceeds from the sale of shares of our common stock under our ATM Facility and $12 thousand received from proceeds from stock option exercises and the issuance of shares of our common stock under the ESPP.
Net cash provided by financing activities for the year ended December 31, 2022 primarily consisted of $7.2 million in net proceeds from the sale of shares of our common stock under our ATM Facility.
We believe that our existing cash and cash equivalents will be sufficient to fund our operations for at least 12 months from the filing date of this Form 10-K. Future Capital Requirements We have not generated any revenue from product sales or from out-licensing. We do not know when, or if, we will generate any revenue.
We had cash and cash equivalents of approximately $37.1 million as of December 31, 2023. We believe that our existing cash and cash equivalents will be sufficient to fund our operations for at least 12 months from the filing date of this Form 10-K. Future Capital Requirements We have not generated any revenue from product sales or from out-licensing.
Overview Forte Biosciences, Inc. and its subsidiaries ( www.fortebiorx.com ) (“Forte”, “we”, “our”) is a biopharmaceutical company that is advancing through preclinical trials its product candidate , FB-102, which is a proprietary molecule with potentially broad autoimmune applications in such indications as graft-versus-host disease (“GvHD”), vitiligo and alopecia areata (“AA”).
Overview Forte Biosciences, Inc. and its subsidiaries ( www.fortebiorx.com ) (“Forte”, “we”, “our”) is a clinical-stage biopharmaceutical company whose lead product candidate, FB-102, is currently in a Phase 1 trial. FB-102 is a proprietary molecule with potentially broad autoimmune and autoimmune-related applications including in such indications as graft-versus-host disease (“GvHD”), vitiligo and alopecia areata (“AA”).
While research and development expenses decreased for the year ended December 31, 2022 compared to the same period last year, we anticipate research and development expenses to increase in the future as we continue to develop our current lead product candidate, FB-102.
We anticipate research and development expenses to increase in the future as we continue to develop our current lead product candidate, FB-102. General and Administrative Expenses General and administrative expenses were $10.6 million for the year ended December 31, 2023 compared to $8.3 million for the same period in 2022.
Net cash used in operating activities for the year ended December 31, 2021 was $16.7 million and consisted primarily of a net loss of $21.7 million adjusted for non-cash stock-based compensation of $4.2 million, depreciation and impairment charges on property and equipment of $0.1 million and a decrease in net operating assets of $0.7 million.
Net cash used in operating activities for the year ended December 31, 2022 was $8.2 million and consisted primarily of a net loss of $13.9 million adjusted for non-cash stock-based compensation of $4.0 million and a decrease in net operating assets of $1.7 million.
Summary Consolidated Statements of Cash Flows The following table sets forth the primary sources and uses of cash for the years ended December 31, 2022 and 2021 (in thousands): Year Ended December 31, 2022 2021 Net cash (used in) provided by: Operating activities $ (8,185 ) $ (16,677 ) Financing activities 7,241 (44 ) Net decrease in cash $ (944 ) $ (16,721 ) Operating Activities Net cash used in operating activities for the year ended December 31, 2022 was $8.2 million and consisted primarily of a net loss of $13.9 million adjusted for non-cash stock-based compensation of $4.0 million and a decrease in net operating assets of $1.7 million.
Summary Consolidated Statements of Cash Flows The following table sets forth the primary sources and uses of cash for the years ended December 31, 2023 and 2022 (in thousands): Year Ended December 31, 2023 2022 Net cash (used in) provided by: Operating activities $ (28,706 ) $ (8,185 ) Investing activities 47 — Financing activities 24,684 7,241 Net decrease in cash $ (3,975 ) $ (944 ) Operating Activities Net cash used in operating activities for the year ended December 31, 2023 was $28.7 million and consisted primarily of a net loss of $31.5 million adjusted for non-cash stock-based compensation of $3.3 million and an increase in net operating assets of $0.4 million.
While our significant accounting policies are described in Note 2 of our consolidated financial statements included elsewhere in this Form 10-K, we believe that the following critical accounting policies are most important to understanding and evaluating our reported financial results.
We believe that the accounting policies discussed below are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving management’s judgments and estimates. 56 While our significant accounting policies are described in Note 2 of our consolidated financial statements included elsewhere in this Form 10-K, we believe that the following critical accounting policies are most important to understanding and evaluating our reported financial results.
We expect to incur ongoing losses as we develop our current lead product candidate, FB-102, which has potentially broad application for autoimmune indications such as graft-vs-host disease, vitiligo and alopecia areata. FB-102 is in preclinical development.
We do not know when, or if, we will generate any revenue. We expect to incur ongoing losses as we develop our current lead product candidate, FB-102, which has potentially broad application for autoimmune and autoimmune-related indications such as graft-vs-host disease, vitiligo and alopecia areata. FB-102 is currently in Phase 1 clinical development.
Expected Dividend – We have never paid dividends on our common stock and have no plans to pay dividends on our common stock. Therefore, we use an expected dividend yield of zero. We will continue to use judgment in evaluating the expected volatility, expected terms and interest rates utilized for our stock-based compensation expense calculations on a prospective basis.
We will continue to use judgment in evaluating the expected volatility, expected terms and interest rates utilized for our stock-based compensation expense calculations on a prospective basis.
Results of Operations Comparison of the Years Ended December 31, 2022 and 2021 The following tables summarize our results of operations for the years ended December 31, 2022 and 2021 (in thousands): Year Ended December 31, 2022 2021 Change Operating expenses: Research and development $ 5,594 $ 13,853 $ (8,259 ) General and administrative 8,302 7,633 669 Total operating expenses 13,896 21,486 (7,590 ) Other income (expenses), net 17 (222 ) 239 Net Loss $ (13,879 ) $ (21,708 ) $ (7,829 ) Research and Development Expenses Research and development expenses were $5.6 million for the year ended December 31, 2022, compared to $13.9 million during the same period in 2021.
Results of Operations Comparison of the Years Ended December 31, 2023 and 2022 The following tables summarize our results of operations for the years ended December 31, 2023 and 2022 (in thousands): Year Ended December 31, 2023 2022 Change Operating expenses: Research and development $ 21,862 $ 5,594 $ 16,268 General and administrative 10,624 8,302 2,322 Total operating expenses 32,486 13,896 18,590 Interest income 1,124 162 962 Other expense, net (114 ) (145 ) 31 Net loss $ (31,476 ) $ (13,879 ) $ (17,597 ) Research and Development Expenses Research and development expenses were $21.9 million for the year ended December 31, 2023, compared to $5.6 million during the same period in 2022.
Other Expenses, net Other expense, net, consists of net foreign exchange losses and franchise taxes, partially offset by interest earned on our cash and cash equivalents. 56 Critical Accounting Policies, Significant Judgments and Use of Estimates Our consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”).
Critical Accounting Policies, Significant Judgments and Use of Estimates Our consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”).
Research and development costs consist primarily of salaries and benefits of research and development personnel and costs related to research activities, preclinical studies, clinical trials, drug manufacturing, and, in 2021, wind down costs incurred following the announcement of our unfavorable clinical trial results and the write-off of manufacturing property and equipment.
Research and development costs consist primarily of salaries and benefits of research and development personnel and costs related to research activities, preclinical studies, clinical trials and drug manufacturing.
The decrease of $8.3 million was primarily due to a net decrease of approximately $3.7 million in manufacturing expenses, a net decrease of approximately $3.1 million in preclinical and clinical expenses as we terminated our FB-401 program following the announcement of our unfavorable clinical trial results, a net decrease in payroll and related expenses of approximately $0.9 million as a result of reduced average headcount and a net decrease of $0.6 million in other expenses.
The increase of $16.3 million was primarily due to a net increase of approximately $9.9 million in manufacturing expense, a net increase of approximately $6.0 million in preclinical and clinical expense as our FB-102 program entered the clinic, and a net increase in payroll and related expense of approximately $0.4 million primarily due to an increase in headcount.
In the future, we may generate revenue from product sales, royalties on product sales, license fees, milestones, or other upfront payments if we enter into any collaborations or license agreements. We expect that our future revenue will fluctuate from quarter to quarter for many reasons, including the uncertain timing and amount of any such payments and sales.
Components of Operating Results Revenue We have no products approved for commercial sale or in active development and have not generated any revenue from product sales. In the future, we may generate revenue from product sales, royalties on product sales, license fees, milestones, or other upfront payments if we enter into any collaborations or license agreements.
There remains a significant unmet need for safe and effective therapies for AA​. We had $41.1 million in cash and cash equivalents as of December 31, 2022. Our common stock is publicly traded on the Nasdaq Capital Market under the ticker symbol FBRX.
We had approximately $37.1 million in cash and cash equivalents as of December 31, 2023. Our common stock is publicly traded on the Nasdaq Capital Market under the ticker symbol FBRX. Prior to our merger with Tocagen, Inc., a publicly traded biotechnology company, Forte was a privately held company incorporated in Delaware on May 3, 2017.
We own one US patent for administering a combination of Gram-positive and Gram-negative bacteria along with metabolites for treatment of a wide variety of skin conditions. The patent’s estimated expiration date is 2039. This patent is not material to Forte’s FB-102 program. We also own four pending US patent applications related to FB-102 program.
The patent’s estimated expiration date is 2039. This patent is not material to Forte’s FB-102 program. We also own two pending PCT applications, one pending application in Taiwan, one pending application in Argentina, and three pending US patent applications related to the FB-102 program. The estimated expiration dates of these patents are 2043-2044.
Prior to our merger with Tocagen, Inc., a publicly traded biotechnology company, Forte was a privately held company incorporated in Delaware on May 3, 2017. In June 2021, we filed a shelf registration statement on Form S-3 that went effective in June 2021 which will allow us to raise up to $300 million in additional capital.
We expect to incur operating losses in the future as we develop our current lead product candidate, FB-102. 58 In June 2021, Forte filed a shelf registration statement on Form S-3 that went effective in June 2021 which allowed Forte to raise up to $300 million in additional capital.
The Company’s FB-102 program aims to address key pathways implicated in these indications. GvHD is a complication that may occur after an allogeneic transplant and is where donor's T-cells attack the patient's healthy cells . There are 2 main types of GvHD – acute GvHD and chronic GvHD. The severity of symptoms range from mild to fatal.
The Company’s FB-102 program aims to address key pathways implicated in these indications with a CD122 antagonist. CD122 is a subunit of IL-2/IL-15 receptors which are key regulators of NK cells and T cell subsets.
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Acute GvHD usually occurs within 100 days of a transplant. Symptoms of the acute GvHD affect the skin, GI tract or liver. Chronic GvHD symptoms can occur any time after a transplant, but usually start within 2 years. Symptoms of chronic GvHD affect the skin, mouth, liver, lungs, GI tract, muscles or joints.
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The primary objective of the Phase 1 trial is to assess the safety, tolerability and pharmacokinetics of single and multiple ascending doses of FB-102 under intravenous and subcutaneous administration. Three cohorts of single ascending doses were successfully completed in March 2024. Cohorts of multiple ascending doses have commenced.
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There remains a significant unmet need for safe and effective therapies for GvHD . Vitiligo is characterized by the loss of melanocytes which are cells that produce skin pigmentation ​ and results in discolored patches appearing in the skin, hair and mucous membrane ​. Vitiligo is mediated primarily by natural killer cells (“NK cells”) and cytotoxic T lymphocytes (“CD8+”).
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On July 31, 2023, the Company issued 15,166,957 shares of the Company’s common stock at a purchase price of $1.006 per Share, and 9,689,293 pre-funded warrants to purchase shares of common stock at a purchase price of $1.005 per pre-funded warrant ("Private Placement").
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Current treatments include black box warnings. There remains a significant unmet need for safe and effective therapies for vitiligo . AA is characterized by nonscaring, unpredictable and patchy hair loss generally on the scalp but also in other areas of the body as a result of immune cells attacking and damaging hair follicles.
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The pre-funded warrants have an exercise price of $0.001 per share of common stock, are immediately exercisable and remain exercisable until exercised in full. The gross proceeds of the Private Placement were approximately $25 million and the Company incurred $272 thousand in issuance costs.
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As of the date of filing of this Annual Report on Form 10-K, we have reached this limit and, as such, may not sell any additional securities under the ATM Facility (or otherwise under Form S-3) until such time as (i) during the preceding twelve-month period, we have not sold securities in excess of the limitation set forth in General Instruction I.B.6 of Form S-3, or (ii) the aggregate market value of our common stock held by non-affiliates is less than $75 million (as determined by General Instruction I.B.6 of Form S-3).
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Certain executive officers, senior management, and board members of the Company participated in this Private Placement, purchasing approximately $1.16 million of shares of common stock at a purchase price of $1.01 per share. In connection with the Private Placement, the Company filed a registration statement on Form S-3 that was declared effective on September 8, 2023.
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Intellectual Property In December 2017, Forte entered into an exclusive license agreement with the DHHS, as amended in May 2020.
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As such, while the ATM Facility remains in place, we remain restricted in our ability to access additional funding from the sale of securities under Form S-3. Intellectual Property We own one US patent for administering a combination of Gram-positive and Gram-negative bacteria along with metabolites for treatment of a wide variety of skin conditions.
Removed
Under the agreement, the DHHS granted Forte an exclusive, sublicensable and worldwide license to certain rights in 12 patents under which we may develop and commercialize pharmaceutical and biological compositions comprising Gram-negative bacteria for the topical 55 treatment of dermatological diseases and conditions. The Company terminated its license agreement with DHHS effective April 2, 2022.
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Macroeconomic Environment Businesses throughout our industry have been and will continue to be impacted by a number of challenging and unexpected global and national events and circumstances that continue to evolve, including without limitation, the military conflicts in Ukraine and the Middle East, increased economic uncertainty, inflation, rising interest rates, recent and any potential future financial institution 55 failures, and other geopolitical tensions.
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The estimated expiration dates of these patents are 2043-2044. COVID-19 The pandemic caused by an outbreak of a new strain of coronavirus, or COVID-19 and its variants, has resulted, and is likely to continue to result, in significant national and global economic disruption and may adversely affect our operations.
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The extent of the impact of these events and circumstances on our business, operations and development timelines and plans remains uncertain, and will depend on certain developments, including the duration and scope of the events and their impact on our development activities, third parties with whom we do business, as well as its impact on regulatory authorities and our key scientific and management personnel.
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We are actively monitoring the impact of COVID-19 and the possible effects on our financial condition, liquidity, operations, suppliers, industry, and workforce. However, the full extent, consequences, and duration of the COVID-19 pandemic and the resulting impact on us cannot currently be predicted.
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We have been and continue to actively monitor the potential impacts that these various events and circumstances may have on our business and we take steps, where warranted, to minimize any potential negative impacts on our business resulting from these events and circumstances.
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We will continue to evaluate the impact that these events could have on our operations, financial position, results of operations and cash flows. Components of Operating Results Revenue We have no products approved for commercial sale or in active development and have not generated any revenue from product sales.
Added
We expect that our future revenue will fluctuate from quarter to quarter for many reasons, including the uncertain timing and amount of any such payments and sales. Research and Development Expenses Research and development costs are expensed as incurred.
Removed
Research and Development Expenses Research and development costs are expensed as incurred.
Added
Pre-Funded Warrants We assessed the pre-funded warrants issued with private equity financing for appropriate equity or liability classification and determined the pre-funded warrants were freestanding instruments that do not meet the definition of a liability in accordance with ASC 480 and do not meet the definition of a derivative in accordance with ASC 815.
Removed
We believe that the accounting policies discussed below are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving management’s judgments and estimates.
Added
The pre-funded warrants are classified as a component of permanent equity because they are freestanding financial instruments that are legally detachable and separately exercisable from the shares of common stock with which they were issued, are immediately exercisable, are not considered mandatorily redeemable, and permit the holders to receive a fixed number of shares of common stock upon exercise.
Removed
These inputs are: Expected term – The expected term represents the period that our stock-based awards are expected to be outstanding and is determined using the simplified method which is based on the mid-point between the vesting period and the end of the contractual term.
Added
In addition, the warrants do not provide any guarantee of value or return.
Removed
We have very limited historical information to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior for our stock-based awards. 57 Expected volatility – Due to the Company’s limited trading of its common stock and lack of company-specific historical or implied volatility data, the Company has based its estimate of expected volatility on the historical volatility of a group of similar companies in the life sciences industry whose shares are publicly traded.
Added
Accordingly, the pre-funded warrants are classified as equity and accounted for as a component of additional paid-in capital at the time of issuance. 57 Shares of common stock into which the pre-funded warrants may be exercised are considered outstanding for purposes of computing net loss per share because the shares may be issued for little or no consideration and are exercisable after the original issuance date.
Removed
The Company selects the peer group based on comparable characteristics, including development stage, product pipeline, and market capitalization. The Company computes historical volatility data using the daily closing prices for the selected companies’ shares during the equivalent period of the calculated expected term of the stock-based awards.
Added
The increase of $2.3 million was primarily due to an increase in professional and legal expense of $2.6 million, an increase in other expense of $0.4 million including rent and personnel expenses, partially offset by a reduction in stock-based compensation expense of $0.7 million . The Company anticipates insurance reimbursements in subsequent quarters for portions of its litigation expense.
Removed
The Company will continue to apply this process until sufficient amount of historical information regarding the volatility of its own stock price becomes available. Risk-Free Interest Rate – The risk-free interest rate is based on the U.S. Treasury zero coupon issues in effect at the time of grant for periods corresponding with the expected term of the stock-based awards.
Added
Interest Income The increase in interest income for the year ended December 31, 2023, compared with the same period in the prior year was primarily driven by higher interest income earned from our cash and cash equivalents as a result of higher interest rates.
Removed
General and Administrative Expenses General and administrative expenses were $8.3 million for the year ended December 31, 2022 compared to $7.6 million for the same period of 2021. The increase of $0.7 million was primarily due to an increase in legal expenses.
Added
Other Expense, net The decrease in other expense, net for the year ended December 31, 2023, compared with the same periods in the prior year was primarily driven by lower franchise tax expenses, partially offset by increased foreign exchange losses, net.
Removed
As of December 31, 2022, we had an accumulated deficit of approximately $87.0 million. We expect to incur operating losses in the future as we develop our current lead product candidate, FB-102.
Added
As of December 31, 2023, we had an accumulated deficit of approximately $118.5 million.
Removed
As of the date of filing of this Annual Report on Form 10-K, we have reached this limit and, as such, may not sell any additional securities under the ATM Facility (or otherwise under Form S-3) until such time as (i) during the preceding twelve-month period, we have not sold securities in excess of the limitation set forth in General Instruction I.B.6 of Form S-3, or (ii) the aggregate market value of our common stock held by non-affiliates is less than $75 million (as determined by General Instruction I.B.6 of Form S-3).
Added
As such, while the ATM Facility remains in place, Forte remains restricted in its ability to access additional funding from the sale of securities under Form S-3. We are not obligated to sell any shares under the ATM Facility.
Removed
Net cash used in financing activities was $44 thousand for the year ended December 31, 2021 consisted of $106 thousand in payments related to our shelf registration, partially offset by $62 thousand of proceeds received for the exercise of stock options.
Added
On July 31, 2023, we issued 15,166,957 shares of our common stock at a purchase price of $1.006 per Share, and 9,689,293 pre-funded warrants to purchase shares of common stock at a purchase price of $1.005 per pre-funded warrant ("in the Private Placement").
Added
The pre-funded warrants have an exercise price of $0.001 per share of common stock, are immediately exercisable and remain exercisable until exercised in full. The gross proceeds of the Private Placement were approximately $25 million and we incurred $272 thousand in issuance costs.
Added
Certain executive officers, senior management, and board members participated in this Private Placement, purchasing approximately $1.16 million of shares of common stock at a purchase price of $1.01 per share. In connection with the Private Placement, we filed a registration statement on Form S-3 that was declared effective on September 8, 2023.
Added
Investing Activities Net cash provided by investing activities for the year ended December 31, 2023 was due to proceeds of $10.1 million from the redemption of U.S. treasury bills partially offset by their purchase of approximately $10.0 million.
Added
Financing Activities Net cash provided by financing activities for the year ended December 31, 2023 was primarily due to the net proceeds of $24.8 million received from our Private Placement of 15,166,957 shares of the Company’s common stock at a purchase price of $1.006 per share, and 9,689,293 pre-funded warrants to purchase shares of common stock at a purchase price of $1.005 per pre-funded warrant.

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