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

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Paragraph-level year-over-year comparison of Rani Therapeutics Holdings, 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.

+648 added−623 removedSource: 10-K (2024-03-20) vs 10-K (2023-03-22)

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

648 paragraphs added · 623 removed · 448 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

148 edited+52 added−64 removed165 unchanged
Biggest changeIn January 2023, we announced entering into a License and Supply Agreement with Celltrion, Inc. (“Celltrion”) under which we receive a license and supply of Celltrion’s ustekinumab biosimilar for development and commercialization of RT-111 worldwide, subject to a right of first negotiation for Celltrion following completion of a Phase 1 clinical trial that meets its primary endpoint(s) (the “Celltrion Agreement”).
Biggest changeStelara ® SC 0.50mg RT-111 0.50mg RT-111 0.75mg Cmax (ng/mL) 56 ± 4 67 ± 7 92 ± 8 Tmax (days) 10 ± 0.8 3.1 ± 0.2* 3.3 ± 0.2* AUC (day*ng/mL) 1,566 ± 130 1,315 ± 150 1,814 ± 165 Bioavailability -- 84% -- Data are Mean ± SE from all subjects, including those with anti-drug antibodies. *p 9 License and Supply Agreement In January 2023, we announced entering into a License and Supply Agreement with Celltrion under which we receive a license and supply of Celltrion’s ustekinumab biosimilar for development and commercialization of RT-111 worldwide, subject to a right of first negotiation for Celltrion following completion of a Phase 1 clinical trial that meets its primary endpoint(s).
We maintain in-house capabilities related to the aseptic manufacturing, following FDA Current Good Manufacturing Practice regulations for drugs that contain minimum requirements for the methods, facilities, and controls used in manufacturing, processing, and packing of a drug product (“cGMP”) guidelines.
We maintain in-house capabilities related to the aseptic manufacturing, following FDA Current Good Manufacturing Practice (“cGMP”) regulations for drugs that contain minimum requirements for the methods, facilities, and controls used in manufacturing, processing, and packing of a drug product guidelines.
In addition, the FDA currently requires pre-approval of promotional materials as a condition for accelerated approval, which could adversely impact the timing of the commercial launch of the product. 27 • The Food and Drug Administration Safety and Innovation Act established a category referred to as “breakthrough therapies.” A sponsor may seek FDA designation of a product candidate as a “breakthrough therapy” if the product is intended, alone or in combination with one or more other products, to treat a serious or life-threatening disease or condition and preliminary clinical evidence indicates that the product may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints.
In addition, the FDA currently requires pre-approval of promotional materials as a condition for accelerated approval, which could adversely impact the timing of the commercial launch of the product. • The Food and Drug Administration Safety and Innovation Act established a category referred to as “breakthrough therapies.” A sponsor may seek FDA designation of a product candidate as a “breakthrough therapy” if the product is intended, alone or in combination with one or more other products, to treat a serious or life-threatening disease or condition and preliminary clinical evidence indicates that the product may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints.
Safety Data • RT-102 was generally well tolerated, with no serious adverse events noted during the study o None of the participants withdrew from the repeat-dose study due to any adverse event related to the RaniPill capsule or due to difficulty swallowing the capsule o Two subjects had transient, mild-to-moderate adverse events which resolved without any intervention • Device remnants were excreted without sequelae in all subjects 9 Pharmacokinetics • RT-102 delivered 20 µg of PTH with high bioavailability (relative to 20 µg SC Forteo (teriparatide) in Study Part 1), confirming the high bioavailability of PTH delivered via the RaniPill capsule observed during Study Part 1.
Safety Data • RT-102 was generally well tolerated, with no serious adverse events noted during the study o None of the participants withdrew from the repeat-dose study due to any adverse event related to the RaniPill capsule or due to difficulty swallowing the capsule o Two subjects had transient, mild-to-moderate adverse events which resolved without any intervention • Device remnants were excreted without sequelae in all subjects Pharmacokinetics • RT-102 delivered 20 µg of PTH with high bioavailability (relative to 20 µg SC Forteo (teriparatide) in Study Part 1, confirming the high bioavailability of PTH delivered via the RaniPill capsule observed during Study Part 1.
For example, the Patient Protection and Affordable Care Act, as amended by the Health Care 30 and Education Reconciliation Act (collectively, the “ACA”), which was enacted in March 2010, contains a number of provisions of particular import to the pharmaceutical and biotechnology industries, including, but not limited to, those governing enrollment in federal healthcare programs, a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated, and annual fees based on pharmaceutical companies’ share of sales to federal health care programs.
For example, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act (collectively, the “ACA”), which was enacted in March 2010, contains a number of provisions of particular import to the pharmaceutical and biotechnology industries, including, but not limited to, those governing enrollment in federal healthcare programs, a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated, and annual fees based on pharmaceutical companies’ share of sales to federal health care programs.
Some studies also include oversight by an independent group of qualified experts organized by the clinical trial sponsor, known as a data safety monitoring board, which provides authorization for whether or not a study may move forward at designated check points based on access to certain data from the study and may halt the clinical trial if the data safety monitoring board determines that there is an 24 unacceptable safety risk for subjects, no demonstration of efficacy, or other grounds.
Some studies also include oversight by an independent group of qualified experts organized by the clinical trial sponsor, known as a data safety monitoring board, which provides authorization for whether or not a study may move forward at designated check points based on access to certain data from the study and may halt the clinical trial if the data safety monitoring board determines that there is an unacceptable safety risk for subjects, no demonstration of efficacy, or other grounds.
Despite the painful injections required to administer it, adalimumab was the best-selling drug globally in 2020. Our solution: RT-105 We are developing RT-105, the RaniPill capsule containing a formulation of adalimumab, for oral treatment of a host of inflammatory conditions, beginning with treatment of psoriatic arthritis and later expanding to other indications for which TNF-alpha inhibitors are approved.
Despite the painful injections required to administer it, adalimumab was the best-selling drug globally in 2020. 12 Our solution: RT-105 We are developing RT-105, the RaniPill capsule containing a formulation of adalimumab, for oral treatment of a host of inflammatory conditions, beginning with treatment of psoriatic arthritis and later expanding to other indications for which TNF-alpha inhibitors are approved.
Patent & Trademark Office (“USPTO”) in examining the patent application (patent term adjustment) or extended to account for term effectively lost as a result of the FDA regulatory review period (patent term extension), or both. Our initial patent family has a priority date in 2009, with patent term expected to extend into at least 2030 if all fees are paid.
Patent & Trademark Office (“USPTO”) in examining the patent application (patent term adjustment) or extended to account for term effectively lost as a result of the FDA regulatory review period (patent term extension), or both. 23 Our initial patent family has a priority date in 2009, with patent term expected to extend into at least 2030 if all fees are paid.
We believe selection of these targets will allow us to potentially accelerate product approval and market launch, while also broadening patient, provider, and payor acceptance of the RaniPill capsule. 7 Below is a summary of our product candidate pipeline. We envision complementing these programs with robust partnering activities to maximize the value inherent in the RaniPill capsule.
We believe selection of these targets will allow us to potentially accelerate product approval and market launch, while also broadening patient, provider, and payor acceptance of the RaniPill capsule. Below is a summary of our product candidate pipeline. We envision complementing these programs with robust partnering activities to maximize the value inherent in the RaniPill capsule.
As such, we are eligible for exemptions from various reporting requirements applicable to other public companies that are not emerging growth companies, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002 and reduced disclosure obligations regarding executive compensation.
As such, we are eligible for exemptions from various reporting requirements applicable to other public companies that are not emerging growth companies, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002 and reduced disclosure obligations regarding executive compensation. 33
In the United States, there were estimated to be seven million patients with psoriasis and three million patients with Crohn’s disease or ulcerative colitis in 2021. Our solution: RT-111 We are developing RT-111, a RaniPill capsule containing an ustekinumab biosimilar, for the treatment of various inflammatory conditions.
In the United States, there were estimated to be seven million patients with psoriasis and three million patients with Crohn’s disease or ulcerative colitis in 2021. 8 Our solution: RT-111 We are developing RT-111, a RaniPill capsule containing an ustekinumab biosimilar, for the treatment of various inflammatory conditions.
A decrease in, or decision to stop, payor reimbursement for a product could reduce physician prescribing of, and patient demand for, the product. Competition Our industry is highly competitive and subject to rapid and significant technological changes as researchers learn more about diseases and develop new technologies and treatments.
A decrease in, or decision to stop, payor reimbursement for a product could reduce physician prescribing of, and patient demand for, the product. 22 Competition Our industry is highly competitive and subject to rapid and significant technological changes as researchers learn more about diseases and develop new technologies and treatments.
Current Good Manufacturing Practices (cGMP) To obtain marketing approval for a candidate product, we must finalize processes for manufacturing the product in commercial quantities in accordance with cGMP requirements. These processes must address design, monitoring, control, and maintenance of manufacturing processes and facilities, and the implemented processes must be capable of consistently producing quality batches of the product candidate.
Current Good Manufacturing Practices (“cGMP”) To obtain marketing approval for a candidate product, we must finalize processes for manufacturing the product in commercial quantities in accordance with cGMP requirements. These processes must address design, monitoring, control, and maintenance of manufacturing processes and facilities, and the implemented processes must be capable of consistently producing quality batches of the product candidate.
The IDE application must be supported by appropriate data, such as animal and laboratory testing results, showing that it is safe to test the device in humans and that the testing protocol is scientifically sound. 25 An IND or IDE must become effective before human clinical trials may begin.
The IDE application must be supported by appropriate data, such as animal and laboratory testing results, showing that it is safe to test the device in humans and that the testing protocol is scientifically sound. An IND or IDE must become effective before human clinical trials may begin.
The device performance analysis does not include participants excluded from the study per protocol, as drug delivery was not measured in such participants. Study Part 2 - Topline Results Study Design Study Part 2 was a continuation of Rani’s single-center, open-label Phase 1 study of RT-102 conducted in Australia.
The device performance analysis does not include participants excluded from the study per protocol, as drug delivery was not measured in such participants. 11 Study Part 2 - Topline Results Study Design Study Part 2 was a continuation of Rani’s single-center, open-label Phase 1 study of RT-102 conducted in Australia.
Failure to exhibit due diligence with regard to conducting Phase 4 clinical trials could result in withdrawal of approval for the associated product. During all phases of clinical development, regulatory agencies require extensive monitoring and auditing of all clinical activities, clinical data, and clinical trial investigators.
Failure to exhibit due diligence with regard to conducting Phase 4 clinical trials could result in withdrawal of approval for the associated product. 25 During all phases of clinical development, regulatory agencies require extensive monitoring and auditing of all clinical activities, clinical data, and clinical trial investigators.
The FDA may, on its own initiative or at the request of the applicant, grant deferrals for submission of data or full or partial waivers. Expedited development and review programs The FDA has a number of programs intended to expedite the development or review of products that meet certain criteria.
The FDA may, on its own initiative or at the request of the applicant, grant deferrals for submission of data or full or partial waivers. 27 Expedited development and review programs The FDA has a number of programs intended to expedite the development or review of products that meet certain criteria.
Additionally, because certain products originally approved under an NDA have been reclassified by the FDA and would now follow a BLA pathway, it is unclear whether conclusions regarding such reclassified products 19 can be leveraged in our BLA submissions.
Additionally, because certain products originally approved under an NDA have been reclassified by the FDA and would now follow a BLA pathway, it is unclear whether conclusions regarding such reclassified products can be leveraged in our BLA submissions.
In parallel, we are in the process of automating the entire manufacturing process, which we anticipate being complete by the time the RaniPill capsule is commercialized. 21 Commercialization Markets The key markets for our products, once approved, will be in the United States, Europe, and Asia.
In parallel, we are in the process of automating the entire manufacturing process, which we anticipate being complete by the time the RaniPill capsule is commercialized. Commercialization Markets The key markets for our products, once approved, will be in the United States, Europe, and Asia.
Of the 39 participants, 15 were administered RT-102 containing a single 20 μg dose of PTH and 14 were administered RT-102 containing a single 80 μg dose of PTH, while a control group of ten participants received a single 20 μg subcutaneous injection (SC) of Forteo (teriparatide), a commercial formulation of PTH for subcutaneous (“SC”) administration.
Of the 39 participants, 15 were administered RT-102 containing a single 20 μg dose of PTH and 14 were administered RT-102 containing a single 80 μg dose of PTH, while a control group of ten participants received a single 20 μg subcutaneous injection (SC) of Forteo (teriparatide), a commercial formulation of PTH for subcutaneous administration.
The FDA closely regulates the marketing, labeling, advertising, and promotion of biologics. A company can make only those claims relating to safety, efficacy, purity, and potency that are approved by the FDA and in accordance with the provisions of 28 the approved label.
The FDA closely regulates the marketing, labeling, advertising, and promotion of biologics. A company can make only those claims relating to safety, efficacy, purity, and potency that are approved by the FDA and in accordance with the provisions of the approved label.
The Purple Book also includes for each biological product a list of patents identified to a biosimilar applicant during biosimilar litigation under the BPCIA. Exclusivities Some of our product candidates may be eligible for exclusivities provided under various FDA programs.
The Purple Book also includes for each biological product a list of patents identified to a biosimilar applicant during biosimilar litigation under the BPCIA. 29 Exclusivities Some of our product candidates may be eligible for exclusivities provided under various FDA programs.
Patents in these families are expected to expire between the late 2030s and early 2040s if all fees are paid. 23 Trade secrets and other proprietary information We rely in part on keeping our trade secrets and other proprietary information confidential.
Patents in these families are expected to expire between the late 2030s and early 2040s if all fees are paid. Trade secrets and other proprietary information We rely in part on keeping our trade secrets and other proprietary information confidential.
Forteo SC 20 μg RT-102 20 μg RT-102 80 μg Cmax (pg/mL) 128 ± 20 98 ± 10 971 ± 223 Tmax (hr) 0.217 1.13 0.994 AUC (h*pg/mL) 126 ± 64 342 ± 36 2600 ± 649 Relative BA (5) N/A ~300% ~400% Device Performance • Two versions of the RaniPill capsule were used during Study Part 1: Version C, which was used in Rani’s prior Phase 1 study of octreotide (which also utilized a Version A and Version B); and Version D, the latest iteration of the RaniPill capsule. • RaniPill Version D demonstrated a higher drug delivery success rate than Version C: • 95% (20/21) of participants received successful drug delivery when ingesting RaniPill Version D. • 75% (6/8) of participants received successful drug delivery when ingesting RaniPill Version C.
Forteo SC 20 μg RT-102 20 μg RT-102 80 μg Cmax (pg/mL) 128 ± 20 98 ± 10 971 ± 223 Tmax (hr) 0.217 1.13 0.994 AUC (h*pg/mL) 126 ± 64 342 ± 36 2600 ± 649 Relative BA (5) N/A ~300% ~400% Device Performance • Two versions of the RaniPill capsule were used during Study Part 1: Version C, which was used in our prior Phase 1 study of octreotide (which also utilized a Version A and Version B); and Version D, the latest iteration of the RaniPill capsule. • RaniPill Version D demonstrated a higher drug delivery success rate than Version C: o 95% (20/21) of participants received successful drug delivery when ingesting RaniPill Version D. o 75% (6/8) of participants received successful drug delivery when ingesting RaniPill Version C.
This level of bioavailability is similar to subcutaneous injection and is significantly higher than that of currently marketed chemistry-based oral biologics, the best attempts of which to our awareness have resulted in peptides being delivered with only low single-digit bioavailability. • Protective coating avoids deployment in the stomach – The proprietary protective coating formulation is pH-sensitive, enabling the RaniPill capsule to maintain its integrity through the acidic environment in the stomach for deployment in the small intestine. • Protection of the drug prior to delivery – The microneedle is protected from intestinal fluid until delivery, and then the rapid injection of the microneedle into the intestinal wall during delivery provides for little or no exposure of the microneedle to intestinal fluid.
This level of bioavailability is significantly higher than that of currently marketed chemistry-based oral biologics, the best attempts of which to our awareness have resulted in peptides being delivered with only low single-digit bioavailability. • Protective coating avoids deployment in the stomach – The proprietary protective coating formulation is pH-sensitive, enabling the RaniPill capsule to maintain its integrity through the acidic environment in the stomach for deployment in the small intestine. • Protection of the drug prior to delivery – The microneedle and drug are protected from intestinal fluid until delivery, and then the rapid injection of the microneedle into the intestinal wall during delivery provides for little or no exposure of the microneedle or drug to intestinal fluid.
The FDCA requires that a sponsor who is planning to submit a marketing application for a product that includes a new active ingredient, new indication, new dosage form, new dosing regimen, or new route of administration submit an initial Pediatric Study Plan, (“PSP”), within sixty days of an end-of-Phase 2 meeting or as may be agreed between the sponsor and FDA.
The FDCA requires that a sponsor who is planning to submit a marketing application for a product that includes a new active ingredient, new indication, new dosage form, new dosing regimen, or new route of administration submit an initial Pediatric Study Plan, (“PSP”), within 60 days of an end-of-Phase 2 meeting or as may be agreed between the sponsor and FDA.
Dissolution of the coating leads to a series of steps that result in a biologic being delivered into the highly vascularized wall of the small intestine so that the biologic can be absorbed into the vasculature and enter the bloodstream. 12 The following illustrations depict the clinically tested RaniPill GO capsule traversing through and deploying within a lumen of the intestine illustrated in cross section.
Dissolution of the coating leads to a series of steps that result in a biologic being delivered into the highly vascularized wall of the small intestine so that the biologic can be absorbed into the vasculature and enter the bloodstream. 15 The following illustrations depict the clinically tested RaniPill GO capsule traversing through and deploying within a lumen of the intestine illustrated in cross section.
Broadly speaking, we will face competition from current and future (generic or biosimilar) manufacturers of the branded injectable versions of our pipeline drugs, manufacturers such as AbbVie Inc., Eli Lilly and Company, Novartis AG, Janssen Biotech, Inc., etc. However, we believe that oral biologics have the potential to take significant market share from current injectable therapies.
Broadly speaking, we will face competition from current and future (generic or biosimilar) manufacturers of the branded injectable versions of our pipeline drugs, manufacturers such as AbbVie Inc., Eli Lilly and Company, Janssen Biotech, Inc., etc. However, we believe that oral biologics have the potential to take significant market share from current injectable therapies.
Any shares of Class B common stock will be cancelled on a one-for-one basis if we, at the election of the Continuing LLC Owners, redeem or exchange such Paired Interest pursuant to the terms of the Rani LLC Agreement. • Entered into a registration rights agreement and tax receivable agreement (“Tax Receivable Agreement” or “TRA”) with certain of the Continuing LLC Owners.
Any shares of Class B common stock will be canceled on a one-for-one basis if we, at the election of the Continuing LLC Owners, redeem or exchange such Paired Interest pursuant to the terms of the Rani LLC Agreement. • Entered into a registration rights agreement and tax receivable agreement (“Tax Receivable Agreement” or “TRA”) with certain of the Continuing LLC Owners.
Safety Data • In Study Part 1, RT-102 was generally well tolerated, with no RaniPill-related adverse events (“AEs”) observed in study participants: o 0% (0/15) of participants dosed with RT-102 20 μg experienced drug-related AEs. 8 o 14% (2/14) of participants dosed with of RT-102 80 μg experienced drug-related AEs. o 50% (5/10) of participants dosed with 20 μg of Forteo SC experienced drug-related AEs. o There were no serious adverse events (“SAEs”) noted during Study Part 1.
Safety Data • In Study Part 1, RT-102 was generally well tolerated, with no RaniPill-related adverse events (“AEs”) observed in study participants: • 0% (0/15) of participants dosed with RT-102 20 μg experienced drug-related AEs. • 14% (2/14) of participants dosed with of RT-102 80 μg experienced drug-related AEs. • 50% (5/10) of participants dosed with 20 μg of Forteo SC experienced drug-related AEs. • There were no serious adverse events (“SAEs”) noted during Study Part 1.
We intend to become a leader in oral biologics by continuing to invest in our technology, such as by expanding payload capacity and developing novel biologic formulations to maximize the number of therapeutic targets and addressable markets. 11 • Expand our reach by selectively entering into strategic partnerships.
We intend to become a leader in oral biologics by continuing to invest in our technology, such as by expanding payload capacity and developing novel biologic formulations to maximize the number of therapeutic targets and addressable markets. 14 • Expand our reach by selectively entering into strategic partnerships.
The study compared two control groups of rodents undergoing sham surgery (N=10) and ovariectomy (N=10) receiving no drug, to three OVX groups each dosed with 5 mcg/kg per day of either RT-102 DS (N=10), teriparatide (N=10), or abaloparatide (N=10).
The study compared two control groups of rodents undergoing sham surgery (N=10) and ovariectomy (N=10) receiving no drug, to three overiectomized groups each dosed with 5 mcg/kg per day of either RT-102 DS (N=10), teriparatide (N=10), or abaloparatide (N=10).
Novartis evaluation agreement In May 2015, we entered into an Evaluation and First Rights Agreement (the “Novartis Agreement”), with Novartis Pharmaceuticals Corporation, or Novartis, in which we agreed to perform certain specified research for Novartis to evaluate two specified Novartis compounds with our oral drug delivery technology.
Novartis evaluation agreement In May 2015, we entered into an Evaluation and First Rights Agreement (the “Novartis Agreement”) with Novartis Pharmaceuticals Corporation (“Novartis”), in which we agreed to perform certain specified research for Novartis to evaluate two specified Novartis compounds with our oral drug delivery technology.
We, along with our third-party contractors, will be required to navigate the various preclinical, clinical, and commercial approval requirements of the governing regulatory authorities of the countries in which we wish to conduct studies or seek approval or licensure of our product candidates.
We, along with our third-party contractors and/or collaboration partners, will be required to navigate the various preclinical, clinical, and commercial approval requirements of the governing regulatory authorities of the countries in which we wish to conduct studies or seek approval or licensure of our product candidates.
Clinical trials involve the administration of the investigational product to human subjects under the supervision of qualified investigators in accordance with current Good Clinical Practices (“cGCP”), which includes the requirement that all research subjects provide their informed consent for their participation in any clinical trial.
Clinical trials involve the administration of the investigational product to human subjects under the supervision of qualified investigators in accordance with current Good Clinical Practices (“GCP”), which includes the requirement that all research subjects provide their informed consent for their participation in any clinical trial.
In connection with the IPO, we were party to the following organizational transactions (the “Organizational Transactions”): • Amended and restated Rani LLC’s operating agreement (the “Rani LLC Agreement”) to appoint Rani Holdings as the sole managing member of Rani LLC and effectuated an exchange of all outstanding interests in Rani LLC into Class A Units and an equal number of voting noneconomic Class B units. 32 • Amended and restated our certificate of incorporation to provide for the issuance of (i) Class A common stock, each share of which entitles its holders to one vote per share, (ii) Class B common stock, each share of which entitles its holders to ten votes per share on all matters presented to the Company's stockholders, (iii) Class C common stock, which has no voting rights, except as otherwise required by law and (iv) preferred stock. • Certain holders of Class A Units tendered their Class A Units for shares of our Class A common stock.
As the sole managing member of Rani LLC, Rani Holdings operates and controls all of Rani LLC’s operations, and through Rani LLC, conducts all of Rani LLC’s business. 32 In connection with the IPO, we were party to the following organizational transactions (the “Organizational Transactions”): • Amended and restated Rani LLC’s operating agreement (the “Rani LLC Agreement”) to appoint Rani Holdings as the sole managing member of Rani LLC and effectuated an exchange of all outstanding interests in Rani LLC into Class A Units and an equal number of voting noneconomic Class B units. • Amended and restated our certificate of incorporation to provide for the issuance of (i) Class A common stock, each share of which entitles its holders to one vote per share, (ii) Class B common stock, each share of which entitles its holders to ten votes per share on all matters presented to the Company's stockholders, (iii) Class C common stock, which has no voting rights, except as otherwise required by law and (iv) preferred stock. • Certain holders of Class A Units tendered their Class A Units for shares of our Class A common stock.
We believe this is a significant breakthrough in drug delivery with the potential to provide expansive opportunities for the company, such that we could potentially pursue a daily dosing option for over 50 additional biologics, for internal development or through partnership, including such biologics as pembrolizumab, etanercept, trastuzumab and secukinumab.
We believe this is a significant breakthrough in drug delivery with the potential to provide expansive opportunities for the company, such that we could potentially pursue a convenient dosing option for over 50 additional biologics, for internal development or through partnership, including such biologics as dupilumab, pembrolizumab, etanercept, trastuzumab and secukinumab.
We currently do not have agreements in place for long-term supplies of any API or drug substance, other than ustekinumab biosimilar for RT-111. Availability of API or drug substance supply may inform our decisions regarding which product candidates present the best development opportunities. Currently we do not have any approved products.
We currently do not have agreements in place for long-term supplies of any API or drug substance, other than ustekinumab biosimilar for RT-111 and adalimumab biosimilar for RT-105. Availability of API or drug substance supply may inform our decisions regarding which product candidates present the best development opportunities. Currently we do not have any approved products.
In addition, small daily dosing may allow for therapeutic exposures to be maintained within a narrow range, whereas larger less frequent injection dosing can lead to large variations in therapeutic exposure, which can directly contribute to adverse events, loss of efficacy, and increased propensity for immunogenic response.
In addition, small, more frequent dosing may allow for therapeutic exposures to be maintained within a narrow range, whereas larger less frequent injection dosing can lead to large variations in therapeutic exposure, which may contribute to adverse events, loss of efficacy, and increased propensity for immunogenic response.
Under the Celltrion Agreement, Celltrion grants us an exclusive, worldwide, royalty-free license to certain intellectual property to make, use, sell, offer for sale, import and otherwise exploit RT-111 and to use certain information to support the manufacture, development and commercialization of RT-111.
Under the Celltrion Agreements, Celltrion grants us an exclusive, worldwide, royalty-free license to certain intellectual property to make, use, sell, offer for sale, import and otherwise exploit RT-111 and RT-105 and to use certain information to support the manufacture, development and commercialization of RT-111 and RT-105.
We are opportunistically exploring strategic partnerships to enable us to expand our commercial reach and enable oral administration of a broader array of biologics. • Continue to strengthen our intellectual property portfolio. Our patent portfolio has helped establish us as a leading oral biologics company.
We are actively exploring strategic partnerships to enable us to expand our commercial reach and enable oral administration of a broader array of biologics and drugs. • Continue to strengthen our intellectual property portfolio. Our patent portfolio has helped establish us as a leading oral biologics company.
For example, the RaniPill capsule may enable a regimen of small daily doses, versus larger less-frequent doses for injections, to improve treatment adherence.
For example, the RaniPill capsule may enable a regimen of small, more frequent doses, versus larger less frequent doses for injections, to improve treatment adherence.
Celltrion, Inc. supplies ustekinumab pursuant to a license and supply agreement and has a right of first negotiation for development and commercial rights following completion of a Phase 1 clinical trial that meets its primary endpoint(s).
Celltrion, Inc. supplies the drug pursuant to a license and supply agreement and has a right of first negotiation for development and commercial rights following completion of a Phase 1 clinical trial that meets its primary endpoint(s).
These changes included aggregate reductions to Medicare payments to providers of 2% per fiscal year, which went into effect in April 2013 and, due to subsequent legislative amendments to the statute, including the Infrastructure Investment and Jobs Act, will remain in effect through 2031 unless additional action is taken by Congress.
These changes included aggregate reductions to Medicare payments to providers of 2% per fiscal year, which went into effect in April 2013 and, due to subsequent legislative amendments to the statute, including the Infrastructure Investment and Jobs Act, will remain in effect through 2031 unless additional action is taken by Congress. Further, Congress is considering additional health reform measures.
This allows a single platform design to be used with multiple drugs. • Optimized dosing regimen – Based on the confirmed patient preference for oral delivery alternatives, we expect better treatment adherence with oral dosing versus injections, thus enabling a more physician-selectable dosing regimen.
This allows a single platform design to be used with multiple drugs. • Optimized dosing regimen – Based on the confirmed patient preference for oral delivery alternatives, we expect better treatment adherence with oral dosing versus injections, thus enabling a more clinically-favorable dosing regimen.
We plan to continue to innovate and expand our intellectual property by developing novel formulations and new applications of the RaniPill capsule. Rani LLC was founded by Mir Imran, our Chairman of the Board, who continues to contribute to our strategic planning and product development.
We plan to continue to innovate and expand our intellectual property by developing further innovations and new applications of the RaniPill capsule. Rani LLC was founded by Mir Imran, our Chairman of the Board, who continues to contribute to our strategic planning and product development.
The degree to which we may be able to reduce the burden on our own development may depend on whether the API is the same as the original approved product.
The degree to which we may be able to reduce the burden on our own development may depend on whether the API or drug substance is the same as the original approved product.
In the event Celltrion does not timely exercise the ROFN or Celltrion notifies us that it does not intend to exercise the ROFN or, after timely exercising the ROFN, notifies us that Celltrion withdraws its exercise of the ROFN, or the parties fail to enter into a definitive agreement for the development and commercialization of RT-111 within the exclusive negotiation period, then the ROFN will terminate and we will have no further obligations under the Celltrion Agreement related to a ROFN.
In the event Celltrion does not timely exercise the ROFN or Celltrion notifies us that it does not intend to exercise the ROFN or, after timely exercising the ROFN, notifies us that Celltrion withdraws its exercise of the ROFN, or the parties fail to enter into a definitive agreement for the development and commercialization of the applicable program within the exclusive negotiation period, then the ROFN regarding that program will terminate and we will have no further obligations under the Celltrion Agreements related to a ROFN for that program.
As of December 31, 2022, we have administered the RaniPill capsule 185 times to 98 human subjects in clinical trials, including seven-day repeat-dosing in ten subjects in our Phase 1 study of RT-102. This is in addition to oral administrations of the RaniPill capsule, without a drug or needle, in non-significant risk studies.
As of December 31, 2023, we have administered the RaniPill capsule 233 times to 146 human subjects in clinical trials, including seven-day repeat-dosing in ten subjects in our Phase 1 study of RT-102. This is in addition to oral administrations of the RaniPill capsule, without a drug or needle, in non-significant risk studies.
Data privacy and security obligations In the ordinary course of our business, we may collect, receive, process, generate, use, transfer, disclose, make accessible, protect, secure, dispose of, transmit, share and store (commonly known as processing) proprietary, confidential and sensitive information, including personal data, intellectual property, trade secret, and proprietary information owned or controlled by ourselves or third parties (collectively, sensitive information).
Data privacy and security obligations In the ordinary course of our business, we may collect, receive, process, generate, use, transfer, disclose, make accessible, protect, secure, dispose of, transmit, share and store (“process”) proprietary, confidential and sensitive information, including personal data, intellectual property, trade secret, clinical trial data, and proprietary information owned or controlled by ourselves or third parties (collectively, sensitive data).
The number and scope of data privacy and security laws, regulations and other obligations is changing, subject to differing applications and interpretations, and may be inconsistent among jurisdictions, or in conflict with other data processing obligations.
Obligations related to the processing of personal data worldwide is rapidly evolving. The number and scope of data privacy and security laws, regulations and other obligations is changing, subject to differing applications and interpretations, and may be inconsistent among jurisdictions, or in conflict with other data processing obligations.
Some of the features and advantages of the RaniPill capsule are listed below. • High bioavailability and high dosing accuracy – Our studies conducted to date have demonstrated that the RaniPill capsule delivers biologics with bioavailability that is generally comparable to subcutaneous injection, with high dosing accuracy.
Some of the features and advantages of the RaniPill capsule are listed below. • High bioavailability and high dosing accuracy – Our studies conducted to date have demonstrated that the RaniPill capsule delivers biologics with high bioavailability and high dosing accuracy.
PTH therapies are delivered by daily subcutaneous injections for up to two years. Approximately ten million Americans suffer from osteoporosis; however, we estimate that only a small fraction of this population is being treated with a form of PTH. While there may be other reasons for this, we believe that patient aversion to daily injections may be a major factor.
Approximately ten million Americans suffer from osteoporosis; however, we estimate that only a small fraction of this population is being treated with a form of PTH. While there may be other reasons for this, we believe that patient aversion to daily injections may be a major factor.
Animal studies require pre-approval by an independent Institutional Animal Care and Use Committee (“IACUC”). Human studies in the United States require pre-approval by the FDA and an independent IRB, requested by way of an IDE or IND for investigational products such as our product candidates.
Human studies in the United States require pre-approval by the FDA and an independent IRB, requested by way of an IDE or IND for investigational products such as our product candidates.
Pharmacodynamics - Rodent Study We also conducted a 6-week pharmacodynamic (“PD”) study of the RT-102 drug substance (“DS”) PTH (1-34) to evaluate the effect of daily RT-102 DS intraperitoneal (“IP”) injections on bone mineral density (“BMD”) in a rodent model of osteoporosis.
Preclinical pharmacodynamic study We conducted a 6-week pharmacodynamic study of the RT-102 drug substance PTH (1-34) to evaluate the effect of daily RT-102 drug substance (“DS”) intraperitoneal injections on bone mineral density in a rodent model of osteoporosis.
If Celltrion timely exercises the ROFN, then Celltrion will have an exclusive period to negotiate in good faith a definitive agreement with us for rights to clinically develop and commercialize RT-111 in territories selected by Celltrion.
If Celltrion timely exercises the ROFN, then Celltrion will have an exclusive period of 90 days to negotiate in good faith a definitive agreement with us for rights to clinically develop and commercialize the applicable program in territories selected by Celltrion.
The number of successful deployments was comparable before and after food was consumed. Regulatory In January 2023, Rani announced that it completed a pre-IND meeting with the FDA with respect to RT-102. Following feedback from the meeting, Rani believes that a 505(b)(2) pathway is suitable for the development of RT-102 in the U.S.
The number of successful deployments was comparable before and after food was consumed. Regulatory We have completed a pre-IND meeting with the FDA with respect to RT-102. Following feedback from the meeting, we believe that a 505(b)(2) pathway is suitable for the development of RT-102 in the U.S.
As of February 13, 2023, this patent family included 71 patents issued in the United States and 139 patents issued in other jurisdictions (in Australia, Austria, Belgium, Canada, China, Denmark, Finland, France, Germany, India, Ireland, Italy, Japan, Netherlands, Norway, Poland, Portugal, Spain, Sweden, Switzerland, Turkey, and the United Kingdom), with applications pending in the United States, Australia, Canada, China, Europe, Hong Kong, India, and Japan.
As of January 1, 2024, this patent family included 79 patents issued in the United States and 144 patents issued in other jurisdictions (in Australia, Austria, Belgium, Canada, China, Denmark, Finland, France, Germany, India, Ireland, Italy, Japan, Netherlands, Norway, Poland, Portugal, Spain, Sweden, Switzerland, Turkey, and the United Kingdom), with applications pending in the United States, Australia, Canada, China, Europe, Hong Kong, India, and Japan.
Item 1. Business Overview We are a clinical stage biotherapeutics company focusing on advancing technologies to enable the administration of biologics and drugs orally, to provide patients, physicians, and healthcare systems with a convenient alternative to painful injections. We are advancing a portfolio of oral therapeutics using our proprietary delivery technology.
Item 1. Business Overview We are a clinical stage biotherapeutics company focusing on advancing technologies to enable the administration of biologics and drugs orally, to provide patients, physicians, and healthcare systems with a convenient alternative to painful injections.
We entered into a License and Supply Agreement with Celltrion, under which we receive a license and supply of Celltrion’s ustekinumab biosimilar for development and commercialization worldwide, subject a right of first negotiation for Celltrion following completion of a Phase 1 clinical trial that meets its primary endpoint(s). Preclinical studies We are currently conducting preclinical work with RT-111.
We entered into a License and Supply Agreement with Celltrion, under which we receive a license and supply of Celltrion’s ustekinumab biosimilar for development and commercialization worldwide, subject to a right of first negotiation for Celltrion following completion of a Phase 1 clinical trial that meets its primary endpoint(s).
The Phase 1 study met all of its endpoints, RT-102 was well tolerated and delivered PTH with high bioavailability (more than 300% greater bioavailability than subcutaneous injection of Forteo (teriparatide)). No serious adverse events were reported in the study.
The study involved a single-ascending dose portion and a seven-day repeat-dose portion. The Phase 1 study met all of its endpoints, RT-102 was well tolerated and delivered PTH with high bioavailability (more than 300% greater bioavailability than subcutaneous injection of Forteo (teriparatide)). No serious adverse events were reported in the study.
Under the Celltrion Agreement, we have sole right to manufacture, develop and commercialize RT-111 worldwide, subject to an exclusive right of first negotiation (“ROFN”) granted to Celltrion.
Under the Celltrion Agreements, we have sole right to manufacture, develop and commercialize RT-111 and RT-105 worldwide, subject to an exclusive right of first negotiation (“ROFN”) granted to Celltrion for each program.
PTH treatment requires lifelong daily injections but has suboptimal efficacy. Treatment of hypoparathyroidism is most effective with consistent and sustained plasma levels of PTH. Our solution: RT-110 We are developing RT-110, the RaniPill capsule containing our second novel formulation of PTH, for oral treatment of hypoparathyroidism. We have worldwide commercial rights to RT-110.
PTH is currently approved for the treatment of hypoparathyroidism by the FDA and EMA. PTH treatment requires lifelong daily injections but has suboptimal efficacy. Treatment of hypoparathyroidism is most effective with consistent and sustained plasma levels of PTH. Our solution: RT-110 We are developing RT-110, the RaniPill capsule containing our second novel formulation of PTH, for oral treatment of hypoparathyroidism.
In addition, the IRA, among other things, (i) directs HHS to negotiate the price of certain single-source drugs and biologics covered under Medicare and (ii) imposes rebates under Medicare Part B and Medicare Part D to penalize price increases that outpace inflation.
In addition, the IRA, among other things, (i) directs HHS to negotiate the price of certain 31 single-source drugs and biologics covered under Medicare and (ii) imposes rebates under Medicare Part B and Medicare Part D to penalize price increases that outpace inflation. These provisions take effect progressively starting in fiscal year 2023.
Celltrion has a right to terminate the agreement if we do not achieve certain development milestones, and each party has certain rights to terminate for material breach or safety concerns regarding the ustekinumab biosimilar or RT-111.
Celltrion has a right to terminate each agreement if we do not achieve certain development milestones with respect to that agreement, and each party has certain rights to terminate the applicable agreement for material breach or safety concerns regarding the stekinumab biosimilar or RT-111, or adalimumab biosimilar or RT-105, respectively.
This patent family claims many device aspects of the RaniPill capsule, and the delivery of a wide variety of biologics using the RaniPill capsule. Granted patents and pending patent applications in this core family number more than 260.
This patent family claims many device aspects of the RaniPill platform, including aspects of the RaniPill GO and certain aspects of the RaniPill HC, and the delivery of a wide variety of biologics using the RaniPill platform. Granted patents and pending patent applications in this core family number more than 270.
Our microtablet patent family includes claims covering the microtablets delivered by the RaniPill capsule. This patent family has a priority date in 2014, includes several dozen granted patents and pending patent applications, and is expected to have patent terms extending into at least 2035 if all fees are paid.
This patent family has a priority date in 2014, includes several dozen granted patents and pending patent applications, and is expected to have patent terms extending into at least 2035 if all fees are paid.
RT-XXX refers to the RaniPill capsule containing a biologic or drug. * Clinical timelines are subject to potential regulatory agency review delays. ** Each of these indications will require separate regulatory approvals. *** Partnered with Celltrion, Inc.
RT-XXX refers to the RaniPill capsule containing a biologic or drug. * Clinical timelines are subject to potential regulatory agency review delays. ** Partnered with Celltrion, Inc.
The U.S. federal Physician Payments Sunshine Act requires applicable manufacturers of prescription drugs, devices, biological products, or medical supplies subject to FDA approval or clearance for which payment is available under Medicare, Medicaid, or the Children’s Health Insurance Program, with specific exceptions, to annually report to the Centers for Medicare & Medicaid Services (“CMS”) information related to certain payments or other transfers of value made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), other healthcare professionals (such as physician assistants and nurse practitioners), and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members.
The U.S. federal Physician Payments Sunshine Act requires applicable manufacturers of prescription drugs, devices, biological products, or medical supplies subject to FDA approval or clearance for which payment is available under Medicare, Medicaid, or the Children’s Health Insurance Program, with specific exceptions, to annually report to the Centers for Medicare & Medicaid Services (“CMS”) information related to certain payments or other transfers of value made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), other healthcare professionals (such as physician assistants and nurse practitioners), and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members. 30 HIPAA created additional federal criminal statutes that prohibit, among other things, executing a scheme to defraud any healthcare benefit program, including private third-party payors, and making false statements relating to healthcare matters.
Patient aversion to injections has promoted a significant interest in the development of solutions to enable the oral delivery of biologics. However, a significant hurdle is the ability to achieve sufficient bioavailability with oral biologics to produce an intended therapeutic effect. Bioavailability refers to the proportion of a delivered dose that reaches the bloodstream in active form.
However, a significant hurdle is the ability to achieve sufficient bioavailability with oral biologics to produce an intended therapeutic effect. Bioavailability refers to the proportion of a delivered dose that reaches the bloodstream in active form.
In addition, the novel design of the balloon positions the microneedle approximately perpendicular to the intestinal wall for reliable drug delivery, with greater than 90% drug delivery success observed in our Phase 1 clinical trial of RT-102.
In addition, the novel design of the balloon positions the microneedle approximately perpendicular to the intestinal wall for reliable drug delivery, with greater than 90% cumulative drug delivery success observed with the latest version of the RaniPill capsule used in our Phase 1 clinical trials of RT-102 and RT-111.
Following our delivery to Celltrion of a data package consisting of topline safety information, pharmacokinetic results and device performance, and the raw data related to topline results from a Phase 1 clinical trial of RT-111 that meets its primary endpoint(s), Celltrion will have a certain period to exercise its ROFN.
For each program, following our delivery to Celltrion of a data package consisting of topline safety information, pharmacokinetic results and device performance, and the raw data related to topline results from a Phase 1 clinical trial of such program that meets its primary endpoint(s), Celltrion will have 30 days to exercise its ROFN with respect to that program.
As February 13, 2023, this patent family included 11 patents issued in the United States, 6 patents issued in other jurisdictions (i.e., Australia, China and Japan), with applications pending in the United States, Australia, Canada, China, Europe, India, and Japan.
As of January 1, 2024, this patent family included 12 patents issued in the United States, 11 patents issued in other jurisdictions (i.e., Australia, Canada, China and Japan), with applications pending in the United States, Australia, Canada, China, Europe, India, and Japan.
We believe that oral biologics utilizing our RaniPill technology have the potential to disrupt the large and growing biologics market. Our strategic vision is to disrupt and expand the market currently served by injectable only therapeutic biologics. We plan to do this by developing and advancing oral biologics therapies, directly ourselves and through partnering.
We believe that oral biologics utilizing our RaniPill technology have the potential to disrupt the large and growing biologics market. Our strategic vision is to disrupt and expand the market currently served by injectable only therapeutic biologics.
STELARA (ustekinumab) is an interleukin-12 and interleukin-23 antagonist marketed by Janssen Biotech, Inc. with sales of approximately $5.9 billion in the United States and approximately $9.1 billion worldwide in 2021. The latest expiring United States patent for STELARA (ustekinumab) will expire in September 2023.
STELARA (ustekinumab) is an interleukin-12 and interleukin-23 antagonist marketed by Janssen Biotech, Inc. with sales of approximately $6.4 billion in the United States and approximately $9.7 billion worldwide in 2022. The latest expiring United States patent for STELARA (ustekinumab) expired in 2023.
We intend to pursue high-value markets with biologics that are already approved where we can develop our own differentiated products. We believe that these products will take market share from available therapies, while also expanding existing markets by reaching new patient populations that otherwise are not being treated by injectable biologics. • Expand in-house manufacturing of the RaniPill capsule.
We believe that these products will take market share from available therapies, while also expanding existing markets by reaching new patient populations that otherwise are not being treated by injectable biologics. • Expand in-house manufacturing of the RaniPill capsule.
It is expected that most of our product candidates will include a biologic within the FDA’s definition of “biological product” and some of our product candidates may include a biologic that will be considered a “drug.” CDER is the lead center for review of therapeutic proteins at this time, thus most of our product candidates will have CDER as the lead center.
It is expected that most of our product candidates will include a biologic within the FDA’s definition of “biological product” and some of our product candidates may include a biologic that will be considered a “drug.” CDER is the lead center for review of therapeutic proteins at this time, thus most of our product candidates will have CDER as the lead center. 19 For each product candidate, we will perform numerous preclinical laboratory tests and animal studies, as well as perform human clinical trials.
Celltrion will provide, and we will purchase, supply of ustekinumab biosimilar at supply prices set forth in the Celltrion Agreement. We will obtain ustekiunmab biosimilar exclusively from Celltrion for the manufacture, development and commercialization of RT-111, subject to a right to obtain supply from alternative sources under certain circumstances where Celltrion experiences supply disruption.
We will obtain ustekiunmab biosimilar and adalimumab biosimilar exclusively from Celltrion for the manufacture, development and commercialization of RT-111 and RT-105, respectively, subject to a right to obtain supply from alternative sources under certain circumstances where Celltrion experiences supply disruption.
Platform study in humans confirming reliable deployment in fed and fasted states An initial clinical assessment of the RaniPill capsule (without a drug) was conducted to evaluate the safety and tolerability of the platform and to compare device performance in fed and fasted states in twenty healthy volunteers, divided into two groups of ten.
RT-100 was well-tolerated with no treatment-related adverse events and all animals remained clinically healthy throughout the study. 18 Platform study in humans confirming reliable deployment in fed and fasted states An initial clinical assessment of the RaniPill capsule (without a drug) was conducted to evaluate the safety and tolerability of the platform and to compare device performance in fed and fasted states in twenty healthy volunteers, divided into two groups of ten.
Chemistry-based oral 22 delivery companies include Oramed Pharmaceuticals, Inc., Entera Bio Ltd., Applied Molecular Transport Inc., Protagonist Therapeutics, Inc., i2O Therapeutics, Biora Therapeutics, Inc., Intract Pharma, and two with recently approved oral peptide products – Mycappssa from Amryt Pharma Plc (which announced it is being acquired by Chiesi Farmaceutici SpA) and Rybelsus from Novo Nordisk A/S.
Chemistry-based oral delivery companies include Oramed Pharmaceuticals, Inc., Entera Bio Ltd., Protagonist Therapeutics, Inc., i2O Therapeutics, Intract Pharma, and two with recently approved oral peptide products – Mycappssa from Chiesi Farmaceutici SpA and Rybelsus from Novo Nordisk A/S.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAmong the provisions of the ACA of importance to our potential product candidates are the following: • an annual, non-tax deductible fee payable by any entity that manufactures or imports specified branded prescription drugs and biologic agents payable to the federal government based on each company’s market share of prior year total sales of branded products to certain federal healthcare programs; • an increase in the statutory minimum rebates a manufacturer must pay under the Medicaid Drug Rebate Program; • a 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; • extension of manufacturers’ Medicaid rebate liability to individuals enrolled in Medicaid managed care organizations; • expansion of eligibility criteria for Medicaid programs in certain states; • a Medicare Part D coverage gap discount program, in which manufacturers must now agree to offer 50% (increased to 70% pursuant to the Bipartisan Budget Act of 2018, effective as of January 1, 2019) point-of-sale discounts off negotiated prices of applicable brand drugs to eligible beneficiaries under their coverage gap period, as a condition for the manufacturer’s outpatient drugs to be covered under Medicare Part D; • expansion of the entities eligible for discounts under the Public Health Service pharmaceutical pricing program; • a new requirement to annually report drug samples that manufacturers and distributors provide to physicians; and 64 • a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research.
Biggest changeThe ACA, among other things, increased the minimum level of Medicaid rebates payable by manufacturers of brand name drugs; required collection of rebates for drugs paid by Medicaid managed care organizations; required manufacturers to participate in a coverage gap discount program, under which they must agree to offer point-of-sale discounts (increased to 70 percent, effective as of January 1, 2019) 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; imposed a non-deductible annual fee on pharmaceutical manufacturers or importers who sell certain “branded prescription drugs” to specified federal government programs, implemented 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 expanded the types of entities eligible for the 340B drug discount program; expanded eligibility criteria for Medicaid programs; created a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research; and established a Center for Medicare Innovation at CMS to test innovative payment and service delivery models to lower Medicare and Medicaid spending, potentially including prescription drug spending.
Furthermore, strategic partners may negotiate for certain rights to control decisions regarding the development and commercialization of our product candidates, if approved, and may not conduct those activities in the same manner as we do.
Furthermore, strategic partners may negotiate for certain rights to control decisions regarding the development and, if approved, commercialization of our product candidates, and may not conduct those activities in the same manner as we do.
Investors may find our Class A common stock less attractive as a result of our reliance on these exemptions. If some investors find our Class A common stock less attractive as a result, there may be a less active trading market for our Class A common stock and our stock price may be more volatile.
Investors may find our Class A common stock less attractive as a result of our reliance on these exemptions. If some investors find our Class A common stock less attractive as a result, there may be a less active trading market for our Class A common stock and our stock price may be more volatile.
The FDA or comparable foreign regulatory authorities can delay, limit or deny approval of a product candidate for many reasons, including: • such authorities may disagree with the design or implementation of our clinical trials; • negative or ambiguous results from our clinical trials or results may not meet the level of statistical significance required by the FDA or comparable foreign regulatory authorities for approval; • serious and unexpected drug-related side effects may be experienced by participants in our clinical trials or by individuals using drugs similar to our product candidates; • the population studied in the clinical trial may not be sufficiently broad or representative to assure safety in the full population for which we seek approval; • such authorities may not accept clinical data from trials which are conducted at clinical facilities or in countries where the standard of care is potentially different from that of the United States; • we may be unable to demonstrate that a product candidate’s clinical and other benefits outweigh its safety risks; • such authorities may disagree with our interpretation of data from preclinical studies or clinical trials; • such authorities may not agree that the data collected from clinical trials of our product candidates are acceptable or sufficient to support the submission of a BLA or other submission or to obtain regulatory approval in the United States or elsewhere, and such authorities may impose requirements for additional preclinical studies or clinical trials; • such authorities may disagree regarding the formulation, labeling and/or the specifications of our product candidates; • approval may be granted only for indications that are significantly more limited than what we apply for and/or with other significant restrictions on distribution and use; • such authorities may find deficiencies in the manufacturing processes or facilities of our third-party manufacturers with which we contract for clinical and commercial supplies; • regulations of such authorities may significantly change in a manner rendering our or any of our potential future collaborators’ clinical data insufficient for approval; or • such authorities may not accept a submission due to, among other reasons, the content or formatting of the submission.
The FDA or comparable foreign regulatory authorities can delay, limit or deny approval of a product candidate for many reasons, including: • such authorities may disagree with the design or implementation of our clinical trials; • negative or ambiguous results from our clinical trials or results may not meet the level of statistical significance required by the FDA or comparable foreign regulatory authorities for approval; • serious and unexpected drug-related side effects may be experienced by participants in our clinical trials or by individuals using drugs similar to our product candidates; • the population studied in the clinical trial may not be sufficiently broad or representative to assure safety in the full population for which we seek approval; • such authorities may not accept clinical data from trials which are conducted at clinical facilities or in countries where the standard of care is potentially different from that of the United States; • we may be unable to demonstrate that a product candidate’s clinical and other benefits outweigh its safety risks; • such authorities may disagree with our interpretation of data from preclinical studies or clinical trials; • such authorities may not agree that the data collected from clinical trials of our product candidates are acceptable or sufficient to support the submission of a BLA or other submission or to obtain regulatory approval in the United States or elsewhere, and such authorities may impose requirements for additional preclinical studies or clinical trials; • such authorities may disagree regarding the formulation, labeling and/or the specifications of our product candidates; • approval may be granted only for indications that are significantly more limited than what we apply for and/or with other significant restrictions on distribution and use; • such authorities may find deficiencies in the manufacturing processes or facilities of our third-party manufacturers with which we contract for clinical and commercial supplies; 47 • regulations of such authorities may significantly change in a manner rendering our or any of our potential future collaborators’ clinical data insufficient for approval; or • such authorities may not accept a submission due to, among other reasons, the content or formatting of the submission.
All of these milestones are based on a variety of assumptions which may cause the timing of achievement of the milestones to vary considerably from our estimates, including: • our available capital resources or capital constraints we experience; • the rate of progress, costs and results of our clinical trials and research and development activities, including the extent of scheduling conflicts with participating clinicians and collaborators, and our ability to identify and enroll patients who meet clinical trial eligibility criteria; • our receipt of approvals by the FDA and comparable foreign regulatory authorities and the timing thereof; • other actions, decisions or rules issued by regulators; • our ability to access sufficient, reliable and affordable supplies of compounds used in the manufacture of our product candidates; • the ability of our suppliers to reliably provide the quantity of materials needed to manufacture and commercialize our products; • the non-occurrence of adverse events or serious adverse events in preclinical studies or clinical trials of our product candidates; • the efforts of our collaborators and the success of our own efforts with respect to the commercialization of our products; and • the securing of, costs related to, and timing issues associated with, product manufacturing, including scale and automation processes, as well as sales and marketing activities.
All of these milestones are based on a variety of assumptions which may cause the timing of achievement of the milestones to vary considerably from our estimates, including: • our available capital resources or capital constraints we experience; • the rate of progress, costs and results of our clinical trials and research and development activities, including the extent of scheduling conflicts with participating clinicians and collaborators, and our ability to identify and enroll patients who meet clinical trial eligibility criteria; • our receipt of approvals by the FDA and comparable foreign regulatory authorities and the timing thereof; • other actions, decisions or rules issued by regulators; • our ability to access sufficient, reliable and affordable supplies of compounds used in the manufacture of our product candidates; • the ability of our suppliers to reliably provide the quantity of materials needed to manufacture and commercialize our products; 69 • the non-occurrence of adverse events or serious adverse events in preclinical studies or clinical trials of our product candidates; • the efforts of our collaborators and the success of our own efforts with respect to the commercialization of our products; and • the securing of, costs related to, and timing issues associated with, product manufacturing, including scale and automation processes, as well as sales and marketing activities.
Our product candidates could fail to receive regulatory approval for many reasons, including the following: • the FDA or comparable foreign regulatory authorities may disagree with the design or implementation of our clinical trials; • we may be unable to demonstrate to the satisfaction of the FDA or comparable foreign regulatory authorities that a product candidate is safe and effective for its proposed indication; • the results of clinical trials may fail to achieve the level of statistical significance required by the FDA or comparable foreign regulatory authorities for approval; • we may be unable to demonstrate that a product candidate’s clinical and other benefits outweigh its safety risks; • the FDA or comparable foreign regulatory authorities may disagree with our interpretation of data submitted in support of regulatory approval; • the data collected from preclinical studies and clinical trials of our product candidates may not be sufficient to support the submission of a BLA or other regulatory submissions necessary to obtain regulatory approval in the United States or elsewhere; • we may not meet the cGMP and other applicable requirements for manufacturing processes, procedures, documentation and facilities necessary for approval by the FDA or comparable foreign regulatory authorities; and • changes to the approval policies or regulations of the FDA or comparable foreign regulatory authorities with respect to our product candidates may result in our clinical data becoming insufficient for approval.
Our product candidates could fail to receive regulatory approval for many reasons, including the following: • the FDA or comparable foreign regulatory authorities may disagree with the design or implementation of our clinical trials; 40 • we may be unable to demonstrate to the satisfaction of the FDA or comparable foreign regulatory authorities that a product candidate is safe and effective for its proposed indication; • the results of clinical trials may fail to achieve the level of statistical significance required by the FDA or comparable foreign regulatory authorities for approval; • we may be unable to demonstrate that a product candidate’s clinical and other benefits outweigh its safety risks; • the FDA or comparable foreign regulatory authorities may disagree with our interpretation of data submitted in support of regulatory approval; • the data collected from preclinical studies and clinical trials of our product candidates may not be sufficient to support the submission of a BLA or other regulatory submissions necessary to obtain regulatory approval in the United States or elsewhere; • we may not meet the cGMP and other applicable requirements for manufacturing processes, procedures, documentation and facilities necessary for approval by the FDA or comparable foreign regulatory authorities; and • changes to the approval policies or regulations of the FDA or comparable foreign regulatory authorities with respect to our product candidates may result in our clinical data becoming insufficient for approval.
A person or entity does not need to have actual knowledge of this statute or specific intent to violate it in order to have committed a violation; 62 • the federal false claims and civil monetary penalties laws, including the False Claims Act, which can be enforced through civil whistleblower or qui tam actions, impose criminal and civil penalties against individuals or entities for knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false, fictitious, or fraudulent; knowingly making, using, or causing to be made or used, a false record or statement to get a false or fraudulent claim paid or approved by the government; or knowingly making, using, or causing to be made or used, a false record or statement to avoid, decrease or conceal an obligation to pay money to the federal government.
A person or entity does not need to have actual knowledge of this statute or specific intent to violate it in order to have committed a violation; • the federal false claims and civil monetary penalties laws, including the False Claims Act, which can be enforced through civil whistleblower or qui tam actions, impose criminal and civil penalties against individuals or entities for knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false, fictitious, or fraudulent; knowingly making, using, or causing to be made or used, a false record or statement to get a false or fraudulent claim paid or approved by the government; or knowingly making, using, or causing to be made or used, a false record or statement to avoid, decrease or conceal an obligation to pay money to the federal government.
Similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation; • HIPAA, as amended by HITECH, and their implementing regulations, which also imposes obligations, including mandatory contractual terms, on “covered entities,” including certain healthcare providers, health plans, and healthcare clearinghouses, and their respective “business associates” that create, receive, maintain or transmit individually identifiable health information for or on behalf of a covered entity as well as their covered subcontractors with respect to safeguarding the privacy, security and transmission of individually identifiable health information.
Similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation; 65 • HIPAA, as amended by HITECH, and their implementing regulations, which also imposes obligations, including mandatory contractual terms, on “covered entities,” including certain healthcare providers, health plans, and healthcare clearinghouses, and their respective “business associates” that create, receive, maintain or transmit individually identifiable health information for or on behalf of a covered entity as well as their covered subcontractors with respect to safeguarding the privacy, security and transmission of individually identifiable health information.
The degree of market acceptance, if approved for commercial sale, will depend on a number of factors, including but not limited to: • the potential or perceived advantages or disadvantages of the oral delivery of biologics as compared to subcutaneous or IV injections of biologics; • the efficacy of our product candidates compared to alternative treatments; • the shelf-life of our product candidates; • the effectiveness of sales and marketing efforts; • the cost of treatment in relation to alternative treatments; • our ability to offer our product candidates for sale at competitive prices; • the willingness of the target patient population to try the RaniPill capsule; • the class of drugs that are included in our product candidates continuing to represent the standard-of-care for the respective disease target and continuing to have a long-term favorable safety profile; • the willingness of physicians to prescribe use of the RaniPill capsule and to prescribe biologics that utilize the RaniPill capsule; • the willingness of the medical community to offer patients our product candidates in addition to or in the place of current subcutaneous and IV injectable therapies; 50 • the strength of marketing and distribution support; • the availability of government and third-party coverage and adequate reimbursement; • our ability to manufacture sufficient supply to meet patients’ demand; • the prevalence and severity of any side effects; and • any restrictions on the use of our product candidates together with other medications or treatments.
The degree of market acceptance, if approved for commercial sale, will depend on a number of factors, including but not limited to: • the potential or perceived advantages or disadvantages of the oral delivery of biologics as compared to subcutaneous or IV injections of biologics; • the efficacy of our product candidates compared to alternative treatments; • the shelf-life of our product candidates; • the effectiveness of sales and marketing efforts; 51 • the cost of treatment in relation to alternative treatments; • our ability to offer our product candidates for sale at competitive prices; • the willingness of the target patient population to try the RaniPill capsule; • the class of drugs that are included in our product candidates continuing to represent the standard-of-care for the respective disease target and continuing to have a long-term favorable safety profile; • the willingness of physicians to prescribe use of the RaniPill capsule and to prescribe biologics that utilize the RaniPill capsule; • the willingness of the medical community to offer patients our product candidates in addition to or in the place of current subcutaneous and IV injectable therapies; • the strength of marketing and distribution support; • the availability of government and third-party coverage and adequate reimbursement; • our ability to manufacture sufficient supply to meet patients’ demand; • the prevalence and severity of any side effects; and • any restrictions on the use of our product candidates together with other medications or treatments.
The success of our product candidates will depend on several factors, including the following: • successful enrollment in clinical trials and completion of preclinical studies and clinical trials with favorable results; • acceptance of INDs by the FDA or similar regulatory filings by comparable foreign regulatory authorities for the conduct of clinical trials of our product candidates and our proposed design of future clinical trials; • demonstrating safety and efficacy to the satisfaction of applicable regulatory authorities; • receipt of marketing approvals from applicable regulatory authorities, including BLAs or NDAs, from the FDA, and maintaining such approvals; • establishing clinical and commercial manufacturing capabilities, and securing adequate supply of drugs for our product candidates; • expanding automation of our manufacturing machinery and procedures; • establishing and maintaining multiple suppliers for our critical manufacturing materials; • establishing sales, marketing and distribution capabilities and launching commercial sales of our products, if and when approved, whether alone or in collaboration with others; • establishing and maintaining patent and trade secret protection or regulatory exclusivity for our product candidates; • maintaining an acceptable safety profile and shelf life of our products following approval; • the class of drugs that are included in our product candidates continuing to represent the standard-of-care for the respective disease target and continuing to have a long-term favorable safety profile; and 38 • maintaining and growing an organization of people who can develop our products and technology.
The success of our product candidates will depend on several factors, including the following: • successful enrollment in clinical trials and completion of preclinical studies and clinical trials with favorable results; 39 • acceptance of INDs by the FDA or similar regulatory filings by comparable foreign regulatory authorities for the conduct of clinical trials of our product candidates and our proposed design of future clinical trials; • demonstrating safety and efficacy to the satisfaction of applicable regulatory authorities; • receipt of marketing approvals from applicable regulatory authorities, including BLAs or NDAs, from the FDA, and maintaining such approvals; • establishing clinical and commercial manufacturing capabilities, and securing adequate supply of drugs for our product candidates; • expanding automation of our manufacturing machinery and procedures; • establishing and maintaining multiple suppliers for our critical manufacturing materials; • establishing sales, marketing and distribution capabilities and launching commercial sales of our products, if and when approved, whether alone or in collaboration with others; • establishing and maintaining patent and trade secret protection or regulatory exclusivity for our product candidates; • maintaining an acceptable safety profile and shelf life of our products following approval; • the class of drugs that are included in our product candidates continuing to represent the standard-of-care for the respective disease target and continuing to have a long-term favorable safety profile; and • maintaining and growing an organization of people who can develop our products and technology.
The commencement and completion of clinical trials can be delayed for a number of reasons, including delays related to: • the FDA or comparable foreign regulatory authorities disagreeing with the design or implementation of our clinical trials; • obtaining regulatory authorizations to commence a trial, or reaching a consensus with regulatory authorities on trial design; • any failure or delay in reaching an agreement with contract research organizations (“CROs”) and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites; • obtaining approval from one or more IRBs; • IRBs refusing to approve, suspending or terminating the trial at an investigational site, precluding enrollment of additional volunteers or withdrawing their approval of the trial; • changes to clinical trial protocol; • clinical sites deviating from trial protocol or dropping out of a trial; • manufacturing sufficient quantities of a product candidate or obtaining sufficient quantities of other therapies or active pharmaceutical ingredients for use in clinical trials; • volunteers failing to enroll or remain in our trial at the rate we expect, or failing to return for post-treatment follow-up; • volunteers choosing an alternative treatment for the indication for which we are developing our product candidates, or participating in competing clinical trials; • lack of adequate funding to continue the clinical trial; • volunteers experiencing severe or unexpected drug-related or device-related adverse effects; • occurrence of serious adverse events in clinical trials of the same class of agents conducted by other companies; • selection of clinical endpoints that require prolonged periods of clinical observation or analysis of the resulting data; • a facility manufacturing our product candidates or any of their components being ordered by the FDA or comparable foreign regulatory authorities to temporarily or permanently shut down due to violations of cGMP regulations or other applicable requirements, or infections or cross-contaminations of product candidates in the manufacturing process; • any changes to our manufacturing process or product formulation that may be necessary or desired; • shortages in, or delays in obtaining, raw materials for manufacturing our product candidates or adequately scaling our manufacturing processes and procedures to deliver sufficient quantities for use in our clinical trials; • third-party clinical investigators losing the licenses or permits necessary to perform our clinical trials, not performing our clinical trials on our anticipated schedule or consistent with the clinical protocol or relevant regulatory requirements; • third-party contractors not performing data collection or analysis in a timely or accurate manner; or • third-party contractors becoming debarred or suspended or otherwise penalized by the FDA or other government or comparable foreign regulatory authorities for violations of regulatory requirements, in which case we may need to 42 find a substitute contractor, and we may not be able to use some or all of the data produced by such contractors in support of our marketing applications.
The commencement and completion of clinical trials can be delayed for a number of reasons, including delays related to: • the FDA or comparable foreign regulatory authorities disagreeing with the design or implementation of our clinical trials or the risks and benefits of the product candidate; • obtaining regulatory authorizations to commence a trial, or reaching a consensus with regulatory authorities on trial design; • any failure or delay in reaching an agreement with contract research organizations (“CROs”) and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites; • obtaining approval from one or more IRBs; • IRBs refusing to approve, suspending or terminating the trial at an investigational site, precluding enrollment of additional volunteers or withdrawing their approval of the trial; • changes to clinical trial protocol; • clinical sites deviating from trial protocol or dropping out of a trial; • manufacturing sufficient quantities of a product candidate or obtaining sufficient quantities of other therapies or active pharmaceutical ingredients for use in clinical trials; • volunteers failing to enroll or remain in our trial at the rate we expect, or failing to return for post-treatment follow-up; • volunteers choosing an alternative treatment for the indication for which we are developing our product candidates, or participating in competing clinical trials; • lack of adequate funding to continue the clinical trial; • volunteers experiencing severe or unexpected drug-related or device-related adverse effects; 43 • occurrence of serious adverse events in clinical trials of the same class of agents conducted by other companies; • selection of clinical endpoints that require prolonged periods of clinical observation or analysis of the resulting data; • a facility manufacturing our product candidates or any of their components being ordered by the FDA or comparable foreign regulatory authorities to temporarily or permanently shut down due to violations of cGMP regulations or other applicable requirements, or infections or cross-contaminations of product candidates in the manufacturing process; • any changes to our manufacturing process or product formulation that may be necessary or desired; • shortages in, or delays in obtaining, raw materials for manufacturing our product candidates or adequately scaling our manufacturing processes and procedures to deliver sufficient quantities for use in our clinical trials; • third-party clinical investigators losing the licenses or permits necessary to perform our clinical trials, not performing our clinical trials on our anticipated schedule or consistent with the clinical protocol or relevant regulatory requirements; • third-party contractors not performing data collection or analysis in a timely or accurate manner; or • third-party contractors becoming debarred or suspended or otherwise penalized by the FDA or other government or comparable foreign regulatory authorities for violations of regulatory requirements, in which case we may need to find a substitute contractor, and we may not be able to use some or all of the data produced by such contractors in support of our marketing applications.
These fluctuations may occur due to a variety of factors, many of which are outside of our control, including, but not limited to: • the timing, degree of success and cost of, and level of investment in, research, development, regulatory approval and commercialization activities relating to our product candidates, which may change from time to time; • coverage and reimbursement policies with respect to our product candidates, if approved, and potential future drugs that compete with our products; • the cost of manufacturing our product candidates, which may vary depending on the quantity of production; • expenditures that we may incur to acquire, develop or commercialize additional product candidates and technologies; • the level of demand for any approved products, which may vary significantly; • future accounting pronouncements or changes in our accounting policies; and • the timing and success or failure of preclinical studies or clinical trials for our product candidates or competing product candidates, or any other change in the competitive landscape of our industry, including consolidation among our competitors or partners. 57 The cumulative effects of these factors could result in large fluctuations and unpredictability in our quarterly and annual operating results.
These fluctuations may occur due to a variety of factors, many of which are outside of our control, including, but not limited to: • the timing, degree of success and cost of, and level of investment in, research, development, regulatory approval and commercialization activities relating to our product candidates, which may change from time to time; • coverage and reimbursement policies with respect to our product candidates, if approved, and potential future drugs that compete with our products; • the cost of manufacturing our product candidates, which may vary depending on the quantity of production; • expenditures that we may incur to acquire, develop or commercialize additional product candidates and technologies; • the level of demand for any approved products, which may vary significantly; • future accounting pronouncements or changes in our accounting policies; and • the timing and success or failure of preclinical studies or clinical trials for our product candidates or competing product candidates, or any other change in the competitive landscape of our industry, including consolidation among our competitors or partners. 59 The cumulative effects of these factors could result in large fluctuations and unpredictability in our quarterly and annual operating results.
We and some of the third-party service providers on which we depend for various support functions, such as data storage, are vulnerable to damage from catastrophic events, such as power loss, natural disasters, terrorism and similar unforeseen events beyond our control. Our corporate headquarters is located in San Jose, which in the past has experienced severe earthquakes and fires.
We and some of the third-party service providers on which we depend for various support functions, such as data storage, are vulnerable to damage from catastrophic events, such as power loss, natural disasters, terrorism and similar unforeseen events beyond our control. Our corporate headquarters is located in San Jose, California, which in the past has experienced severe earthquakes and fires.
If a natural disaster, power outage or other event occurred that prevented us from using all or a significant portion of our headquarters, damaged critical infrastructure, such as our data storage facilities or financial systems, or that otherwise disrupted 68 operations, it may be difficult or, in certain cases, impossible for us to continue our business for a substantial period of time.
If a natural disaster, power outage or other event occurred that prevented us from using all or a significant portion of our headquarters, damaged critical infrastructure, such as our data storage facilities or financial systems, or that otherwise disrupted operations, it may be difficult or, in certain cases, impossible for us to continue our business for a substantial period of time.
In addition, business disruptions of the kind noted above, including geopolitical events like the ongoing conflict between Ukraine and Russia or disruptions to bank deposits and lending commitments due to bank failures, could impact economies and financial markets, resulting in economic worsening and/or inflation that could impact our ability to raise capital, increase the costs of goods and services, cause us to have to de-prioritize or stop certain business activities, diminish potential partnering opportunities, and have an adverse effect on our results of operations. 90 Unanticipated changes in effective tax rates or adverse outcomes resulting from examination of our income or other tax returns could adversely affect our results of operations and financial condition We are or may be subject to taxes by the U.S. federal, state, local and foreign tax authorities, and our tax liabilities will be affected by the allocation of expenses to differing jurisdictions.
In addition, business disruptions of the kind noted above, including geopolitical events like the ongoing conflict between Ukraine and Russia or disruptions to bank deposits and lending commitments due to bank failures, could impact economies and financial markets, resulting in economic worsening and/or inflation that could impact our ability to raise capital, increase the costs of goods and services, cause us to have to de-prioritize or stop certain business activities, diminish potential partnering opportunities, and have an adverse effect on our results of operations. 93 Unanticipated changes in effective tax rates or adverse outcomes resulting from examination of our income or other tax returns could adversely affect our results of operations and financial condition We are or may be subject to taxes by the U.S. federal, state, local and foreign tax authorities, and our tax liabilities will be affected by the allocation of expenses to differing jurisdictions.
Patient enrollment and retention in clinical trials is a significant factor in the timing of clinical trials and depends on many factors, including the size and nature of the patient population, the nature of the trial protocol, the existing body of safety and 43 efficacy data with respect to the study drug, the number and nature of competing treatments and ongoing clinical trials of competing drugs for the same indication, the proximity of patients to clinical trial sites and the eligibility criteria for the clinical trial.
Patient enrollment and retention in clinical trials is a significant factor in the timing of clinical trials and depends on many factors, including the size and nature of the patient population, the nature of the trial protocol, the existing body of safety and efficacy data with respect to the study drug, the number and nature of competing treatments and ongoing clinical trials of competing drugs for the same indication, the proximity of patients to clinical trial sites and the eligibility criteria for the clinical trial.
In addition, while we currently expect that RaniPill HC will be able to leverage many of the same components and manufacturing processes as are used for our existing delivery device, it may turn out that such components or manufacturing processes are not suited for RaniPill HC or RaniPill HC may require modifications that negatively affect our ability to 60 use common components or processes between the RaniPill GO and RaniPill HC.
In addition, while we currently expect that RaniPill HC will be able to leverage many of the same components and manufacturing processes as are used for our existing delivery device, it may turn out that such components or manufacturing processes are not suited for RaniPill HC or RaniPill HC may require modifications that negatively affect our ability to use common components or processes between the RaniPill GO and RaniPill HC.
We may not be successful in our efforts to establish or maintain such collaborations for our product candidates because our research and development pipeline may be insufficient, our product candidates may be deemed to be at too early of a stage of development for collaborative effort or third parties may not view our product candidates as having the requisite potential to demonstrate safety and efficacy or significant commercial opportunity.
We may not be successful in our efforts to establish or maintain such collaborations because our research and development pipeline may be insufficient, our product candidates or technology may be deemed to be at too early of a stage of development for collaborative effort or third parties may not view our product candidates or technology as having the requisite potential to demonstrate safety and efficacy or significant commercial opportunity.
Moreover, the reporting requirements, rules and regulations will increase our legal and financial compliance costs and will make some activities more time consuming and costly. Any changes we make to comply with these obligations may not be sufficient to allow us to continue to satisfy our obligations as a public company on a timely basis, or at all.
Moreover, the reporting requirements, rules and regulations increase our legal and financial compliance costs and make some activities more time consuming and costly. Any changes we make to comply with these obligations may not be sufficient to allow us to continue to satisfy our obligations as a public company on a timely basis, or at all.
During times of war and other major conflicts, we and the third parties upon which we rely may be vulnerable to a heightened risk of these attacks, including cyber-attacks, that could materially disrupt our systems and operations, supply chain, and ability to produce, develop, test and distribute our capsules, product candidates, and other goods and services.
During times of war and other major conflicts, we and the third parties upon which we rely may be vulnerable to a heightened risk of these attacks, including retaliatory cyber-attacks, that could materially disrupt our systems and operations, supply chain, and ability to produce, develop, test and distribute our capsules, product candidates, and other goods and services.
However, if we were to be deemed an investment company, restrictions imposed by the 1940 Act, including limitations on our capital structure and 82 our ability to transact with affiliates, could make it impractical for us to continue our business as contemplated and could adversely affect our business, results of operations and financial condition.
However, if we were to be deemed an investment company, restrictions imposed by the 1940 Act, including limitations on our capital structure and our ability to transact with affiliates, could make it impractical for us to continue our business as contemplated and could adversely affect our business, results of operations and financial condition.
As a result of a failure in any one of these factors, our business, financial condition and results of operations could be adversely affected. Our high-capacity oral delivery device, RaniPill HC, is in early stages of development, and it is subject to the inherent risks and uncertainties of developing a novel, innovative technology.
As a result of a failure in any one of these factors, our business, financial condition and results of operations could be adversely affected. 62 Our high-capacity oral delivery device, RaniPill HC, is in early stages of development, and it is subject to the inherent risks and uncertainties of developing a novel, innovative technology.
In addition, even if one or more of our product candidates qualify as breakthrough therapies, the FDA may later decide that the product candidates no longer meets the conditions for qualification, or it may decide that the time period for FDA review or approval will not be shortened. We may seek Fast Track designation for some of our product candidates.
In addition, even if one or more of our product candidates qualify as breakthrough therapies, the FDA may later decide that the product candidates no longer meets the conditions for qualification, or it may decide that the time period for FDA review or approval will not be shortened. 48 We may seek Fast Track designation for some of our product candidates.
Congress of the FDA’s approval process may significantly delay or prevent marketing approval, as well as subject us to more stringent product labeling and post-marketing testing and other requirements. 65 Governments outside the United States tend to impose strict price controls, which may adversely affect our revenues, if any.
Congress of the FDA’s approval process may significantly delay or prevent marketing approval, as well as subject us to more stringent product labeling and post-marketing testing and other requirements. Governments outside the United States tend to impose strict price controls, which may adversely affect our revenues, if any.
Our product candidates require aseptic manufacturing techniques that may present additional manufacturing challenges compared to other oral route of administration products. The same requirements 61 and risks are applicable to the suppliers of the key raw material used to manufacture the active pharmaceutical ingredients or drug substances for the biologics of our product candidates.
Our product candidates require aseptic manufacturing techniques that may present additional manufacturing challenges compared to other oral route of administration products. The same requirements and risks are applicable to the suppliers of the key raw material used to manufacture the active pharmaceutical ingredients or drug substances for the biologics of our product candidates.
If a regulatory authority discovers previously unknown problems with a product, such as adverse events of unanticipated severity or frequency, or problems with the facility where the product is manufactured, or disagrees with the promotion, marketing or labeling of a product, such regulatory authorities may impose restrictions on that product or us, including requiring withdrawal of the 49 product from the market.
If a regulatory authority discovers previously unknown problems with a product, such as adverse events of unanticipated severity or frequency, or problems with the facility where the product is manufactured, or disagrees with the promotion, marketing or labeling of a product, such regulatory authorities may impose restrictions on that product or us, including requiring withdrawal of the product from the market.
If approved, our product candidates are expected to face competition from commercially available drugs as well as drugs and devices that are in the development pipelines of our competitors. Pharmaceutical companies may invest heavily to accelerate discovery and development of novel technologies or to in-license novel technologies that could make our product candidates less competitive.
If approved, our product candidates are expected to face competition from commercially available drugs as well as drugs and devices that are in the development pipelines of our competitors. 53 Pharmaceutical companies may invest heavily to accelerate discovery and development of novel technologies or to in-license novel technologies that could make our product candidates less competitive.
Our research programs may initially show promise in identifying potential product candidates, yet fail to yield product candidates for clinical development for many reasons, including: • our financial and internal resources are insufficient; • our research methodology used may not be successful in identifying potential product candidates; • competitors may develop alternatives that render our product candidates uncompetitive; • our product candidates may be shown to have harmful side effects or other characteristics that indicate such product candidate is unlikely to be effective or otherwise unlikely to achieve applicable regulatory approval; 59 • our product candidates may not be capable of being produced in commercial quantities at an acceptable cost, or at all; or • our product candidates may not be accepted by patients, the medical community, healthcare providers or third-party payors.
Our research programs may initially show promise in identifying potential product candidates, yet fail to yield product candidates for clinical development for many reasons, including: • our financial and internal resources are insufficient; • our research methodology used may not be successful in identifying potential product candidates; 61 • competitors may develop alternatives that render our product candidates uncompetitive; • our product candidates may be shown to have harmful side effects or other characteristics that indicate such product candidate is unlikely to be effective or otherwise unlikely to achieve applicable regulatory approval; • our product candidates may not be capable of being produced in commercial quantities at an acceptable cost, or at all; or • our product candidates may not be accepted by patients, the medical community, healthcare providers or third-party payors.
During trademark registration proceedings, our 74 applications may be rejected by the USPTO or foreign agencies, or may be opposed by third parties. Although we are given an opportunity to respond, we may be unable to overcome such rejections or oppositions. In addition, third parties may seek to cancel registered trademarks, and our trademarks may not survive such proceedings.
During trademark registration proceedings, our applications may be rejected by the USPTO or foreign agencies, or may be opposed by third parties. Although we are given an opportunity to respond, we may be unable to overcome such rejections or oppositions. In addition, third parties may seek to cancel registered trademarks, and our trademarks may not survive such proceedings.
Results from nonclinical studies and 45 clinical trials can be interpreted in different ways. Even if we believe the nonclinical or clinical data for our product candidates are promising, such data may not be sufficient to support approval by the FDA and comparable foreign regulatory authorities.
Results from nonclinical studies and clinical trials can be interpreted in different ways. Even if we believe the nonclinical or clinical data for our product candidates are promising, such data may not be sufficient to support approval by the FDA and comparable foreign regulatory authorities.
As a result, we may forgo or delay 46 pursuit of opportunities with other product candidates or other indications that could have had greater commercial potential or likelihood of success. In addition, we are focused on developing the RaniPill capsule in addition to the drug formulations for use in the RaniPill capsule.
As a result, we may forgo or delay pursuit of opportunities with other product candidates or other indications that could have had greater commercial potential or likelihood of success. In addition, we are focused on developing the RaniPill capsule in addition to the drug formulations for use in the RaniPill capsule.
If we fail to continue to advance the RaniPill platform, technological change may impair our ability to compete effectively and technological advances or products developed by our competitors may render our technologies or product candidates obsolete, less competitive or not economical. We currently have no marketing and sales organization.
If we fail to continue to advance the RaniPill platform, technological change may impair our ability to compete effectively and technological advances or products developed by our competitors may render our technologies or product candidates obsolete, less competitive or not economical. 54 We currently have no marketing and sales organization.
Moreover, we might not have been the first to make the inventions for which we apply for patents and therefore not be entitled to a patent on such inventions. 73 Additionally, the scope of our patent coverage may not provide desired coverage for all aspects of our product candidates in all jurisdictions, and scope may differ between jurisdictions.
Moreover, we might not have been the first to make the inventions for which we apply for patents and therefore not be entitled to a patent on such inventions. Additionally, the scope of our patent coverage may not provide desired coverage for all aspects of our product candidates in all jurisdictions, and scope may differ between jurisdictions.
In the absence of meaningful use, we may be forced to forfeit various ones of our trademarks and domain names. Intellectual property law and regulation could affect the value of our intellectual property portfolio. Interpretation of existing laws and regulations is uncertain and may depend on specific facts of a case.
In the absence of meaningful use, we may be forced to forfeit various ones of our trademarks and domain names. 77 Intellectual property law and regulation could affect the value of our intellectual property portfolio. Interpretation of existing laws and regulations is uncertain and may depend on specific facts of a case.
We cannot predict interpretations of existing laws and regulations, future changes to laws or regulations, or changes in the interpretation of laws or regulations. Such changes could increase uncertainty with respect to the value of patents and trademarks once obtained. 75 Intellectual property rights do not provide complete protection for our business activities.
We cannot predict interpretations of existing laws and regulations, future changes to laws or regulations, or changes in the interpretation of laws or regulations. Such changes could increase uncertainty with respect to the value of patents and trademarks once obtained. Intellectual property rights do not provide complete protection for our business activities.
In the case of a continuing event of default under the Loan Agreement, the Lender could elect to declare all amounts outstanding to be 37 immediately due and payable, proceed against the collateral in which we granted the Lender a security interest under the Loan Agreement, or otherwise exercise the rights of a secured creditor.
In the case of a continuing event of default under the Loan Agreement, the Lender could elect to declare all amounts outstanding to be immediately due and payable, proceed against the collateral in which we granted the Lender a security interest under the Loan Agreement, or otherwise exercise the rights of a secured creditor.
We could encounter delays if a clinical trial is modified, suspended or terminated by us, by the IRBs or ethics committees of the institutions in which such clinical trials are being conducted, by a Data Safety Monitoring Board for such trial or by the FDA or comparable foreign regulatory authorities.
In addition, we could encounter delays if a clinical trial is modified, suspended or terminated by us, by the IRBs or ethics committees of the institutions in which such clinical trials are being conducted, by a Data Safety Monitoring Board for such trial or by the FDA or comparable foreign regulatory authorities.
Further, we are presently party to a Service Agreement with ICL effective January 1, 2021, as amended in March 2022 (as amended, the "Rani LLC-ICL Service Agreement"), pursuant to which Rani LLC and ICL agreed to provide personnel services to the other upon requests, and Rani LLC occupies certain facilities leased by ICL.
Further, we are presently party to a Service Agreement with ICL effective January 1, 2021, as amended in March 2022 and March 2024 (as amended, the "Rani LLC-ICL Service Agreement"), pursuant to which Rani LLC and ICL agreed to provide personnel services to the other upon requests, and Rani LLC occupies certain facilities leased by ICL.
If a court were to find the exclusive forum provision contained in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur further significant additional costs associated with resolving such action in other jurisdictions, all of which could seriously harm our business. 89 General Risk Factors As a public company, we are obligated to develop and maintain proper and effective internal control over financial reporting, and any failure to maintain the adequacy of these internal controls may adversely affect investor confidence in our company and, as a result, the value of our Class A common stock.
If a court were to find the exclusive forum provision contained in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur further significant additional costs associated with resolving such action in other jurisdictions, all of which could seriously harm our business. 92 General Risk Factors As a public company, we are obligated to develop and maintain proper and effective internal control over financial reporting, and any failure to maintain the adequacy of these internal controls may adversely affect investor confidence in our company and, as a result, the value of our Class A common stock.
We may expend significant resources or modify our business activities (including our clinical trial activities) to try to protect against security incidents. Certain data privacy and security obligations may require us to implement and maintain specific 72 security measures, industry-standard or reasonable security measures to protect our information technology systems and sensitive information.
We may expend significant resources or modify our business activities (including our clinical trial activities) to try to protect against security incidents. Certain data privacy and security obligations may require us to implement and maintain specific security measures, or industry-standard or reasonable security measures to protect our information technology systems and sensitive data.
There is a risk that we may face additional oppositions in Europe as additional European patents are granted. We may assert challenges against others of infringement of our intellectual property. We may determine that our competitors are infringing our patents or trademarks. In such case we could initiate infringement proceedings against them.
There is a risk that we may face additional oppositions in Europe as additional European patents are granted. 80 We may assert challenges against others of infringement of our intellectual property. We may determine that our competitors are infringing our patents or trademarks. In such case we could initiate infringement proceedings against them.
We will be required to submit applicable equivalent regulatory filings to foreign regulatory authorities to the extent we initiate clinical trials outside of the United States. 41 We do not know whether our planned clinical trials will begin on time or be completed on schedule, if at all.
We will be required to submit applicable equivalent regulatory filings to foreign regulatory authorities to the extent we initiate clinical trials outside of the United States. We do not know whether our planned clinical trials will begin on time or be completed on schedule, if at all.
As a result, the multi-class structure of our common stock may prevent the inclusion of our Class A common stock in such indices and may cause stockholder advisory firms to publish negative commentary about our corporate governance practices or 83 otherwise seek to cause us to change our capital structure.
As a result, the multi-class structure of our common stock may prevent the inclusion of our Class A common stock in such indices and may cause stockholder advisory firms to publish negative commentary about our corporate governance practices or otherwise seek to cause us to change our capital structure.
Accordingly, these shares will be able to be freely sold in the public market upon issuance as permitted by any applicable vesting requirements. 86 Continuing LLC Owners are entitled to rights with respect to the registration of their shares under the Securities Act.
Accordingly, these shares will be able to be freely sold in the public market upon issuance as permitted by any applicable vesting requirements. Continuing LLC Owners are entitled to rights with respect to the registration of their shares under the Securities Act.
We have relied upon and plan to continue to rely upon third-party CROs to monitor and manage clinical trials and collect data during our preclinical studies and clinical programs. We rely on these parties for execution of our preclinical studies and clinical 55 trials, and control only certain aspects of their activities.
We have relied upon and plan to continue to rely upon third-party CROs to monitor and manage clinical trials and collect data during our preclinical studies and clinical programs. We rely on these parties for execution of our preclinical studies and clinical trials, and control only certain aspects of their activities.
There is no guarantee of success in defending such challenges, and if we are not successful, we may be blocked from using the technology that is the subject of the misappropriation challenge. 79 We may be subject to challenges to the inventorship or ownership of our intellectual property.
There is no guarantee of success in defending such challenges, and if we are not successful, we may be blocked from using the technology that is the subject of the misappropriation challenge. We may be subject to challenges to the inventorship or ownership of our intellectual property.
Accordingly, these shares are freely tradeable without restriction under the Securities Act. Any sales of securities by the foregoing or other stockholders could have a material adverse effect on the trading price of our Class A common stock.
Accordingly, these shares are freely tradeable without restriction under the Securities Act. 89 Any sales of securities by the foregoing or other stockholders could have a material adverse effect on the trading price of our Class A common stock.
The restrictive covenants in the Loan Agreement could prevent us from pursuing business opportunities that we or our stockholders may consider beneficial. A breach of any of these covenants could result in an event of default under the Loan Agreement.
The restrictive covenants in the Loan Agreement could prevent us from pursuing business opportunities that we or our stockholders may consider beneficial. 38 A breach of any of these covenants could result in an event of default under the Loan Agreement.
An inability to incorporate technologies or features that are important or essential to our products may prevent us from selling our products. Third parties may obtain our proprietary information, which could harm our business and competitive position.
An inability to incorporate technologies or features that are important or essential to our products may prevent us from selling our products. 82 Third parties may obtain our proprietary information, which could harm our business and competitive position.
See the risk factor below entitled “The Tax Receivable Agreement with certain of the Continuing LLC Owners requires 80 us to make cash payments to them in respect of certain benefits to which we may become entitled.
See the risk factor below entitled “The Tax Receivable Agreement with certain of the Continuing LLC Owners requires us to make cash payments to them in respect of certain benefits to which we may become entitled.
Any violations of the laws and regulations described above may result in substantial civil and criminal fines and penalties, imprisonment, the loss of export or import privileges, debarment, tax reassessments, breach of contract and fraud litigation, reputational harm, and other consequences. 91 If securities or industry analysts do not publish research or publish unfavorable or inaccurate research about our business, our Class A common stock price and trading volume could decline.
Any violations of the laws and regulations described above may result in substantial civil and criminal fines and penalties, imprisonment, the loss of export or import privileges, debarment, tax reassessments, breach of contract and fraud litigation, reputational harm, and other consequences. 94 If securities or industry analysts do not publish research or publish unfavorable or inaccurate research about our business, our Class A common stock price and trading volume could decline.
We also make assumptions, estimations, calculations 47 and conclusions as part of our analyses of data, and we may not have received or had the opportunity to fully and carefully evaluate all data.
We also make assumptions, estimations, calculations and conclusions as part of our analyses of data, and we may not have received or had the opportunity to fully and carefully evaluate all data.
Our future effective tax rates could be subject to volatility or adversely affected by a number of factors, including: • changes in the valuation of our deferred tax assets and liabilities; • expected timing and amount of the release of any tax valuation allowances; • tax effects of equity-based compensation; • changes in tax laws, regulations or interpretations thereof; or • future earnings being lower than anticipated in countries where we have lower statutory tax rates and higher than anticipated earnings in countries where we have higher statutory tax rates.
Our future effective tax rates could be subject to volatility or adversely affected by a number of factors, including: • changes in the valuation of our deferred tax assets and liabilities; • expected timing and amount of the release of any tax valuation allowances; • tax effects of stock-based compensation; • changes in tax laws, regulations or interpretations thereof; or • future earnings being lower than anticipated in countries where we have lower statutory tax rates and higher than anticipated earnings in countries where we have higher statutory tax rates.
Moreover, while we do not submit claims and our customers make the ultimate decision 63 on how to submit claims, from time to time, we may provide reimbursement guidance to our customers.
Moreover, while we do not submit claims and our customers make the ultimate decision on how to submit claims, from time to time, we may provide reimbursement guidance to our customers.
In January 2023, we entered into a License and Supply Agreement with Celltrion, under which we receive supply of ustekinumab biosimilar from Celltrion for RT-111 and Celltrion has a right of first negotiation to obtain development and commercialization rights for RT-111 (a “Collaboration”) after 54 completion of a Phase 1 clinical trial that meets its primary endpoint(s).
In January 2023, we entered into a License and Supply Agreement with Celltrion, under which we receive supply of ustekinumab biosimilar from Celltrion for RT-111 and Celltrion has a right of first negotiation to obtain development and commercialization rights for RT-111 after completion of a Phase 1 clinical trial that meets its primary endpoint(s).
However, Rani LLC ’s ability to make such distributions may be subject to various limitations and restrictions, such as restrictions on distributions that would either violate any contract or agreement to which Rani LLC is then a party, including debt agreements, or any applicable law, or that would have the effect of rendering Rani LLC insolvent.
However, Rani LLC’s ability to make such distributions may be subject to various limitations and restrictions, such as restrictions on distributions that would either violate any contract or agreement to which Rani LLC is then a party, including debt agreements, or any applicable law, or that would have the effect of rendering Rani LLC insolvent.
Clinical trials can be delayed for a variety of reasons, including delays related to: • obtaining regulatory approvals to commence a clinical trial; • fraud or negligence on the part of consultants or contractors; • obtaining institutional review board or ethics committee approval at each site; • recruiting suitable patients to participate in a clinical trial; • having patients complete a clinical trial or return for post-treatment follow-up; • clinical sites deviating from the clinical trial’s protocol or dropping out of a clinical trial; • the impacts of the COVID-19 pandemic or the conflict between Russia and Ukraine on our ongoing and planned preclinical studies and clinical trials; • adding new clinical trial sites; or 40 • manufacturing sufficient quantities of product candidate for use in our preclinical studies and clinical trials, including product candidates manufactured in accordance with our specifications.
Clinical trials can be delayed for a variety of reasons, including delays related to: • obtaining regulatory approvals to commence a clinical trial; • fraud or negligence on the part of consultants or contractors; • obtaining institutional review board or ethics committee approval at each site; • recruiting suitable patients to participate in a clinical trial; • having patients complete a clinical trial or return for post-treatment follow-up; • clinical sites deviating from the clinical trial’s protocol or dropping out of a clinical trial; • the impacts of the conflict between Russia and Ukraine on our ongoing and planned preclinical studies and clinical trials; • adding new clinical trial sites; or • manufacturing sufficient quantities of product candidate for use in our preclinical studies and clinical trials, including product candidates manufactured in accordance with our specifications.
Moreover, any delay or setback in the development of any product candidate would be expected to adversely affect our business and cause our stock price to fall. We may not be successful in our efforts to use and expand our proprietary RaniPill platform to build a pipeline of product candidates.
Moreover, any delay or setback in the development of any product candidate would be expected to adversely affect our business and cause our stock price to fall. We may not be successful in our efforts to use and expand our proprietary RaniPill platform to build a pipeline of product candidates and partnered programs.
Such disruptions could severely impact our business, current and planned clinical trials and preclinical studies, including as a result of: • inability of our management to travel in connection with establishing partnerships and collaborations; • delays in receiving the supplies, materials and services needed to conduct preclinical studies and clinical trials; 69 • disruption of our access to capital in the global financial markets; • delays or difficulties in enrolling patients in future planned clinical trials of our product candidates; • delays or difficulties in clinical site initiation, including difficulties in recruiting clinical site investigators and clinical site staff; • diversion of healthcare resources away from the conduct of clinical trials, including the diversion of hospitals serving as our clinical trial sites and hospital staff supporting the conduct of clinical trials; • interruption of key clinical trial activities, such as clinical trial site monitoring, due to limitations on travel imposed or recommended by federal or state governments, employers and others or interruption of clinical trial subject visits and study procedures, which may impact the integrity of subject data and clinical study endpoints; • limitations in resources, including our employees, that would otherwise be focused on the conduct of our business or our current or planned preclinical studies or clinical trials, including because of sickness, the desire to avoid contact with large groups of people or restrictions on movement or access to our facility as a result of government-imposed “shelter in place” or similar working restrictions; • interruptions or delays in the operations of the FDA or comparable foreign regulatory authorities, which may impact review and approval timelines; • changes in regulations as part of a response to the COVID-19 pandemic or other such disruptions which may require us to change the ways in which our clinical trials are conducted, which may result in unexpected costs or require us to discontinue clinical trials altogether; • interruptions or delays to our pipeline and research programs; and • delays in necessary interactions with regulators, ethics committees and other important agencies and contractors due to limitations in employee resources or furlough of government or contractor personnel.
Such disruptions could severely impact our business, current and planned clinical trials and preclinical studies, including as a result of: • inability of our management to travel in connection with establishing partnerships and collaborations; • delays in receiving the supplies, materials and services needed to conduct preclinical studies and clinical trials; • disruption of our access to capital in the global financial markets; 71 • delays or difficulties in enrolling patients in future planned clinical trials of our product candidates; • delays or difficulties in clinical site initiation, including difficulties in recruiting clinical site investigators and clinical site staff; • diversion of healthcare resources away from the conduct of clinical trials, including the diversion of hospitals serving as our clinical trial sites and hospital staff supporting the conduct of clinical trials; • interruption of key clinical trial activities, such as clinical trial site monitoring, due to limitations on travel imposed or recommended by federal or state governments, employers and others or interruption of clinical trial subject visits and study procedures, which may impact the integrity of subject data and clinical study endpoints; • limitations in resources, including our employees, that would otherwise be focused on the conduct of our business or our current or planned preclinical studies or clinical trials, including because of sickness, the desire to avoid contact with large groups of people or restrictions on movement or access to our facility as a result of government-imposed “shelter in place” or similar working restrictions; • interruptions or delays in the operations of the FDA or comparable foreign regulatory authorities, which may impact review and approval timelines; • changes in regulations as part of a response to a public health crisis or other such disruptions which may require us to change the ways in which our clinical trials are conducted, which may result in unexpected costs or require us to discontinue clinical trials altogether; • interruptions or delays to our pipeline and research programs; and • delays in necessary interactions with regulators, ethics committees and other important agencies and contractors due to limitations in employee resources or furlough of government or contractor personnel.
Our operations, and those of our CROs, suppliers and other contractors and consultants, could be subject to earthquakes, power shortages, telecommunications failures, water shortages, floods, hurricanes, typhoons, fires, extreme weather conditions, public health pandemics or epidemics (including, for example, the COVID-19 pandemic), geopolitical events, including civil or political unrest (such as the ongoing conflict between Ukraine and Russia), terrorism, insurrection or war, recent and potential future disruptions in access to bank deposits or lending commitments due to bank failures, and other natural or man-made disasters or business interruptions, for which we are predominantly self-insured.
Our operations, and those of our CROs, suppliers and other contractors and consultants, could be subject to earthquakes, power shortages, telecommunications failures, water shortages, floods, hurricanes, typhoons, fires, extreme weather conditions, public health pandemics or epidemics, geopolitical events, including civil or political unrest (such as the ongoing conflict between Ukraine and Russia), terrorism, insurrection or war, recent and potential future disruptions in access to bank deposits or lending commitments due to bank failures, and other natural or man-made disasters or business interruptions, for which we are predominantly self-insured.
We may not be able to complete development of RaniPill HC in a timely manner, or at all, or such development may require an amount of time and resource that we are not able to devote to it or believes is not warranted based on the estimated benefits.
We may not be able to complete development of RaniPill HC in a timely manner, or at all, or such development may require an amount of time and resource that we are not able to devote to it or believe is not warranted based on the estimated benefits.
Such infringement of our patent protected rights is likely to cause us damage and lead to a reduction in the prices of our products, thereby reducing our anticipated profits. We may also inadvertently lose patent assets by failing to follow agency procedures.
Such infringement of our patent protected rights is likely to cause us damage and lead to a reduction in the prices of our products, thereby reducing our anticipated profits. We may also inadvertently lose patent assets by failing to follow agency procedures. The U.S.
We face competition primarily from current and future (generic and biosimilars) manufacturers of subcutaneous and IV injectable versions of our product candidates, such as AbbVie Inc., Eli Lilly and Company, Novartis AG, Janssen Biotech, Inc. and the SOMA and LUMI from the Novo Nordisk-MIT collaboration.
We face competition primarily from current and future (generic and biosimilars) manufacturers of subcutaneous and IV injectable versions of our product candidates, such as AbbVie Inc., Eli Lilly and Company, Janssen Biotech, Inc. and the SOMA and LUMI from the Novo Nordisk-MIT collaboration.
We may not be able to successfully deliver the biologic payload to the intestinal wall with great enough certainty to achieve adequate efficacy or safety for any of our product candidates or to the satisfaction of the FDA or other regulatory bodies.
We may not be able to successfully deliver the biologic payload to the intestinal wall with great enough certainty to achieve adequate efficacy or safety for any of our product candidates or to the satisfaction of the FDA or other regulatory bodies or potential collaborators.
For example, in our Phase 1 clinical trial of RT-101, the RaniPill capsule was well tolerated by all subjects, and no subjects had difficulty swallowing the pill. Capsule remnants were passed by all trial subjects and no serious adverse events were observed.
For example, in our Phase 1 clinical trial of RT-102, the RaniPill capsule was well tolerated by all subjects, and no subjects had difficulty swallowing the pill. Capsule remnants were passed by all trial subjects and no serious adverse events were observed.
However, if any of the current oppositions results in a revocation or reduction in our patent protection, it could encourage Novo Nordisk As or other parties to seek to invalidate or reduce additional patents in Europe or other jurisdictions.
However, if any of the current oppositions results in a revocation or reduction in our patent protection, it could encourage Novo Nordisk A/S or other parties to seek to invalidate or reduce additional patents in Europe or other jurisdictions.
Future or past business transactions (such as acquisitions or integrations) could also expose us to additional cybersecurity risks and vulnerabilities, as our systems could be negatively affected by vulnerabilities present in acquired or integrated entities’ systems and technologies.
Additionally, future or past business transactions (such as acquisitions or integrations) could expose us to additional cybersecurity risks and vulnerabilities, as our systems could be negatively affected by vulnerabilities present in acquired or integrated entities’ systems and technologies.
Further, as a result of a public health crisis, such as the COVID-19 pandemic, we may be required to develop and implement additional clinical trial policies and procedures designed to help protect trial participants, which may include using telemedicine visits, remote monitoring of patients and clinical sites, and measures to ensure that data from clinical trials that may be disrupted as a result of the crisis are collected pursuant to the trial protocol and consistent with GCPs, with any material protocol deviation reviewed and approved by the site IRB.
Further, as a result of a public health crisis, we may be required to develop and implement additional clinical trial policies and procedures designed to help protect trial participants, which may include using telemedicine visits, remote monitoring of patients and clinical sites, and measures to ensure that data from clinical trials that may be disrupted as a result of the crisis are collected pursuant to the trial protocol and consistent with GCPs, with any material protocol deviation reviewed and approved by the site IRB.
In addition, pursuant to the Rani LLC-ICL Service Agreement and a separate service agreement dated January 1, 2021 originally between RMS and ICL but which was assigned by RMS to Rani LLC in April 2022 (the “RMS-ICL Service Agreement”), we sublease from ICL the office, laboratory and manufacturing space used for our operations (“Occupancy Services”).
In addition, pursuant to the Rani LLC-ICL Service Agreement and a separate service agreement dated January 1, 2021 originally between RMS and ICL but which was assigned by RMS to Rani LLC in April 2022 and amended in March 2024 (the “RMS-ICL Service Agreement”), we sublease from ICL the office, laboratory and manufacturing space used for our operations (“Occupancy Services”).
We expect that our financial condition and operating results will fluctuate significantly from period to period due to a variety of factors, many of which are beyond our control, including, but not limited to: • the clinical outcomes from the continued development of our product candidates; • occurrence of adverse events or serious adverse events in preclinical studies or clinical trials of our product candidates; • potential side effects of our product candidates, whether caused by the biologic formulation or the RaniPill capsule, that could delay or prevent approval or cause an approved product to be taken off the market; • our ability to obtain, as well as the timeliness of obtaining, additional funding to develop, and potentially manufacture and commercialize our product candidates; • our ability to manufacture our product candidates to our specifications and in a timely manner to support our preclinical studies and clinical trials, and, if approved, commercialization; • our ability to scale, optimize and expand automation of our manufacturing processes for our product candidates for the conduct of preclinical studies and clinical trials and, if approved, for successful commercialization; • competition from existing products directed against the same biologic target or therapeutic indications of our product candidates as well as new products that may receive marketing approval; • the timing of regulatory review and approval of our product candidates; 34 • market acceptance of our product candidates that receive regulatory approval, if any, including perception of the safety and efficacy of the oral delivery of biologics; • our ability to expand our commercial reach by selectively entering into strategic partnerships on favorable terms or at all; • our ability to establish an effective sales and marketing infrastructure directly or through collaborations with third parties; • the ability of patients or healthcare providers to obtain coverage or sufficient reimbursement for our products; • our ability to manufacture our product candidates in accordance with current Good Manufacturing Practices, for the conduct of preclinical studies and clinical trials and, if approved, for successful commercialization; • our ability as well as the ability of any third-party collaborators, to obtain, maintain and protect intellectual property rights covering our product candidates and technologies, and our ability to develop, manufacture and commercialize our product candidates without infringing on the intellectual property rights of others; • our ability to add infrastructure and adequately manage our future growth; and • our ability to attract and retain key personnel with appropriate expertise and experience to manage our business effectively.
We expect that our financial condition and operating results will fluctuate significantly from period to period due to a variety of factors, many of which are beyond our control, including, but not limited to: • the clinical outcomes from the continued development of our product candidates; • occurrence of adverse events or serious adverse events in preclinical studies or clinical trials of our product candidates; • potential side effects of our product candidates, whether caused by the biologic formulation or the RaniPill capsule, that could delay or prevent approval or cause an approved product to be taken off the market; • our ability to obtain, as well as the timeliness of obtaining, additional funding to develop, and potentially manufacture and commercialize our product candidates and develop the RaniPill HC; • our ability to manufacture our product candidates to our specifications and in a timely manner to support our preclinical studies and clinical trials, and, if approved, commercialization; • our ability to scale, optimize and expand automation of our manufacturing processes for our product candidates for the conduct of preclinical studies and clinical trials and, if approved, for successful commercialization; • competition from existing products directed against the same biologic target or therapeutic indications of our product candidates as well as new products that may receive marketing approval; • the timing of regulatory review and approval of our product candidates; • market acceptance of our product candidates that receive regulatory approval, if any, including perception of the safety and efficacy of the oral delivery of biologics; • our ability to enter into collaboration agreements with third parties who may desire to license our oral delivery technology for use with their own product candidates; • our ability to expand our commercial reach by selectively entering into strategic partnerships on favorable terms or at all; • our ability to establish an effective sales and marketing infrastructure directly or through collaborations with third parties; • the ability of patients or healthcare providers to obtain coverage or sufficient reimbursement for our products; • our ability to manufacture our product candidates in accordance with current Good Manufacturing Practices, for the conduct of preclinical studies and clinical trials and, if approved, for successful commercialization; • our ability as well as the ability of any third-party collaborators, to obtain, maintain and protect intellectual property rights covering our product candidates and technologies, and our ability to develop, manufacture and commercialize our product candidates without infringing on the intellectual property rights of others; 37 • our ability to add infrastructure and adequately manage our future growth; and • our ability to attract and retain key personnel with appropriate expertise and experience to manage our business effectively.
The European Patent Office (EPO) provides for an opposition proceeding that could result in revocation of or amendment to a European patent. We are presently involved in opposition proceedings involving four of our European patents at the EPO, all of which opposition proceedings were asserted against us by Novo Nordisk AS.
The European Patent Office (“EPO”) provides for an opposition proceeding that could result in revocation of or amendment to a European patent. We are presently involved in opposition proceedings involving four of our European patents at the EPO, all of which opposition proceedings were asserted against us by Novo Nordisk A/S.
If we fail to achieve announced milestones in the timeframes we announce and expect, the commercialization of our product candidates may be delayed and our business and results of operations may be harmed. We may engage in strategic transactions that could impact our liquidity, increase our expenses and present significant distractions to our management.
If we fail to achieve announced milestones in the timeframes we announce and expect, our stock price may decrease, the commercialization of our product candidates may be delayed and our business and results of operations may be harmed. We may engage in strategic transactions that could impact our liquidity, increase our expenses and present significant distractions to our management.
We cannot be sure that our insurance coverage will be adequate or sufficient to protect us from or to mitigate liabilities arising out of our data privacy and security practices, or that it will be available on commercially reasonable terms or at all, or that such coverage will pay future claims.
We cannot be sure that our insurance coverage will be adequate or sufficient to protect us from or to mitigate liabilities arising out of our privacy and security practices, such coverage will continue to be available on commercially reasonable terms or at all, or that such coverage will pay future claims.
Accordingly, we expect that we will need to raise substantial additional funds in the future in order to complete the development of the RaniPill platform, to complete the clinical development of our product candidates and seek regulatory approval thereof, to expand our manufacturing capabilities, to further develop the RaniPill HC device and to commercialize any of our product candidates.
We will need to raise substantial additional funds in the future in order to complete the development of the RaniPill platform, to complete the clinical development of our product candidates and seek regulatory approval thereof, to expand our manufacturing capabilities, to further develop the RaniPill HC device and to commercialize any of our product candidates.
For example, the results generated to date in preclinical studies and the Phase 1 clinical trials of RT-101 and RT-102 do not ensure that future Phase 2 or later clinical trials of these product candidates will have similar results or be successful.
For example, the results generated to date in preclinical studies and the Phase 1 clinical trials ofRT-102 and RT-111 do not ensure that future Phase 2 or later clinical trials of these product candidates will have similar results or be successful.
Our management and other personnel devote a substantial amount of time to ensure that we comply with all of these requirements, and we will likely need to hire additional accounting and financial staff with appropriate public company reporting experience and technical accounting knowledge.
Our management and other personnel devote a substantial amount of time to ensure that we comply with all of these requirements, and we may need to hire additional accounting and financial staff with appropriate public company reporting experience and technical accounting knowledge.
If we rely on these exemptions, our stockholders will not have the same protections afforded to stockholders of companies that are subject to such requirements. As of March 16, 2023, our Chairman, Mir Imran beneficially owned more than 80% of the combined voting power of our Class A and Class B common stock.
If we rely on these exemptions, our stockholders will not have the same protections afforded to stockholders of companies that are subject to such requirements. As of March 10, 2024, our Chairman, Mir Imran beneficially owned more than 80% of the combined voting power of our Class A and Class B common stock.
As of March 16, 2023, our named executive officers, directors, holders of 5% or more of our capital stock and their respective affiliates beneficially held outstanding stock representing over 80% of our voting power. Therefore, these stockholders have substantial influence and may be able to determine all matters requiring stockholder approval.
As of March 10, 2024, our named executive officers, directors, holders of 5% or more of our capital stock and their respective affiliates beneficially held outstanding stock representing over 80% of our voting power. Therefore, these stockholders have substantial influence and may be able to determine all matters requiring stockholder approval.
Our funding requirements and the timing of our need for additional capital are subject to change based on a number of factors, including: • the progress, costs, trial design, results and timing of our preclinical studies and clinical trials; • the progress, costs, and results of our research pipeline; • the progress and costs of development of the RaniPill HC device and other improvements or advancements to our delivery technologies; 35 • the willingness of the FDA or other regulatory authorities to accept data from our clinical trials, as well as data from our completed and planned preclinical studies and clinical trials and other work, as the basis for review and approval of our product candidates; • the outcome, costs, and timing of seeking and obtaining FDA, and any other regulatory approvals; • the number and characteristics of product candidates that we pursue; • our ability to manufacture sufficient quantities of the RaniPill capsule; • our need to expand our research and development activities; • the costs associated with manufacturing, and obtaining drug supply for, our product candidates, including for clinical and commercial supplies; • the costs associated with securing and establishing commercial infrastructure, including establishing sales, marketing, and distribution capabilities; • the costs of acquiring, licensing, or investing in businesses, product candidates, and technologies; • our ability to maintain, expand, and defend the scope of our intellectual property portfolio, including the amount and timing of any payments we may be required to make, or that we may receive, in connection with the licensing, filing, prosecution, defense, and enforcement of any patents or other intellectual property rights; • our need and ability to retain key management and hire scientific, technical, business, and engineering personnel; • the effect of competing drugs and product candidates and other market developments; • the timing, receipt, and amount of sales from our potential products, if approved; • our ability to establish strategic collaborations; • our need to implement additional internal systems and infrastructure, including financial and reporting systems; • security breaches, data losses or other disruptions affecting our information systems; • the economic and other terms, timing of and success of any collaboration, licensing, or other arrangements which we may enter in the future; and • the effects of disruptions to and volatility in the credit and financial markets in the United States and worldwide from the COVID-19 pandemic, the conflict between Ukraine and Russia or other such disruptions.
Our funding requirements and the timing of our need for additional capital are subject to change based on a number of factors, including: • the progress, costs, trial design, results and timing of our preclinical studies and clinical trials; • the progress, costs, and results of our research pipeline; • the progress and costs of development of the RaniPill HC device and other improvements or advancements to our delivery technologies; • the willingness of the FDA or other regulatory authorities to accept data from our clinical trials, as well as data from our completed and planned preclinical studies and clinical trials and other work, as the basis for review and approval of our product candidates; • the outcome, costs, and timing of seeking and obtaining FDA, and any other regulatory approvals; • the number and characteristics of product candidates that we pursue; • our ability to manufacture sufficient quantities of the RaniPill capsule; • our need to expand our research and development activities; • the costs associated with manufacturing, and obtaining drug supply for, our product candidates, including for clinical and commercial supplies; • the costs associated with securing and establishing commercial infrastructure, including establishing sales, marketing, and distribution capabilities; • the costs of acquiring, licensing, or investing in businesses, product candidates, and technologies; • our ability to maintain, expand, and defend the scope of our intellectual property portfolio, including the amount and timing of any payments we may be required to make, or that we may receive, in connection with the licensing, filing, prosecution, defense, and enforcement of any patents or other intellectual property rights; • our need and ability to retain key management and hire scientific, technical, business, and engineering personnel; • the effect of competing drugs and product candidates and other market developments; • the timing, receipt, and amount of sales from our potential products, if approved; • our ability to establish strategic collaborations; 35 • our need to implement additional internal systems and infrastructure, including financial and reporting systems; • security breaches, data losses or other disruptions affecting our information systems; • our ability to realize savings from any restructuring plans and cost-containment measures we propose to implement; • the economic and other terms, timing of and success of any collaboration, licensing, or other arrangements which we may enter in the future; and • the effects of disruptions to and volatility in the credit and financial markets in the United States and worldwide from geopolitical conflicts or other such disruptions.
In the Phase 1 clinical trials of RT-101 and RT-102, we tested the RaniPill capsule in a limited number of healthy volunteers.
In the Phase 1 clinical trials of RT-102 and RT-111, we tested the RaniPill capsule in a limited number of healthy volunteers.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe have the option to renew the lease for one additional term of twelve months, subject to approval by ICL upon a nine months’ notice of renewal prior to the end of the lease term. Our San Antonio lease will continue until terminated by either party upon six months’ notice.
Biggest changeWe intend to transition certain of our operations to the Fremont facility so that we will no longer need the space in Milpitas, California. Our San Antonio lease will continue until terminated by either party upon six months’ notice. We provided to ICL notice of termination of the San Antonio lease in December 2023.
If required, we believe that suitable additional or alternative space would be available in the future on commercially reasonable terms.
The lease will terminate in June 2024. If required, we believe that suitable additional or alternative space would be available in the future on commercially reasonable terms.
The lease for the San Jose facility has a twelve month term that renews automatically on January 1st of each year for a successive twelve month period, subject to termination by either party upon a six months notice. Our lease for the Milpitas facility expires in February 2024.
The lease for the San Jose facility has a twelve month term that renews automatically on January 1st of each year for a successive twelve month period, subject to termination by either party upon a six months’ notice.
Item 2. Properties Our corporate headquarters are currently located in San Jose, California. We lease approximately 55,000 square feet of office, research and development, production and manufacturing, and laboratory space in San Jose and Milpitas, California and San Antonio, Texas, pursuant to service agreements with ICL, a related party.
Item 2. Properties Our corporate headquarters are currently located in San Jose, California. We lease approximately 88,000 square feet of office, research and development, production and manufacturing, and laboratory space for our business. In February 2024, we began occupying approximately 33,000 square feet in Fremont, California under a lease with a third party.
Added
The term of the lease is 63 months. Subject to certain conditions, we have an option to renew the lease for one additional 5-year term at the then-prevailing market rate. We also lease approximately 55,0000 square feet in San Jose and Milpitas, California and San Antonio, Texas, pursuant to service agreements with ICL, a related party.
Added
In March 2024, we amended our lease for the San Jose facility to increase our use from 23,000 square feet to 24,000 square feet. In March 2024, we also extended the term of our lease for the Milpitas facility from February 2024 to August 2024.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeRegardless of outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors. Item 4. Mine Safety Disclosures Not applicable. 92 PART II
Biggest changeRegardless of outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors. Item 4. Mine Safety Disclosures Not applicable. 96 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeUpon exchange of the LLC Units for Class A common stock, the corresponding shares of Class B common stock paired with such LLC Units are cancelled.
Biggest changeUpon exchange of the LLC Units for Class A common stock, the corresponding shares of Class B common stock paired with such LLC Units are cancelled. Recent Sales of Unregistered Securities None. Item 6. [Reserved] 97
Stockholders As of March 16, 2023, we had 149 holders of record of our Class A common stock and 18 holders of record of our Class B common stock.
Stockholders As of March 14, 2024, we had 140 holders of record of our Class A common stock and 18 holders of record of our Class B common stock.
Removed
Recent Sales of Unregistered Securities During the quarter ended December 31, 2022, we issued 13,000 shares of Class A common stock to Stephanie McGrory, our former employee, in connection with the resolution of an employment matter.
Removed
The shares were offered and sold in accordance with the terms of the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended. Item 6. [Reserved] 93

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest changeItem 6. [Reserved] 93 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 94 Item 7A. Quantitative and Qualitative Disclosures about Market Risk 107 Item 8. Financial Statements and Supplementary Data 108 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 139
Biggest changeItem 6. [Reserved] 97 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 98 Item 7A. Quantitative and Qualitative Disclosures about Market Risk 112 Item 8. Financial Statements and Supplementary Data 113 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 139

Item 7. Management's Discussion & Analysis

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

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Biggest changeResearch and Development Expenses The following table reflects our research and development costs by nature of expense (in thousands): Year Ended December 31, 2022 2021 Payroll, equity-based compensation and related benefits $ 24,838 $ 20,120 Facilities, materials and supplies 5,727 3,595 Third-party services 5,682 2,429 Other 360 338 Total $ 36,607 $ 26,482 Research and development expenses were $36.6 million for the year ended December 31, 2022, compared to $26.5 million for the year ended December 31, 2021.
Biggest changeThe following table summarizes our results of operations (in thousands): Year Ended December 31, 2023 2022 Change Operating expenses Research and development $ 39,624 $ 36,607 8.2 % General and administrative 26,475 26,844 (1.4 ) % Total operating expenses $ 66,099 $ 63,451 4.2 % Loss from operations (66,099 ) (63,451 ) 4.2 % Other income (expense), net Interest income and other, net 3,301 1,248 164.5 % Interest expense and other, net (5,085 ) (1,071 ) 374.8 % Loss before income taxes (67,883 ) (63,274 ) 7.3 % Income tax expense — (70 ) * Net loss $ (67,883 ) $ (63,344 ) 7.2 % Net loss attributable to non-controlling interest (33,913 ) (32,756 ) 3.5 % Net loss attributable to Rani Therapeutics Holdings, Inc. $ (33,970 ) $ (30,588 ) 11.1 % *Not meaningful Research and Development Expenses The following table reflects our research and development costs by nature of expense (in thousands): Year Ended December 31, 2023 2022 Payroll, stock-based compensation and related benefits $ 26,247 $ 24,838 Third-party services 6,864 5,682 Facilities, materials and supplies 6,300 5,727 Other 213 360 Total $ 39,624 $ 36,607 The increase of $3.0 million in research and development expenses was primarily attributed to higher compensation costs of $1.4 million, an increase of $1.2 million in third-party services and an increase of $0.6 million in facilities, materials and supplies expense related to preclinical and clinical development activities, offset by a decrease in other costs of $0.2 million.
As the sole managing member of Rani LLC, the Company operates and controls all of Rani LLC’s operations, and through Rani LLC, conducts all of Rani LLC’s business and the financial results of Rani LLC and, prior to December 15, 2022, RMS are included in the consolidated financial statements of the Company.
As the sole managing member of Rani LLC, the Company operates and controls all of Rani LLC’s operations, and through Rani LLC, conducts all of Rani LLC’s business and the financial results of Rani LLC and RMS (prior to December 15, 2022) are included in the consolidated financial statements of the Company.
We expect our research and development expenses to increase significantly in the foreseeable future as we continue to invest in activities related to testing and developing the RaniPill GO and RaniPill HC and the development of our product candidates, as our product candidates advance into later stages of development, as we begin to conduct larger clinical trials, as we seek regulatory approvals for our product candidates upon successful completion of clinical trials, and incur expenses associated with hiring additional personnel to support the research and development efforts.
We expect our research and development expenses to increase significantly for the foreseeable future as we continue to invest in activities related to testing and developing the RaniPill GO and RaniPill HC and the development of our product candidates, as our product candidates advance into later stages of development, as we begin to conduct larger clinical trials, as we seek regulatory approvals for our product candidates upon successful completion of clinical trials, and incur expenses associated with hiring additional personnel to support the research and development efforts.
Financing Activities For the year ended December 31, 2022, net cash provided by financing activities was $29.0 million, which was primarily attributable to proceeds from the issuance of long-term debt and warrants, net of issuance costs of $29.6 million.
For the year ended December 31, 2022, net cash provided by financing activities was $29.0 million, which was primarily attributable to proceeds from the issuance of long-term debt and warrants, net of issuance costs of $29.6 million.
See Note 8 to the consolidated financial statements contained in Part II, Item 8 of this Annual Report on Form 10-K for additional information. (2) Represents long-term debt principal maturities and final payment equal to 5.5% of aggregate amount funded, excluding interest.
See Note 7 to the consolidated financial statements contained in Part II, Item 8 of this Annual Report on Form 10-K for additional information. (2) Represents long-term debt principal maturities and final payment equal to 5.5% of aggregate amount funded, excluding interest.
Our vertically integrated manufacturing strategy will result in material future capital outlays and fixed costs related to constructing and operating a manufacturing facility. We have and plan to continue to invest in automated manufacturing production lines for the current RaniPill capsule and RaniPill HC.
Our vertically integrated manufacturing strategy will result in material future capital outlays and fixed costs related to constructing and operating a manufacturing facility. We have invested and plan to continue to invest in automated manufacturing production lines for the current RaniPill capsule and RaniPill HC.
Costs of property and equipment related to scaling-up of the manufacturing capacity for clinical trials and to support commercialization are capitalized as property and equipment unless the related asset does not have an alternative future use. Clinical and preclinical costs are a component of research and development expense.
Costs of property and equipment related to scaling-up of the manufacturing capacity for clinical trials and to support commercialization are capitalized as property and equipment unless the related asset does not have an alternative future use. 111 Clinical and preclinical costs are a component of research and development expense.
These exchanges and redemptions may result in increases in the tax basis of the assets of Rani LLC that otherwise would not have been available. Increases in tax basis resulting from such exchanges may reduce the amount of income tax that the Company would otherwise be required to pay in the future.
These exchanges and redemptions may result in increases in the tax basis of the assets of Rani LLC that otherwise would not have been available. Increases in tax basis resulting from such 101 exchanges may reduce the amount of income tax that the Company would otherwise be required to pay in the future.
Under the amendment in March 2022, Rani LLC has a right to occupy certain facilities leased by ICL in Milpitas, California and San Antonio, Texas (“Occupancy 98 Services”) for general office, research and development, and light manufacturing.
Under the amendment in March 2022, Rani LLC has a right to occupy certain facilities leased by ICL in Milpitas, California and San Antonio, Texas (“Occupancy Services”) for general office, research and development, and light manufacturing.
As of December 31, 2022, we have not recorded a liability under the TRA related to the income tax benefits originating from the exchanges of Paired Interest or non-corresponding Class A Units of Rani LLC as it is not probable that the Company will realize such tax benefits.
As of December 31, 2023, we have not recorded a liability under the TRA related to the income tax benefits originating from the exchanges of Paired Interest or non-corresponding Class A Units of Rani LLC as it is not probable that the Company will realize such tax benefits.
Any shares of Class B common stock will be cancelled on a one-for-one basis if, at the election of the Continuing LLC Owners, we redeem or exchange such Paired Interest pursuant to the terms of the Rani LLC Agreement.
Any shares of Class B common stock will be canceled on a one-for-one basis if, at the election of the Continuing LLC Owners, we redeem or exchange such Paired Interest pursuant to the terms of the Rani LLC Agreement.
Organizational Transactions The Company was incorporated in April 2021 and formed for the purpose of facilitating an IPO of its Class A common stock, and to facilitate certain organizational transactions (“Organizational Transactions”) and to operate the business of Rani Therapeutics, LLC (“Rani LLC”) and its consolidated subsidiary at such time, Rani Management Services, Inc. (“RMS”).
Organizational Transactions The Company was incorporated in April 2021 and formed for the purpose of facilitating an IPO of its Class A common stock, and to facilitate certain organizational transactions (“Organizational Transactions”) and to operate the business of Rani LLC and its consolidated subsidiary at such time, Rani Management Services, Inc. (“RMS”).
To the extent the Company is able to realize the income tax benefits associated with the exchanges of Paired 102 Interest or non-corresponding Class A Units of Rani LLC subject to the TRA, the TRA payable would range from zero to $22.9 million at December 31, 2022.
To the extent the Company is able to realize the income tax benefits associated with the exchanges of Paired Interest or non-corresponding Class A Units of Rani LLC subject to the TRA, the TRA payable would range from zero to $22.9 million at December 31, 2023.
Therefore, we report NCI based on the Class A Units of Rani LLC held by the Continuing LLC Owners on our consolidated balance sheet as of December 31, 2022.
Therefore, we report NCI based on the Class A Units of Rani LLC held by the Continuing LLC Owners on our consolidated balance sheet as of December 31, 2023.
See Note 13 to the consolidated financial statements contained in Part II, Item 8 of this Annual Report on Form 10-K for additional information.
See Note 12 to the consolidated financial statements contained in Part II, Item 8 of this Annual Report on Form 10-K for additional information.
When, and if, any of our product candidates are approved for commercialization, we plan to develop a commercialization infrastructure for those products in the United States, Europe, Asia, and potentially in certain other key markets. We may also rely on partnerships to provide commercialization infrastructure, including sales, marketing, and commercial distribution.
When, and if, any of our product candidates are approved for commercialization, we plan to develop a commercialization infrastructure or engage commercial sales organizations or distributors for those products in the United States, Europe, Asia, and potentially in certain other key markets. We may also rely on partnerships to provide commercialization infrastructure, including sales, marketing, and commercial distribution.
The purpose of the Loans is for general corporate purposes. The Loan Agreement also contains various covenants and restrictive provisions. As of December 31, 2022, we were in compliance with all applicable debt covenants under the Loan Agreement and had cash, cash equivalents, and marketable securities totaling $98.5 million.
The purpose of the Loans is for general corporate purposes. The Loan Agreement also contains various covenants and restrictive provisions. As of December 31, 2023, we were in compliance with all applicable debt covenants under the Loan Agreement and had cash, cash equivalents, and marketable securities totaling $48.5 million.
As of December 31, 2022, we had an accumulated deficit of $38.9 million. We expect to continue to incur significant losses for the foreseeable future, and our net losses may fluctuate significantly from period to period, depending on the timing of and expenditures on our planned research and development activities.
As of December 31, 2023, we had an accumulated deficit of $72.9 million. We expect to continue to incur significant losses for the foreseeable future, and our net losses may fluctuate significantly from period to period, depending on the timing of and expenditures on our planned research and development activities.
In January 2023, we announced entering into a License and Supply Agreement with Celltrion, Inc. (“Celltrion”) under which we receive a license and supply of Celltrion’s ustekinumab biosimilar for development and commercialization of RT-111 worldwide, subject to a right of first negotiation for Celltrion following completion of a Phase 1 clinical trial that meets its primary endpoint(s) (the “Celltrion Agreement”).
In January 2023, we announced entering into a License and Supply Agreement with Celltrion under which we receive a license and supply of Celltrion’s ustekinumab biosimilar for development and commercialization of RT-111 worldwide, subject to a right of first negotiation for Celltrion following completion of a Phase 1 clinical trial that meets its primary endpoint(s).
Certain individuals who continue to own interests in Rani LLC but do not hold shares of the Company’s Class B common stock (“non-corresponding Class A Units”) have the ability to exchange their non-corresponding Class A Units of Rani LLC for 1,387,471 shares of the Company’s Class A common stock.
Certain individuals who continue to own interests in Rani LLC but do not hold shares of the Company’s Class B common stock (“non-corresponding Class A Units”) have the ability to exchange their non-corresponding Class A Units of Rani LLC for 1,345,067 shares of the Company’s Class A common stock.
The Non-Exclusive License Agreement will continue in perpetuity unless terminated. 99 Intellectual Property Agreement with Mir Imran (the “Mir Agreement”) In June 2021, we entered into the Mir Agreement, pursuant to which we and Mir Imran agreed that we would own all intellectual property conceived (i) using any of our people, equipment, or facilities or (ii) that is within the field of oral delivery of sensors, small molecule drugs or biologic drugs including, any peptide, antibody, protein, cell therapy, gene therapy or vaccine.
Intellectual Property Agreement with Mir Imran (the “Mir Agreement”) In June 2021, we entered into the Mir Agreement, pursuant to which we and Mir Imran agreed that we would own all intellectual property conceived (i) using any of our people, equipment, or facilities or (ii) that is within the field of oral delivery of sensors, small molecule drugs or biologic drugs including, any peptide, antibody, protein, cell therapy, gene therapy or vaccine.
Investing Activities For the year ended December 31, 2022, net cash used in investing activities was $72.4 million consisting of $73.8 million in purchases of marketable securities, $3.0 million in proceeds from maturities of marketable securities and $1.6 million in purchases of property and equipment.
For the year ended December 31, 2022, net cash used in investing activities was $72.4 million consisting of $73.8 million in purchases of marketable securities, $3.0 million in proceeds from maturities of marketable securities and $1.6 million in purchases of property and equipment. 110 Financing Activities For the year ended December 31, 2023, there were no significant financing activities.
We expense research and development costs as incurred. Costs for external development activities are recognized based on an evaluation of the progress to completion of specific tasks using information provided to us by our vendors.
Costs for external development activities are recognized based on an evaluation of the progress to completion of specific tasks using information provided to us by our vendors.
We also rely on other exemptions provided by the JOBS Act, including not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act unless we cease to be an emerging growth company. 106 We will remain an emerging growth company until the earliest of (1) December 31, 2026 (the last day of the fiscal year following the fifth anniversary of the closing of our initial public offering), (2) the last day of the fiscal year in which we have total annual gross revenue of at least $1.235 billion, (3) the last day of the fiscal year in which we are deemed to be a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which would occur if the market value of our Class A common stock held by non-affiliates exceeded $700.0 million as of the last business day of the second fiscal quarter of such year or (4) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.
We will remain an emerging growth company until the earliest of (1) December 31, 2026 (the last day of the fiscal year following the fifth anniversary of the closing of our initial public offering), (2) the last day of the fiscal year in which we have total annual gross revenue of at least $1.235 billion, (3) the last day of the fiscal year in which we are deemed to be a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which would occur if the market value of our Class A common stock held by non-affiliates exceeded $700.0 million as of the last business day of the second fiscal quarter of such year or (4) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.
Overview We are a clinical stage biotherapeutics company focusing on advancing technologies to enable the administration of biologics and drugs orally, to provide patients, physicians, and healthcare systems with a convenient alternative to painful injections. We are advancing a portfolio of oral therapeutics using our proprietary delivery technology.
Overview We are a clinical stage biotherapeutics company focusing on advancing technologies to enable the administration of biologics and drugs orally, to provide patients, physicians, and healthcare systems with a convenient alternative to painful injections.
As of December 31, 2022, the Company held approximately 50% of the Class A Units of Rani LLC, and approximately 50% of the outstanding Class A Units of Rani LLC are held by the Continuing LLC Owners.
As of December 31, 2023, the Company held approximately 51% of the Class A Units of Rani LLC, and approximately 49% of the outstanding Class A Units of Rani LLC are held by the Continuing LLC Owners.
As of December 31, 2022, we had not delivered any placement notices to either of the Agents. Since our inception, we have incurred significant losses and negative cash flows from operations. Our net losses were $63.3 million and $53.1 million for the year ended December 31, 2022 and 2021, respectively.
As of December 31, 2023, we had not delivered any placement notices to either of the Agents and there had been no ATM Sales. Since our inception, we have incurred significant losses and negative cash flows from operations. Our net losses were $67.9 million and $63.3 million for the year ended December 31, 2023 and 2022, respectively.
From the date of the Organizational Transactions to December 31, 2022, there were 5,173,947 exchanges of Paired Interests and 158,051 exchanges of noncorresponding Class A Units of Rani LLC for an equal number of shares of our Class A common stock.
From the date of the Organizational Transactions to December 31, 2023, there were 5,173,947 exchanges of Paired Interests and 200,455 exchanges of non-corresponding Class A Units of Rani LLC for an equal number of shares of our Class A common stock.
We determine the actual costs through discussions with internal personnel and external service providers as to the progress or stage of completion of services and the agreed-upon fee to be paid for such services. Recently Adopted Accounting Standards For a description of the expected impact of recent accounting pronouncements, see “Note 2.
We determine the actual costs through discussions with internal personnel and external service providers as to the progress or stage of completion of services and the agreed-upon fee to be paid for such services. Recently Adopted Accounting Standards None.
The following table summarizes our cash, cash equivalents, and marketable securities: December 31, 2022 2021 Cash and cash equivalents $ 27,007 $ 117,453 Marketable securities 71,475 — Total cash, cash equivalents, and marketable securities $ 98,482 $ 117,453 As of December 31, 2022, we had cash, cash equivalents, marketable securities of $98.5 million, compared to $117.5 million as of December 31, 2021.
The following table summarizes our cash, cash equivalents, and marketable securities: December 31, 2023 2022 Cash and cash equivalents $ 5,864 $ 27,007 Marketable securities 42,675 71,475 Total cash, cash equivalents and marketable securities $ 48,539 $ 98,482 As of December 31, 2023, we had cash and cash equivalents and marketable securities of $48.5 million, compared to $98.5 million as of December 31, 2022.
In addition, our ability to raise additional capital 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.
In addition, our ability to raise additional capital may be adversely impacted by potential worsening global economic conditions and the recent disruptions to and volatility in the credit and financial markets.
To date, we have financed our operations primarily through an IPO, private placements of Rani LLC preferred units, the issuance of convertible promissory notes, and long-term debt, as well as contract revenue generated from evaluation agreements. In August 2021, we raised net proceeds of $73.6 million from the IPO.
To date, we have financed our operations primarily through an IPO, private placements of Rani LLC preferred units, the issuance of convertible promissory notes, and long-term debt, as well as contract revenue generated from evaluation agreements. In August 2022, we entered into the Loan Agreement with the Lender.
These expenses include: External expenses, consisting of: • expenses associated with CROs, for managing and conducting clinical trials; • expenses associated with laboratory supplies, drug material for clinical trials, developing and manufacturing of the RaniPill GO, RaniPill HC and other materials; • expenses associated with preclinical studies performed by third parties; and • expenses associated with consulting, legal fees for patent matters, advisors, and other external services.
These expenses include: External expenses, consisting of: • expenses associated with contract research organizations ("CROs,"), for managing and conducting clinical trials; • expenses associated with laboratory supplies, drug material for clinical trials, developing and manufacturing of the RaniPill GO, RaniPill HC and other materials; • expenses associated with preclinical studies performed by third parties; • expenses associated with consulting, advisors, and other external services; and • other research and development costs related to compliance with quality and regulatory requirements.
Food and Drug Administration (“FDA”), or other regulatory authorities to accept data from our clinical trials, as well as data from our completed and planned clinical trials and preclinical studies and other work, as the basis for review and approval of our product candidates or collaborator drugs or biologics paired with the RaniPill GO and/or RaniPill HC for various indications; • the outcome, costs, and timing of seeking and obtaining FDA, and any other regulatory approvals; • the number and characteristics of product candidates that we pursue; • our ability to manufacture sufficient quantities of the RaniPill capsules; • our need to expand our research and development activities; • the costs associated with manufacturing our product candidates, including establishing commercial supplies and sales, marketing, and distribution capabilities; • the costs associated with securing and establishing commercial infrastructure; • the costs of acquiring, licensing, or investing in businesses, product candidates, and technologies; 103 • our ability to maintain, expand, and defend the scope of our intellectual property portfolio, including the amount and timing of any payments we may be required to make, or that we may receive, in connection with the licensing, filing, prosecution, defense, and enforcement of any patents or other intellectual property rights; • our need and ability to retain key management and hire scientific, technical, business, and engineering personnel; • the effect of competing drugs and product candidates and other market developments; • the timing, receipt, and amount of sales from our potential products, if approved; • our ability to establish strategic collaborations; • our need to implement additional internal systems and infrastructure, including financial and reporting systems; • security breaches, data losses or other disruptions affecting our information systems; • the economic and other terms, timing of and success of any collaboration, licensing, or other arrangements which we may enter in the future; and • the effects of disruptions to and volatility in the credit and financial markets in the United States and worldwide from the COVID-19 pandemic.
We anticipate that we will need to raise substantial additional capital, the requirements of which will depend on many factors, including: • the progress, costs, trial design, results of and timing of our preclinical studies and clinical trials; • the progress, costs, and results of our research pipeline; • the willingness of the FDA, or other regulatory authorities to accept data from our clinical trials, as well as data from our completed and planned clinical trials and preclinical studies and other work, as the basis for review and approval of our product candidates or collaborator drugs or biologics paired with the RaniPill GO and/or RaniPill HC for various indications; • the outcome, costs, and timing of seeking and obtaining FDA, and any other regulatory approvals; • the number and characteristics of product candidates that we pursue; • our ability to manufacture sufficient quantities of the RaniPill capsules; • our need to expand our research and development activities; • the costs associated with manufacturing our product candidates, including establishing commercial supplies and sales, marketing, and distribution capabilities; • the costs associated with securing and establishing commercial infrastructure; • the costs of acquiring, licensing, or investing in businesses, product candidates, and technologies; • our ability to maintain, expand, and defend the scope of our intellectual property portfolio, including the amount and timing of any payments we may be required to make, or that we may receive, in connection with the licensing, filing, prosecution, defense, and enforcement of any patents or other intellectual property rights; • our need and ability to retain key management and hire scientific, technical, business, and engineering personnel; • the effect of competing drugs and product candidates and other market developments; • the timing, receipt, and amount of sales from our potential products, if approved; • our ability to establish strategic collaborations; • our need to implement additional internal systems and infrastructure, including financial and reporting systems; • security breaches, data losses or other disruptions affecting our information systems; • our ability to realize savings from any restructuring plans or cost-containment measures we have implemented or additional measures we may implement; • the economic and other terms, timing of and success of any collaboration, licensing, or other arrangements which we may enter in the future. 109 If we raise additional capital through debt financing, we may be subject to covenants that restrict our operations including limitations on our ability to incur liens or additional debt, pay dividends, make certain investments, and engage in certain merger, consolidation, or asset sale transactions.
As a Continuing LLC Owner, ICL is entitled to exchange, subject to the terms of the Rani LLC Agreement, Paired Interests for our Class A common stock; provided that, at our election, we may effect a direct exchange of such Class A common stock or make a cash payment equal to a volume weighted average market price of one share of Class A common stock for each Paired Interest redeemed.
As a Continuing LLC Owner, ICL is entitled to exchange, subject to the terms of the Rani LLC Agreement, Paired Interests for our Class A common stock; provided that, at our election, we may effect a direct exchange of such Class A common stock or make a cash payment equal to a volume weighted average market price of one share of Class A common stock for each Paired Interest redeemed. 105 During the years ended December 31, 2023 and 2022, these related parties that are party to the Rani LLC Agreement exchanged zero and 2,317,184 Paired Interests, respectively, for the Company's Class A common stock.
RaniPill HC We continue to develop the RaniPill HC, a high-capacity RaniPill capsule designed to deliver drug payloads up to 20 mg, 500%-plus higher than the payload capacity of the RaniPill GO. We are conducting preclinical studies with a fully-autonomous RaniPill HC.
RaniPill HC We continue to develop the RaniPill HC, a high-capacity RaniPill capsule designed to deliver drug payloads up to 200µL, 500%-plus higher than the payload capacity of the RaniPill GO.
Costs are billed or charged on a monthly basis by ICL or Rani LLC, respectively, as well as allocations of expenses based upon Rani LLC’s utilization of ICL’s facilities and equipment.
The RMS-ICL Service Agreement specifies the scope of services to be provided as well as the methods for determining the costs of services. Costs are billed or charged on a monthly basis by ICL or Rani LLC, respectively, as well as allocations of expenses based upon Rani LLC’s utilization of ICL’s facilities and equipment.
Regulatory In January 2023, Rani announced that it completed a pre-IND meeting with the FDA with respect to RT-102. Following feedback from the meeting, Rani believes that a 505(b)(2) pathway is suitable for the development of RT-102 in the U.S.
RT-102 In January 2023, we announced that we completed a pre-IND meeting with the FDA with respect to RT-102. Following feedback from the meeting, we believe that a 505(b)(2) pathway is suitable for the development of RT-102 in the U.S. In addition, we obtained guidance from the FDA on its preclinical and clinical development plans for RT-102.
Research and Development Expense Research and development expense consists primarily of direct and indirect costs incurred in connection with our research and development activities to develop the RaniPill GO and RaniPill HC.
Components of Results of Operations Operating Expenses Our operating expenses consisted of research and development and general and administrative activities. Research and Development Expense Research and development expense consists primarily of direct and indirect costs incurred in connection with our research and development activities to develop the RaniPill platform.
The Rani LLC-ICL Service Agreement has a twelve-month term and will automatically renew for a successive twelve-month periods unless terminated; except that the Occupancy Services in Milpitas, California have a term until February 2024, following an extension granted in July 2022, with the potential for one additional annual renewal, subject to approval by the landlord upon a nine months’ notice of renewal prior to the end of the lease term, and the Occupancy Services in San Antonio, Texas continue until either party gives six months’ notice of termination.
The Rani LLC-ICL Service Agreement has a twelve-month term and will automatically renew for a successive twelve-month periods unless terminated; except that the Occupancy Services in Milpitas, California have a term until August 2024, and the Occupancy Services in San Antonio, Texas continue until either party gives six months’ notice of termination.
Internal expenses, consisting of: • expenses including salaries, bonuses, equity-based compensation and benefits for personnel engaged in the research and development functions; • expenses associated with service and repair of equipment, equipment depreciation, and allocated facility costs for research and development; and • other research and development costs related to compliance with quality and regulatory requirements.
Internal expenses, consisting of: • expenses including salaries, bonuses, stock-based compensation and benefits for personnel engaged in the research and development functions; and • expenses associated with equipment depreciation and allocated facility costs for research and development. We expense research and development costs as incurred.
A liability for the payable to parties subject to the TRA, and a reduction to stockholders’ equity, is accrued when (i) an exchange of a Paired Interest or non-corresponding Class A Units of Rani LLC has occurred and (ii) when it is deemed probable that the Tax Attributes associated with the exchange will be used to reduce our taxable income based on the contractual percentage of the benefit of Tax Attributes that we expect to receive over a period of time.
A liability for the payable to parties subject to the TRA, and a reduction to stockholders’ equity, is accrued when (i) an exchange of a Paired Interest or non-corresponding Class A Units of Rani LLC has occurred and (ii) when it is deemed probable that the Tax Attributes associated with the exchange will be used to reduce our taxable income based on the contractual percentage of the benefit of Tax Attributes that we expect to receive over a period of time. 103 Relationship with InCube Labs, LLC Service Agreements In June 2021, Rani LLC entered into a service agreement with InCube Labs, LLC (“ICL”) effective retrospectively to January 1, 2021, and subsequently amended such agreement in March 2022 and March 2024 (as amended, the "Rani LLC-ICL Service Agreement"), pursuant to which Rani LLC and ICL agreed to provide personnel services to the other upon requests.
At this time, we cannot reasonably estimate or know the nature, timing, and estimated costs of the efforts that will be necessary to complete development of the RaniPill GO and RaniPill HC and complete the development of, and obtain regulatory approval for, our product candidates.
The historical focus of our research and development has been on the RaniPill delivery platform and not tracked costs on a project-by-project basis associated with different drug compounds. 102 At this time, we cannot reasonably estimate or know the nature, timing, and estimated costs of the efforts that will be necessary to complete development of the RaniPill GO and RaniPill HC and complete the development of, and obtain regulatory approval for, our product candidates.
Our failure to raise capital as and when needed could have a negative impact on our consolidated financial condition and our ability to pursue our business strategies.
Adequate additional funding may not be available to us on acceptable terms or at all. Our failure to raise capital as and when needed could have a negative impact on our consolidated financial condition and our ability to pursue our business strategies.
The JOBS Act permits an emerging growth company like us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies.
Other Information JOBS Act Accounting Election We are an “emerging growth company” within the meaning of the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). The JOBS Act permits an emerging growth company like us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies.
Exclusive License Agreement In June 2021, we and ICL entered into an Amended and Restated Exclusive License Agreement which replaces the 2012 Exclusive License Agreement, as amended in 2013, and terminates the Intellectual Property Agreement, as amended in June 2013.
Rani LLC pays for the use of these facilities through our services agreements with ICL. 104 Exclusive License Agreement In June 2021, we and ICL entered into an Amended and Restated Exclusive License Agreement which replaces the 2012 Exclusive License Agreement, as amended in 2013, and terminates the Intellectual Property Agreement, as amended in June 2013.
A Loan of $30.0 million was committed at closing, with $15.0 million funded immediately and $15.0 million available to be drawn between October 1, 2022 and December 31, 2022, which was drawn in December 2022. The remaining $15.0 million of Loans is uncommitted and is subject to certain conditions and approval by the Lender.
The Loan Agreement provides for Loans in an aggregate principal amount up to $45.0 million. A Loan of $30.0 million was committed at closing, with $15.0 million funded immediately and $15.0 million available to be drawn between October 1, 2022 and December 31, 2022, which was drawn in December 2022.
We are also developing a high-capacity version known as the RaniPill HC, which is in preclinical stage and which is intended to enable delivery of drug payloads up to 20 mg with high bioavailability.
We are also developing a high-capacity version of the RaniPill capsule known as the RaniPill HC, which is intended to enable delivery of drug payloads up to 200µL in liquid form with high bioavailability. We have tested preclinically the RaniPill HC with multiple therapeutics, including antibodies and a peptide.
Cash Flows The following table summarizes our cash flows for the periods presented (in thousands): Year Ended December 31, 2022 2021 Net cash used in operating activities $ (46,515 ) $ (32,245 ) Net cash used in investing activities (72,436 ) (506 ) Net cash provided by financing activities 29,005 77,146 Net (decrease) increase in cash, cash equivalents and restricted cash equivalents $ (89,946 ) $ 44,395 104 Operating Activities Net cash used in operating activities for the year ended December 31, 2022 was $46.5 million, which was primarily attributable to a net loss of $63.3 million, partially offset by the equity-based compensation expense of $15.8 million, non-cash operating lease expense of $0.8 million, noncash depreciation and amortization expense of $0.5 million and net accretion and amortization of investments in marketable securities of $0.9 million.
Cash Flows The following table summarizes our cash flows for the periods presented (in thousands): Year Ended December 31, 2023 2022 Net cash used in operating activities $ (51,236 ) $ (46,515 ) Net cash provided by (used in) investing activities 29,860 (72,436 ) Net cash provided by financing activities 233 29,005 Net decrease in cash, cash equivalents and restricted cash equivalents $ (21,143 ) $ (89,946 ) Operating Activities Net cash used in operating activities for the year ended December 31, 2023 was $51.2 million, which was primarily attributable to a net loss of $67.9 million and net accretion and amortization of investments in marketable securities of $2.3 million, partially offset by the stock-based compensation expense of $19.0 million and depreciation and amortization expense of $0.8 million Additionally, there was a combined decrease in accounts payable and accrued expenses and other current liabilities of $1.1 million.
ICL may grant sublicenses under this license to third parties only with our prior approval.
ICL may grant sublicenses under this license to third parties only with our prior approval. The Non-Exclusive License Agreement will continue in perpetuity unless terminated.
The process of conducting the necessary clinical research to obtain regulatory approval is costly and time-consuming, the successful development of the RaniPill GO and RaniPill HC and our product candidates is highly uncertain, and we may never succeed in successfully developing the RaniPill GO and/or RaniPill HC or achieve the development of, and regulatory approval for, our product candidates. 97 General and Administrative Expenses General and administrative expenses consist primarily of personnel-related costs (including salaries, bonuses, equity-based compensation, and benefits) for personnel in executive, finance, accounting, legal, corporate and business development, and other administrative functions.
The process of conducting the necessary clinical research to obtain regulatory approval is costly and time-consuming, the successful development of the RaniPill platform and our product candidates is highly uncertain, and we may never succeed in successfully developing the RaniPill GO and/or RaniPill HC or achieve the development of, and regulatory approval for, our product candidates.
Costs are billed or charged on a monthly basis by ICL or Rani LLC, respectively. In June 2021, RMS entered into a service agreement with ICL (the “RMS-ICL Service Agreement”) effective retrospectively to January 1, 2021, pursuant to which ICL agreed to rent a specified portion of its facility in San Jose, California to RMS.
Costs are billed or charged on a monthly basis by ICL or Rani LLC, respectively. In December 2023, we provided to ICL notice of termination of the Occupancy Services in San Antonio, which termination will take effect in June 2024. In June 2021, RMS entered into a service agreement with ICL effective retrospectively to January 1, 2021.
In addition, we enter into agreements in the normal course of business with contract research organizations for clinical trials and with vendors for preclinical studies and other services and products for operating purposes, which are generally cancelable upon written notice. 105 Critical Accounting Policies and Estimates This discussion and analysis of financial condition and results of operation is based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States.
In addition, we enter into agreements in the normal course of business with contract research organizations for clinical trials and with vendors for preclinical studies and other services and products for operating purposes, which are generally cancelable upon written notice.
We are developing and clinically testing a drug-agnostic oral delivery platform, the RaniPill capsule, which is designed to deliver a wide variety of drug substances, including large molecules such as peptides, proteins, and antibodies. The current RaniPill capsule, the RaniPill GO, is designed to deliver up to a 3 mg dose of drug with high bioavailability.
Our technology comprises a drug-agnostic oral delivery platform, the RaniPill capsule, which is designed to deliver a wide variety of drug substances, including antibodies, proteins, peptides, and oligonucleotides. We are currently developing two configurations of the platform – the RaniPill GO and the RaniPill HC.
Contractual Obligations and Other Commitments The following table summarizes our contractual obligations and commitments as of December 31, 2022 (in thousands): As of December 31, 2022 Total Short-term Long-term Operating leases (1) $ 1,065 $ 1,006 $ 59 Debt obligations (2) 31,650 — 31,650 Total $ 32,715 $ 1,006 $ 31,709 (1) Represents operating lease payments.
Contractual Obligations and Other Commitments The following table summarizes our contractual obligations and commitments as of December 31, 2023 (in thousands): As of December 31, 2023 Total Short-term Long-term Operating leases (1) $ 7,582 $ 2,104 $ 5,478 Debt obligations (2) 31,031 4,897 26,134 Total $ 38,613 $ 7,001 $ 31,612 (1) Represents operating lease payments.
Clinical Update RT-102 In August 2022, we announced positive topline results from Part 1 (“Study Part 1”) of the Phase 1 study of RT-102, which is being developed for the potential treatment of osteoporosis. The study met all of its endpoints and RT-102 was generally well 94 tolerated.
Program Updates RT-111 In February 2024, we announced positive topline results from a Phase 1 study of RT-111, which is being developed for the potential treatment of inflammatory conditions. The study met all of its endpoints and RT-111 was generally well tolerated with no serious adverse events noted.
Rani LLC or ICL may terminate services under the RMS-ICL Service Agreement upon 60 days' notice to the other party, except for occupancy which requires six months’ notice. The RMS-ICL Service Agreement specifies the scope of services to be provided as well as the methods for determining the costs of services.
The RMS-ICL Service Agreement has a twelve-month term and will automatically renew for successive twelve-month periods unless terminated. Rani LLC or ICL may terminate services under the RMS-ICL Service Agreement upon 60 days' notice to the other party, except for occupancy which requires six months’ notice.
The table below details the amounts charged by ICL for services and rent, net of the amount charged to ICL under the RMS-ICL Service Agreement, which is included in the consolidated statements of operations and comprehensive loss (in thousands): Year Ended December 31, 2022 2021 Research and development $ 1,170 $ 1,115 General and administrative 222 735 Total $ 1,392 $ 1,850 Financing activity In March 2021, an outstanding notes receivable balance totaling $1.7 million, including all accrued interest, was fully repaid by ICL.
The table below details the amounts charged by ICL for services and rent, net of the amount charged to ICL under the RMS-ICL Service Agreement, which is included in the consolidated statements of operations and comprehensive loss (in thousands): Year Ended December 31, 2023 2022 Research and development $ 1,254 $ 1,170 General and administrative 254 222 Total $ 1,508 $ 1,392 Prior to April 2022, our eligible employees were permitted to participate in ICL’s 401(k) Plan (“401(k) Plan”).
We may be unable to raise additional funds or to enter into such agreements or arrangements on favorable terms, or at all.
We may be unable to raise additional funds or to enter into such agreements or arrangements on favorable terms, or at all. Tax Receivable Agreement We entered into a Tax Receivable Agreement with certain of the Continuing LLC Owners in August 2021 in connection with the IPO.
Liquidity and Capital Resources Source of Liquidity We have not generated any revenue from commercial product sales and have incurred significant operating losses and negative cash flows from operations. We have not yet commercialized any products, and we do not expect to generate revenue from sales of commercial products for several years, if at all.
We have not yet commercialized any products, and we do not expect to generate revenue from sales of commercial products for several years, if at all. We anticipate that we will continue to incur net losses for the foreseeable future.
The TRA provides that we pay to such entities and individuals 85% of the amount of tax benefits, if any, it is deemed to realize from exchanges of Paired Interests. During the year ended December 31, 2022, these parties to the TRA exchanged 2,317,184 Paired Interests that resulted in tax benefits subject to the TRA.
The TRA provides that we pay to ICL and the other Continuing LLC Owners 85% of the amount of tax benefits, if any, it is deemed to realize from exchanges of Paired Interests.
Net cash used in operating activities for the year ended December 31, 2021 was $32.2 million, which was primarily attributable to a net loss of $53.1 million, partially offset by the equity-based compensation expense of $22.6 million, a loss on the extinguishment of the debt of $0.7 million, non-cash depreciation and amortization of $0.5 million, and the change in the estimated fair value of our preferred unit warrant liability of $0.4 million.
Net cash used in operating activities for the year ended December 31, 2022 was $46.5 million, which was primarily attributable to a net loss of $63.3 million and net accretion and amortization of investments in marketable securities of $0.9 million, partially offset by the equity-based compensation expense of $15.8 million and depreciation and amortization expense of $0.5 million.
In August 2022, we entered into the Sales Agreement with the Agents, pursuant to which we may offer and sell from time to time through the Agents up to $150.0 million of shares of our Class A common stock, in such share amounts as we may specify by delivering a placement notice to the Agents, in accordance with the terms and conditions set forth in the Sales Agreement.
As of December 31, 2023, we were in compliance with all applicable debt covenants under the Loan Agreement and had cash, cash equivalents and marketable securities totaling $48.5 million. 107 In August 2022, we entered into the Sales Agreement with the Agents, pursuant to which we may offer and sell from time to time through the Agents up to $150.0 million of shares of our Class A common stock in ATM Sales.
In August 2022, we entered into the Loan Agreement with the Lender. The Loan Agreement provides for Loans in an aggregate principal amount up to $45.0 million.
RT-100 was well-tolerated with no treatment-related adverse events and all animals remained clinically healthy throughout the study. Financial Update In August 2022, we entered into the Loan Agreement with the Lender for term loans (the “Loans”) in an aggregate principal amount up to $45.0 million.
The difference was primarily attributed to an increase in interest income of $1.2 million from our investment in marketable securities, loss on extinguishment of debt of $0.7 million, and change in estimated fair 101 value of preferred unit warrants of $0.4 million, partially offset by an increase in interest expense of $0.6 million from our long-term debt.
Other Income (Expense), Net The increase of $1.9 million in other expense, net, was primarily attributed to an increase in interest expense of $4.0 million from our debt, partially offset by an increase in interest income of $2.1 million from our investment in marketable securities. 106 Liquidity and Capital Resources Sources of Liquidity As of December 31, 2023, our cash, cash equivalents and marketable securities totaled $48.5 million.
Additionally, RMS and ICL agreed to provide personnel services to the other upon requests based on rates specified in the RMS-ICL Service Agreement. In April 2022, RMS assigned the RMS-ICL Service Agreement to Rani LLC. The RMS-ICL Service Agreement has a twelve-month term and will automatically renew for successive twelve-month periods unless terminated.
Pursuant to the RMS-ICL Service Agreement, ICL agreed to rent a specified portion of its facility in San Jose, California to RMS. Additionally, RMS and ICL agreed to provide personnel services to the other upon requests based on rates specified in the RMS-ICL Service Agreement.
We may seek to raise capital through equity offerings or debt financings, which may include ATM Sales, collaboration agreements, or other arrangements with other companies, or through other sources of financing. Adequate additional funding may not be available to us on acceptable terms or at all.
We expect our expenses to continue to increase in connection with our ongoing activities as we continue to advance the RaniPill GO, RaniPill HC and our product candidates. 108 We may seek to raise capital through equity offerings or debt financings, which may include ATM Sales, collaboration agreements, or other arrangements with other companies, or through other sources of financing.
For the year ended December 31, 2021, net cash used in investing activities was $0.5 million, consisting solely of purchases of property and equipment.
Investing Activities For the year ended December 31, 2023, net cash provided by investing activities was $29.9 million consisting of $104.4 million in proceeds from maturities of marketable securities partially offset by $73.3 million and $1.2 million in purchases of marketable securities and property and equipment, respectively.
The difference was primarily attributed to higher compensation costs of $2.0 million due to headcount growth, third-party services of $1.6 million due to public company related costs, and travel expenses of $1.0 million, partially offset by a decrease of $4.9 million in equity-based compensation due to our non-recurring IPO and Organizational Transactions for the year ended December 31, 2021 and facility, material and supplies expenses of $0.6 million.
General and Administrative Expenses The decrease of $0.3 million in general and administrative expenses was primarily attributed to lower third-party services of $1.8 million related to support for compliance with public company requirements and lower facilities, material and supplies and other costs of $0.3 million, offset by higher compensation costs of $1.8 million.
As a result, our financial statements may not be comparable with companies that comply with public company effective dates for accounting standards.
As a result, our financial statements may not be comparable with companies that comply with public company effective dates for accounting standards. We also rely on other exemptions provided by the JOBS Act, including not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act unless we cease to be an emerging growth company.
Registration Rights Agreement In connection with the IPO, we entered into a Registration Rights Agreement with the Continuing LLC Owners, including ICL.
During the years ended December 31, 2023 and 2022, these parties to the TRA exchanged zero and 2,317,184 Paired Interests, respectively, that resulted in tax benefits subject to the TRA. Registration Rights Agreement In connection with the IPO, we entered into a Registration Rights Agreement with the Continuing LLC Owners, including ICL.
As of December 31, 2022, we had not delivered any placement notices to either of the Agents and there had been no ATM Sales. COVID-19 Business Impact In March 2020, the World Health Organization declared the COVID-19 outbreak a pandemic.
As of December 31, 2023, we had not delivered any placement notices to either of the Agents and there had been no ATM Sales. 100 Reduction in Force In November 2023, we committed to a plan for strategic prioritization of our programs, expansion of our manufacturing and streamlining of our business operations to support potential near-term value drivers and long-term growth (the “Restructuring”).
The purpose of the Loans is for general corporate purposes. The Loan Agreement also contains various covenants and restrictive provisions. As of December 31, 2022, we were in compliance with all applicable debt covenants under the Loan Agreement and had cash, cash equivalents and marketable securities totaling $98.5 million.
The remaining $15.0 million of Loans is uncommitted and is subject to certain conditions and approval by the Lender. The purpose of the Loans is for general corporate purposes. The Loan Agreement also contains various covenants and restrictive provisions.
Removed
The RaniPill GO is optimized to orally deliver a variety of therapeutics, and we are advancing development of the RaniPill HC to address biologics and drugs with higher dosing requirements. Since our inception in 2012, we have devoted the majority of our resources to research and development, manufacturing automation and scaleup, and establishing our intellectual property portfolio.
Added
We are advancing a portfolio of oral therapeutics using our proprietary delivery technology and we are actively pursuing partnering the technology with third party biopharmaceutical companies for the oral delivery of their biologics and drugs.
Removed
To date, we have financed our operations primarily through an initial public offering ("IPO"), private placements of Rani LLC preferred units, the issuance of convertible promissory notes, long-term debt, and contract revenue generated from our evaluation agreements. We do not have any products approved for sale, and we have not yet generated any revenue from sales of a commercial product.
Added
The RaniPill GO is designed to deliver up to a 3 mg dose of drug in microtablet form with high bioavailability. We have completed three Phase 1 clinical trials using the RaniPill GO.
Removed
In the study, RT-102 orally delivered 20 µg and 80 µg of PTH with 300-400% greater bioavailability than subcutaneous Forteo (teriparatide) 20 µg. In December 2022, we announced positive topline results from Part 2 (“Study Part 2”) of the Phase 1 study of RT-102. The study met all of its endpoints.
Added
We intend to initiate clinical testing of the RaniPill HC in 2024. We believe that, together, the RaniPill GO and RaniPill HC could enable us to deliver most biologics currently on the market with convenient, oral dosing. As of December 31, 2023, our cash, cash equivalents and marketable securities totaled $48.5 million.
Removed
The study evaluated the safety and tolerability of once-daily administration of RT-102 containing 20 µg of PTH given repeatedly for seven consecutive days in ten healthy female volunteers. RT-102 was well tolerated with no serious adverse events noted, and delivered 20 µg of PTH with high bioavailability, confirming the high bioavailability observed during Study Part 1.

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