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

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

+458 added−509 removedSource: 10-K (2024-02-20) vs 10-K (2023-03-09)

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

458 paragraphs added · 509 removed · 329 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

104 edited+25 added−67 removed215 unchanged
Biggest changeAkeso is currently conducting, in China, a Phase III clinical trial in patients with NSCLC who are positive for an epidermal growth factor receptor (“EGFR”) mutation and whose disease has progressed after treatment with an EGFR tyrosine-kinase inhibitor (“TKI”).
Biggest changeCompetition for ivonescimab (SMT112) Ivonescimab is currently being investigated in Phase III clinical trials in Summit’s Licensed Territory in two metastatic NSCLC indications: a) ivonescimab combined with chemotherapy in patients with epidermal growth factor receptor (“EGFR”)-mutated, locally advanced or metastatic non-squamous NSCLC who have progressed after treatment with a third-generation EGFR tyrosine kinase inhibitor (“TKI”) (“HARMONi”); and b) ivonescimab combined with chemotherapy in first-line metastatic squamous NSCLC patients (“HARMONi-3”) Ivonescimab is also being investigated in multiple Phase II and Phase III clinical trials in China.
In exchange for these rights, Summit made an upfront payment during the first quarter of 2023 comprising of $474.9 million cash and the issuance of 10 million shares of Company common stock in lieu of $25.1 million cash pursuant to the a share transfer agreement.
In exchange for these rights, Summit made an upfront payment during the first quarter of 2023 comprising of $474.9 million cash and the issuance of 10 million shares of Company common stock in lieu of $25.1 million cash pursuant to a share transfer agreement.
Akeso shall initially be solely responsible for the manufacture of our requirements of clinical and commercial drug substance for use in the Licensed Territory until such time that we are able to establish second source suppliers or are able to manufacture the drug substance independently.
Until such time that we are able to establish second source suppliers or are able to manufacture the drug substance independently, Akeso shall initially be solely responsible for the manufacture of our requirements of clinical and commercial drug substance for use in the Licensed Territory.
Restrictions under applicable federal and state healthcare laws and regulations, include the following: • the federal Anti-Kickback Statute, which prohibits, among other things, persons and entities from knowingly and willfully soliciting, offering, paying, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward either the referral of an individual for, or the purchase, order or recommendation of, any good or service, for which payment may be made, in whole or in part, under a federal healthcare program such as Medicare and Medicaid; • the federal civil and criminal false claims laws, including the civil False Claims Act, and civil monetary penalties laws, which prohibit individuals or entities from, among other things, knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false, fictitious or fraudulent 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; • the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which created additional federal criminal laws that prohibit, among other things, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program or making false statements relating to health care matters; • HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, and their respective implementing regulations, including the Final Omnibus Rule published in January 2013, which impose obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information; • Foreign Corrupt Practices Act, or FCPA, which prohibits companies and their intermediaries from making, or offering or promising to make improper payments to non-U.S. officials for the purpose of obtaining or retaining business or otherwise seeking favorable treatment; • the federal false statements statute, which prohibits knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement in connection with the delivery of or payment for healthcare benefits, items or services; 22 • the federal transparency requirements known as the federal Physician Payments Sunshine Act, under the Patient Protection and Affordable Care Act, as amended by the Health Care Education Reconciliation Act, or the Affordable Care Act, which requires certain manufacturers of drugs, devices, biologics and medical supplies to report annually to the Centers for Medicare & Medicaid Services, or CMS, within the United States Department of Health and Human Services, information related to payments and other transfers of value made by that entity to physicians and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members; and • analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, which may apply to healthcare items or services that are reimbursed by non-government third-party payors, including private insurers.
Restrictions under applicable federal and state healthcare laws and regulations, include the following: • the federal Anti-Kickback Statute, which prohibits, among other things, persons and entities from knowingly and willfully soliciting, offering, paying, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward either the referral of an individual for, or the purchase, order or recommendation of, any good or service, for which payment may be made, in whole or in part, under a federal healthcare program such as Medicare and Medicaid; • the federal civil and criminal false claims laws, including the civil False Claims Act, and civil monetary penalties laws, which prohibit individuals or entities from, among other things, knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false, fictitious or fraudulent 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; • the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which created additional federal criminal laws that prohibit, among other things, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program or making false statements relating to health care matters; • HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, and their respective implementing regulations, including the Final Omnibus Rule published in January 2013, which impose obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information; • Foreign Corrupt Practices Act, or FCPA, which prohibits companies and their intermediaries from making, or offering or promising to make improper payments to non-U.S. officials for the purpose of obtaining or retaining business or otherwise seeking favorable treatment; • the federal false statements statute, which prohibits knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement in connection with the delivery of or payment for healthcare benefits, items or services; • the federal transparency requirements known as the federal Physician Payments Sunshine Act, under the Patient Protection and Affordable Care Act, as amended by the Health Care Education Reconciliation Act, or the Affordable Care Act, which requires certain manufacturers of drugs, devices, biologics and medical supplies to report annually to the Centers for Medicare & Medicaid Services, or CMS, within the United States Department of Health and Human Services, information related to payments and other transfers of value made by that entity to physicians and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members; and • analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, which may apply to healthcare items or services that are reimbursed by non-government third-party payors, including private insurers.
Among the provisions of the ACA of importance to our potential product candidates are: 23 • an annual, nondeductible fee on any entity that manufactures or imports specified branded prescription drugs and biologic agents, apportioned among these entities according to their market share in certain government healthcare programs; • expansion of eligibility criteria for Medicaid programs by, among other things, allowing states to offer Medicaid coverage to certain individuals with income at or below 133% of the federal poverty level, thereby potentially increasing a manufacturer’s Medicaid rebate liability; • expanded manufacturers’ rebate liability under the Medicaid Drug Rebate Program by increasing the minimum rebate for both branded and generic drugs and revising the definition of “average manufacturer price,” or AMP, for calculating and reporting Medicaid drug rebates on outpatient prescription drug prices; • addressed 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; • established the Medicare Part D coverage gap discount program by requiring manufacturers to provide a 70% as of January 1, 2019 point-of-sale-discount off the negotiated price of applicable brand drugs to eligible beneficiaries during their coverage gap period as a condition for the manufacturers’ outpatient drugs to be covered under Medicare Part D; and • a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research.
Among the provisions of the ACA of importance to our potential product candidates are: • an annual, nondeductible fee on any entity that manufactures or imports specified branded prescription drugs and biologic agents, apportioned among these entities according to their market share in certain government healthcare programs; • expansion of eligibility criteria for Medicaid programs by, among other things, allowing states to offer Medicaid coverage to certain individuals with income at or below 133% of the federal poverty level, thereby potentially increasing a manufacturer’s Medicaid rebate liability; • expanded manufacturers’ rebate liability under the Medicaid Drug Rebate Program by increasing the minimum rebate for both branded and generic drugs and revising the definition of “average manufacturer price,” or AMP, for calculating and reporting Medicaid drug rebates on outpatient prescription drug prices; • addressed 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; • established the Medicare Part D coverage gap discount program by requiring manufacturers to provide a 70% as of January 1, 2019 point-of-sale-discount off the negotiated price of applicable brand drugs to eligible beneficiaries during their coverage gap period as a condition for the manufacturers’ outpatient drugs to be covered under Medicare Part D; and • a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research.
Such authorization is intended for products for which the applicant can demonstrate that it is unable to provide comprehensive data on the efficacy and safety under normal conditions of use, because the indications for which the product in question is intended are encountered so rarely that the applicant cannot reasonably be expected to provide comprehensive evidence, or in the present state of scientific knowledge, comprehensive information cannot be provided, or it would be contrary to generally accepted principles of medical ethics to collect such information.
Such authorization is intended for products for which the applicant can demonstrate that it is unable to provide comprehensive data 16 on the efficacy and safety under normal conditions of use, because the indications for which the product in question is intended are encountered so rarely that the applicant cannot reasonably be expected to provide comprehensive evidence, or in the present state of scientific knowledge, comprehensive information cannot be provided, or it would be contrary to generally accepted principles of medical ethics to collect such information.
These requirements include compliance with E.U. cGMP standards when manufacturing medicinal products and active pharmaceutical ingredients, including the manufacture of active pharmaceutical ingredients outside of the European Union with the intention to import the active pharmaceutical ingredients into the European Union; • The marketing and promotion of authorized drugs, including industry-sponsored continuing medical education and advertising directed toward the prescribers of drugs and/or the general public, are strictly regulated in the European Union notably under Directive 2001/83EC, as amended, and E.U.
These requirements include compliance with E.U. cGMP standards when manufacturing medicinal products and active pharmaceutical ingredients, 18 including the manufacture of active pharmaceutical ingredients outside of the European Union with the intention to import the active pharmaceutical ingredients into the European Union; • The marketing and promotion of authorized drugs, including industry-sponsored continuing medical education and advertising directed toward the prescribers of drugs and/or the general public, are strictly regulated in the European Union notably under Directive 2001/83EC, as amended, and E.U.
As a result of the Company's decision to not pursue further internal 4 clinical development of ridinilazole and seek partners or a divestiture related to ridinilazole as a path forward for the clinical development of the asset, the Company recorded expenses for the remaining clinical trial costs associated with the close out activities of ridinilazole and recognized the remainder of the deferred income that had been received from BARDA prior to the expenses being recognized during the third quarter of 2022.
As a result of the Company’s decision to not pursue further internal clinical development of ridinilazole and seek partners or a divestiture related to ridinilazole as a path forward for the clinical development of the asset, the Company recorded expenses for the remaining clinical trial costs associated with the close out activities of ridinilazole and recognized the remainder of the deferred income that had been received from BARDA prior to the expenses being recognized during the third quarter of 2022.
Regulation (EC) No 1901/2006 provides that prior to obtaining a marketing authorization in the European Union, applicants have to demonstrate compliance with all measures included in an EMA-approved Paediatric Investigation Plan ("PIP"), covering all subsets of the pediatric population, unless the EMA has granted (1) a product-specific waiver, (2) a class waiver or (3) a deferral for one or more of the measures included in the PIP.
Regulation (EC) No 1901/2006 provides that prior to obtaining a marketing authorization in the European Union, applicants have to demonstrate compliance with all measures included in an EMA-approved Paediatric Investigation Plan (“PIP”), covering all subsets of the pediatric population, unless the EMA has granted (1) a product-specific waiver, (2) a class waiver or (3) a deferral for one or more of the measures included in the PIP.
BARDA In September 2017, we were awarded a contract from the Biomedical Advanced Research and Development Authority ("BARDA"), part of the Office of the Assistant Secretary for Preparedness and Response at the United States Department of Health and Human Services, to fund, in part, the clinical and regulatory development of ridinilazole for the treatment of infections caused by C. difficile .
BARDA In September 2017, we were awarded a contract from the Biomedical Advanced Research and Development Authority (“BARDA”), part of the Office of the Assistant Secretary for Preparedness and Response at the United States Department of Health and Human Services, to fund, in part, the clinical and regulatory development of ridinilazole for the treatment of infections caused by C. difficile .
The downward pressure on health care costs in general, particularly prescription products, has become 21 intense. As a result, increasingly high barriers are being erected to the entry of new products. Political, economic and regulatory developments may further complicate pricing negotiations, and pricing negotiations may continue after reimbursement has been obtained.
The downward pressure on health care costs in general, particularly prescription products, has become intense. As a result, increasingly high barriers are being erected to the entry of new products. Political, economic and regulatory developments may further complicate pricing negotiations, and pricing negotiations may continue after reimbursement has been obtained.
Learning and Development We are committed to investing in learning and development for our employees. Our employees have access to online training courses which cover a wide range of technical and business topics to help them develop their professional skills and explore other areas as they plan for their career and personal growth.
Learning and Development 22 We are committed to investing in learning and development for our employees. Our employees have access to online training courses which cover a wide range of technical and business topics to help them develop their professional skills and explore other areas as they plan for their career and personal growth.
Under that agreement, 90% of applications seeking approval of new molecular entities ("NMEs"), are meant to be reviewed within ten months from the date on which FDA accepts the NDA for filing, and 90% of applications for NMEs that have been designated for “priority review” are meant to be reviewed within six months of the acceptance date.
Under that agreement, 90% of applications seeking approval of new molecular entities (“NMEs”), are meant to be reviewed within ten months from the date on which FDA accepts the NDA for filing, and 90% of applications for NMEs that have been designated for “priority review” are meant to be reviewed within six months of the acceptance date.
REMS can include medication guides, physician communication plans for healthcare professionals, and elements to assure safe use ("ETASU"). ETASU may include, but are not limited to, special training or certification for prescribing or dispensing, dispensing only under certain circumstances, special monitoring, and the use of patient registries.
REMS can include medication guides, physician communication plans for healthcare professionals, and elements to assure safe use (“ETASU”). ETASU may include, but are not limited to, special training or certification for prescribing or dispensing, dispensing only under certain circumstances, special monitoring, and the use of patient registries.
The E.U. medicines rules expressly permit the E.U. Member States to adopt national legislation prohibiting or restricting the sale, supply or use of any medicinal product containing, consisting of or derived from a specific type of human or animal cell, 19 such as embryonic stem cells.
The E.U. medicines rules expressly permit the E.U. Member States to adopt national legislation prohibiting or restricting the sale, supply or use of any medicinal product containing, consisting of or derived from a specific type of human or animal cell, such as embryonic stem cells.
The failure to comply with the FDCA and applicable U.S. requirements at any time during the product development process, approval process or after approval may subject an applicant or sponsor to a variety of administrative or judicial sanctions, including refusal by the FDA to approve pending applications, withdrawal of an approval, imposition of a clinical hold, issuance of warning letters and other types of letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, refusals of government contracts, restitution, disgorgement of profits, or civil or criminal investigations and penalties brought by the FDA and the Department of Justice ("DOJ"), or other federal and state governmental entities.
The failure to comply with the FDCA and applicable U.S. requirements at any time during the product development process, approval process or after approval may subject an applicant or sponsor to a variety of administrative or judicial sanctions, including refusal by the FDA to approve pending applications, withdrawal of an approval, imposition of a clinical hold, issuance of warning letters and other types of letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, refusals of government contracts, restitution, disgorgement of profits, or civil or criminal investigations and penalties brought by the FDA and the Department of Justice (“DOJ”), or other federal and state governmental entities.
Regulatory Data Protection in the European Union In the European Union, innovative medicinal products approved on the basis of a complete independent data package qualify for eight years of data exclusivity upon marketing authorization and an additional two years of market exclusivity pursuant to Directive 2001/83/EC.
Regulatory Data Protection in the European Union 17 In the European Union, innovative medicinal products approved on the basis of a complete independent data package qualify for eight years of data exclusivity upon marketing authorization and an additional two years of market exclusivity pursuant to Directive 2001/83/EC.
The FDA has committed to reviewing such resubmissions in two or six months depending on the type of information included. Even with submission of 15 this additional information, the FDA ultimately may decide that the application does not satisfy the regulatory criteria for approval.
The FDA has committed to reviewing such resubmissions in two or six months depending on the type of information included. Even with submission of this additional information, the FDA ultimately may decide that the application does not satisfy the regulatory criteria for approval.
If a clinical trial continues for more than three years from the day on which the Clinical Trials Regulation becomes applicable, the Clinical Trials Regulation will at that time begin to apply to the clinical trial. The new Clinical Trials Regulation aims to simplify and streamline the approval of clinical trials in the European Union.
If a clinical trial continues for more than three 15 years from the day on which the Clinical Trials Regulation becomes applicable, the Clinical Trials Regulation will at that time begin to apply to the clinical trial. The new Clinical Trials Regulation aims to simplify and streamline the approval of clinical trials in the European Union.
A Joint Select Committee on Deficit Reduction, tasked with recommending a targeted deficit reduction of at least $1.2 trillion for the years 2013 through 2021, was unable to reach required goals, thereby triggering the legislation’s automatic reduction to several government programs.
A Joint Select 21 Committee on Deficit Reduction, tasked with recommending a targeted deficit reduction of at least $1.2 trillion for the years 2013 through 2021, was unable to reach required goals, thereby triggering the legislation’s automatic reduction to several government programs.
The IND and Institutional Review Board ("IRB") Processes An IND is an exemption from the FDCA that allows an unapproved drug to be shipped in interstate commerce for use in an investigational clinical trial and a request for FDA authorization to administer an investigational drug to humans.
The IND and Institutional Review Board ( “ IRB ” ) Processes An IND is an exemption from the FDCA that allows an unapproved drug to be shipped in interstate commerce for use in an investigational clinical trial and a request for FDA authorization to administer an investigational drug to humans.
Pediatric Exclusivity Pediatric exclusivity is another type of non-patent marketing exclusivity in the United States and, if granted, provides for the attachment of an additional six months of marketing protection to the term of any existing regulatory exclusivity, including the non-patent and orphan exclusivity.
Pediatric Exclusivity 14 Pediatric exclusivity is another type of non-patent marketing exclusivity in the United States and, if granted, provides for the attachment of an additional six months of marketing protection to the term of any existing regulatory exclusivity, including the non-patent and orphan exclusivity.
In connection with the License Agreement, the Company has also agreed to enter into a Supply Agreement with Akeso, pursuant to which Summit agreed to purchase a certain portion of drug substance for clinical and commercial supply (the “Supply Agreement”).
In connection with the License Agreement, the Company has also agreed to enter into a Supply Agreement with Akeso; pursuant to the License Agreement, Summit agreed to purchase a certain portion of drug substance for clinical and commercial supply (the “Supply Agreement”).
The key competitive factors affecting the success of our product candidates are likely to be their efficacy, safety, convenience, price and availability of coverage and reimbursement from government and other third-party payors.
The key competitive factors affecting the success of our product candidates are 3 likely to be their efficacy, safety, convenience, price and availability of coverage and reimbursement from government and other third-party payors.
University College London On March 23, 2010, we entered into a collaborative research agreement with the School of Pharmacy, University of London which was later novated on November 28, 2011, by the School of Pharmacy to University College London.
University College London 6 On March 23, 2010, we entered into a collaborative research agreement with the School of Pharmacy, University of London which was later novated on November 28, 2011, by the School of Pharmacy to University College London.
Government Regulation As a biopharmaceutical company focused on the discovery, development, and commercialization of novel therapeutics for serious diseases, we are subject to extensive and ongoing regulation by the FDA under the Federal Food, Drug, and Cosmetic Act ("FDCA") and its implementing regulations, as well as other regulatory bodies in the United States, Europe and other countries.
Government Regulation As a biopharmaceutical company focused on the discovery, development, and commercialization of novel therapeutics for serious diseases, we are subject to extensive and ongoing regulation by the FDA under the Federal Food, Drug, and Cosmetic Act (“FDCA”) and its implementing regulations, as well as other regulatory bodies in the United States, Europe and other countries.
Running clinical trials that can support regulatory approvals is 11 the best way to ultimately ensure wide access for patients to our product candidates. At this point in the development, we cannot support any use of our product candidates outside of clinical trials. In addition, on May 30, 2018, the Right to Try Act was signed into law.
Running clinical trials that can support regulatory approvals is 9 the best way to ultimately ensure wide access for patients to our product candidates. At this point in the development, we cannot support any use of our product candidates outside of clinical trials. In addition, on May 30, 2018, the Right to Try Act was signed into law.
The FDA or the applicant may request an amendment to the plan at any time. 12 A sponsor must submit an initial pediatric study plan, if required under PREA, no later than either 60 calendar days after the date of the end-of-phase II meeting or such other time as agreed upon between FDA and the sponsor.
The FDA or the applicant may request an amendment to the plan at any time. 10 A sponsor must submit an initial pediatric study plan, if required under PREA, no later than either 60 calendar days after the date of the end-of-phase II meeting or such other time as agreed upon between FDA and the sponsor.
Summit has not assumed any liabilities (including contingent liabilities), nor acquired any physical assets or trade names, or hired or acquired any employees from Akeso in connection with the License Agreement. 1 Ivonescimab Ivonescimab is a novel potential first-in-class PD-1 / VEGF bispecific antibody, believed to be the most advanced in clinical development.
Summit has not assumed any liabilities (including contingent liabilities), nor acquired any physical assets or trade names, or hired or acquired any employees from Akeso in connection with the License Agreement. 1 Ivonescimab Ivonescimab is a novel potential first-in-class PD-1 / VEGF bispecific antibody, believed to be the most advanced in clinical development in the Licensed Territories.
Information about clinical trials must be submitted within specific timeframes to the National Institutes of Health ("NIH"), for public dissemination on its ClinicalTrials.gov website. Similar requirements for posting clinical trial information are present in the European Union (EudraCT) website: https://eudract.ema.europa.eu/ and other countries, as well.
Information about clinical trials must be submitted within specific timeframes to the National Institutes of Health (“NIH”), for public dissemination on its ClinicalTrials.gov website. Similar requirements for posting clinical trial information are present in the European Union (EudraCT) website: https://eudract.ema.europa.eu/ and other countries, as well.
Similar provisions are available in Europe and certain other foreign jurisdictions to extend the term of a patent that covers an approved drug, provided that statutory and regulatory requirements are met. The U.S. Patent and Trademark Office ("USPTO") reviews and approves the application for any patent term extension or restoration in consultation with the FDA.
Similar provisions are available in Europe and certain other foreign jurisdictions to extend the term of a patent that covers an approved drug, provided that statutory and regulatory requirements are met. The U.S. Patent and Trademark Office (“USPTO”) reviews and approves the application for any patent term extension or restoration in consultation with the FDA.
Member State laws. Direct-to- consumer advertising of prescription medicines is prohibited across the European Union. General Data Protection Regulation The collection, use, disclosure, transfer, or other processing of personal data regarding individuals in the European Union, including personal health data, is subject to the E.U. General Data Protection Regulation ("GDPR"), which became effective on May 25, 2018.
Member State laws. Direct-to- consumer advertising of prescription medicines is prohibited across the European Union. General Data Protection Regulation The collection, use, disclosure, transfer, or other processing of personal data regarding individuals in the European Union, including personal health data, is subject to the E.U. General Data Protection Regulation (“GDPR”), which became effective on May 25, 2018.
Under the Pediatric Research Equity Act ("PREA") of 2003, an NDA or supplement thereto must contain data that are adequate to assess the safety and effectiveness of the drug product for the claimed indications in all relevant pediatric subpopulations, and to support dosing and administration for each pediatric subpopulation for which the product is safe and effective.
Under the Pediatric Research Equity Act (“PREA”) of 2003, an NDA or supplement thereto must contain data that are adequate to assess the safety and effectiveness of the drug product for the claimed indications in all relevant pediatric subpopulations, and to support dosing and administration for each pediatric subpopulation for which the product is safe and effective.
We accomplish this through strict compliance with applicable workplace safety laws and regulations, continuous risk assessment and expeditious action. We have again had no reportable health and safety issues in 2022. Our Corporate Information Summit Therapeutics Inc. was incorporated in Delaware on July 17, 2020.
We accomplish this through strict compliance with applicable workplace safety laws and regulations, continuous risk assessment and expeditious action. We have again had no reportable health and safety issues in 2023. Our Corporate Information Summit Therapeutics Inc. was incorporated in Delaware on July 17, 2020.
Marketing Authorization To obtain a marketing authorization for a product under E.U. regulatory systems, an applicant must submit a marketing authorization application ("MAA") either under a centralized procedure administered by the EMA, or one of the procedures administered by competent authorities in the E.U. Member States (decentralized procedure, national procedure or mutual recognition procedure).
Marketing Authorization To obtain a marketing authorization for a product under E.U. regulatory systems, an applicant must submit a marketing authorization application (“MAA”) either under a centralized procedure administered by the EMA, or one of the procedures administered by competent authorities in the E.U. Member States (decentralized procedure, national procedure or mutual recognition procedure).
Significant uncertainty exists as to the coverage and reimbursement status of products approved by the FDA and other government authorities.
Significant uncertainty exists as to the coverage and reimbursement status of products approved by the FDA and other 20 government authorities.
Summit, in working with Akeso, is in the process of selecting a name for ivonescimab, which we will pursue protection for as a trademark in Licensed Territories. In connection with the development of our product pipeline, we will seek protection for marks we currently use and future marks when appropriate.
Summit, in working with Akeso, is in the process of selecting a name for ivonescimab, which we will pursue protection for as a trademark in licensed Summit countries. In connection with the development of our product pipeline, we will seek protection for marks we currently use and future marks when appropriate.
In addition to the foregoing IND requirements, an IRB/Ethics Committee ("EC") representing each institution participating in the clinical trial must review and approve the plan for any clinical trial before it commences at that institution, and the IRB must conduct continuing review and reapprove the study at least annually.
In addition to the foregoing IND requirements, an IRB/Ethics Committee (“EC”) representing each institution participating in the clinical trial must review and approve the plan for any clinical trial before it commences at that institution, and the IRB must conduct continuing review and reapprove the study at least annually.
Through our website, we make available free of charge our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to these reports in a timely manner after we provide them to the Securities and Exchange Commission (“SEC”). 25
Through our website, we make available free of charge our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to these reports in a timely manner after we provide them to the Securities and Exchange Commission (“SEC”). 23
The FDA may also grant accelerated approval for such a drug when 14 the product has an effect on an intermediate clinical endpoint that can be measured earlier than an effect on irreversible morbidity or mortality ("IMM"), and that is reasonably likely to predict an effect on IMM or other clinical benefit, taking into account the severity, rarity, or prevalence of the condition and the availability or lack of alternative treatments.
The FDA may also grant accelerated approval for such a drug when 12 the product has an effect on an intermediate clinical endpoint that can be measured earlier than an effect on irreversible morbidity or mortality (“IMM”), and that is reasonably likely to predict an effect on IMM or other clinical benefit, taking into account the severity, rarity, or prevalence of the condition and the availability or lack of alternative treatments.
When the foreign clinical study is not 10 conducted under an IND, the sponsor must ensure that the study complies with certain regulatory requirements of the FDA in order to use the study as support for an IND or application for marketing approval.
When the foreign clinical study is not 8 conducted under an IND, the sponsor must ensure that the study complies with certain regulatory requirements of the FDA in order to use the study as support for an IND or application for marketing approval.
The requirement for a REMS can materially affect the potential market and profitability of a product. 13 The FDA may refer an application for a drug to an advisory committee or explain why such referral was not made.
The requirement for a REMS can materially affect the potential market and profitability of a product. 11 The FDA may refer an application for a drug to an advisory committee or explain why such referral was not made.
Patent Term Extension In order to compensate the patentee for delays in obtaining a marketing authorization for a patented product, a supplementary certificate ("SPC") may be granted extending the exclusivity period for that specific product by up to five years.
Patent Term Extension In order to compensate the patentee for delays in obtaining a marketing authorization for a patented product, a supplementary certificate (“SPC”) may be granted extending the exclusivity period for that specific product by up to five years.
To date, we have paid $0.1 million under this agreement. 5 CARB-X In May 2021, we announced the selection of a new preclinical candidate, SMT-738, which originated from the DDS-04 series. SMT-738 has been under development to combat multi-drug resistant infections, specifically Carbapenem-resistant Enterobacteriaceae ("CRE") infections.
To date, we have paid $0.1 million under this agreement. CARB-X In May 2021, we announced the selection of a new preclinical candidate, SMT-738, which originated from the DDS-04 series. SMT-738 has been under development to combat multi-drug resistant infections, specifically Carbapenem-resistant Enterobacteriaceae (“CRE”) infections.
Finally, with passage of the 21st Century Cures Act, or Cures Act, in December 2016, Congress authorized the FDA to accelerate review and approval of antibacterial products via the limited-population antibacterial drug ("LPAD") pathway.
Finally, with passage of the 21st Century Cures Act, or Cures Act, in December 2016, Congress authorized the FDA to accelerate review and approval of antibacterial products via the limited-population antibacterial drug (“LPAD”) pathway.
We anticipate that the centralized procedure will be mandatory for the product candidates we are developing. 18 Under the centralized procedure, the Committee for Medicinal Products for Human Use ("CHMP") is also responsible for several post-authorization and maintenance activities, such as the assessment of modifications or extensions to an existing marketing authorization.
We anticipate that the centralized procedure will be mandatory for the product candidates we are developing. Under the centralized procedure, the Committee for Medicinal Products for Human Use (“CHMP”) is also responsible for several post-authorization and maintenance activities, such as the assessment of modifications or extensions to an existing marketing authorization.
With enactment of the Food and Drug Administration Safety and Innovation Act ("FDASIA"), in 2012, sponsors must also submit pediatric study plans prior to the assessment data.
With enactment of the Food and Drug Administration Safety and Innovation Act (“FDASIA”), in 2012, sponsors must also submit pediatric study plans prior to the assessment data.
All prior development and marketing activities relating to ridinilazole are being terminated and all business activities related to anti-infectives are being reviewed for partnership opportunities for potential further development.
All prior development and marketing activities relating to ridinilazole have been terminated and all business activities related to anti-infectives are being reviewed for partnership opportunities for potential further development.
We also rely on trade secrets, know-how, continuing technological innovation and in-licensing opportunities to develop and maintain our proprietary and competitive position.
We also rely on trade secrets, know-how, continuing technological innovation and in-licensing opportunities to develop and maintain our proprietary and competitive position. Ivonescimab Program .
The Paediatric Committee of the EMA ("PDCO") may grant deferrals for some medicines, allowing a company to delay development of the medicine in children until 20 there is enough information to demonstrate its effectiveness and safety in adults.
The Paediatric Committee of the EMA (“PDCO”) may grant deferrals for some medicines, allowing a company to delay development of the medicine in children until there is enough information to demonstrate its effectiveness and safety in adults.
It may be permissible, under very specific, narrow conditions, for a manufacturer to engage in 16 nonpromotional, non-misleading communication regarding off-label information, such as distributing scientific or medical journal information.
It may be permissible, under very specific, narrow conditions, for a manufacturer to engage in non-promotional, non-misleading communication regarding off-label information, such as distributing scientific or medical journal information.
In addition, the distribution of prescription pharmaceutical products is subject to the Prescription Drug Marketing Act ("PDMA"), and its implementing regulations, as well as the Drug Supply Chain Security Act ("DSCSA"), which regulate the distribution and tracing of prescription drug samples at the federal level, and set minimum standards for the regulation of distributors by the states.
In addition, the distribution of prescription pharmaceutical products is subject to the Prescription Drug Marketing Act (“PDMA”), and its implementing regulations, as well as the Drug Supply Chain Security Act (“DSCSA”), which regulate the distribution and tracing of prescription drug samples at the federal level, and set minimum standards for the regulation of distributors by the states.
Our ridinilazole program is currently protected by 23 granted U.S. and foreign patents, with 22 pending patent applications. Our patent portfolio for ridinilazole includes patents and patent applications directed to composition of matter, polymorphic forms, methods of manufacture and use and formulation subject matter.
Ridinilazole Program . Our ridinilazole program is currently protected by 96 granted U.S. and foreign patents, with 34 pending patent applications. Our patent portfolio for ridinilazole includes patents and patent applications directed to composition of matter, polymorphic forms, methods of manufacture and use and formulation subject matter.
An applicant seeking approval to market and distribute a new drug product in the United States must typically undertake the following: • completion of preclinical laboratory tests, animal studies and formulation studies in compliance with the FDA’s good laboratory practice ("GLP regulations"); • submission to the FDA of an Investigational New Drug ("IND"), which must take effect before human clinical trials may begin; • approval by an independent institutional review board, or IRB, approving each clinical study before each clinical trial may be initiated; • performance of adequate and well-controlled human clinical trials in accordance with current good clinical practices ("GCP"), to establish the safety and efficacy of the proposed drug product for each indication; • preparation and submission to the FDA of a new drug application ("NDA") or Biologic Licensing Application ("BLA"); 9 • review of the product candidate by an FDA advisory committee, where appropriate or if applicable; • satisfactory completion of one or more FDA inspections of the manufacturing facility or facilities at which the product, or components thereof, are produced to assess compliance with current Good Manufacturing Practices ("cGMP"), requirements and to assure that the facilities, methods and controls are adequate to preserve the product’s identity, strength, quality and purity; • satisfactory completion of FDA audits of clinical trial sites to assure compliance with GCPs and the integrity of the clinical data; • payment of user fees and securing FDA approval of the NDA/BLA; and • compliance with any post-approval requirements, including Risk Evaluation and Mitigation Strategies ("REMS"), where applicable, and any post-approval studies required by the FDA.
An applicant seeking approval to market and distribute a new drug product in the United States must typically undertake the following: • completion of preclinical laboratory tests, animal studies and formulation studies in compliance with the FDA’s good laboratory practice (“GLP regulations”); • submission to the FDA of an Investigational New Drug (“IND”), which must take effect before human clinical trials may begin; • approval by an independent institutional review board, or IRB, approving each clinical study before each clinical trial may be initiated; • performance of adequate and well-controlled human clinical trials in accordance with current good clinical practices (“GCP”), to establish the safety and efficacy of the proposed drug product for each indication; • preparation and submission to the FDA of a new drug application (“NDA”) or Biologic Licensing Application (“BLA”); • review of the product candidate by an FDA advisory committee, where appropriate or if applicable; 7 • satisfactory completion of one or more FDA inspections of the manufacturing facility or facilities at which the product, or components thereof, are produced to assess compliance with current Good Manufacturing Practices (“cGMP”), requirements and to assure that the facilities, methods and controls are adequate to preserve the product’s identity, strength, quality and purity; • satisfactory completion of FDA audits of clinical trial sites to assure compliance with GCPs and the integrity of the clinical data; • payment of user fees and securing FDA approval of the NDA/BLA; and • compliance with any post-approval requirements, including Risk Evaluation and Mitigation Strategies (“REMS”), where applicable, and any post-approval studies required by the FDA.
We do not tolerate any form of discrimination and our employment policies and practices focus on ensuring that all our employment processes are free from discrimination or harassment on any grounds. Approximately 63% of our employees are female and 62% of our executive team is female.
We do not tolerate any form of discrimination and our employment policies and practices focus on ensuring that all our employment processes are free from discrimination or harassment on any grounds. Approximately 57% of our employees are female and 47% of our executive team is female.
The IRB/EC must review and approve, among other things, the study protocol and informed consent information to be provided to study subjects. An IRB/EC must operate in compliance with FDA/HA ("Health Authority") regulations.
The IRB/EC must review and approve, among other things, the study protocol and informed consent information to be provided to study subjects. An IRB/EC must operate in compliance with FDA/HA (“Health Authority”) regulations.
We expect that our existing patents and patent applications (assuming the applications proceed to grant) will provide patent coverage for our ridinilazole program until 2043. SMT-738 Program . Our SMT738 program currently has 4 granted patents and 23 patent applications pending worldwide, directed to the composition of matter.
We expect that our existing patents and patent applications (assuming the applications proceed to grant) will provide patent coverage for our ridinilazole program until 2043. SMT-738 Program . Our SMT-738 program currently has 14 granted patents and 29 patent applications pending worldwide, directed to the composition of matter.
In 2022, we continued to strengthen the team by attracting a number of world class leaders with successful track records into the Company, all of our executive positions are now filled with proven leaders. As of December 31, 2022, we had 76 full-time employees and 77 total employees.
In 2022, we continued to strengthen the team by attracting a number of world class leaders with successful track records into the Company, all of our executive positions are now filled with proven leaders. As of December 31, 2023, we had 105 total employees.
Diversity, Equity and Inclusion We are committed to embedding a culture of diversity, equity and inclusion across our Company. We believe that diversity of gender, age, ethnicity, sexual orientation, culture, education, background and experience fuels innovation and enables our employees to succeed. This includes ensuring opportunity for all and embraces the positive effect that our diverse workforce brings.
We believe that diversity of gender, age, ethnicity, sexual orientation, culture, education, background and experience fuels innovation and enables our employees to succeed. This includes ensuring opportunity for all and embraces the positive effect that our diverse workforce brings.
We believe the importance of understanding patients prior to the development of widespread resistance. 3 On January 20, 2023, we announced that, given the License Agreement that we entered into in December 2022 and the shift in Company’s focus to oncology, we will cease further investment in the Discuva platform and evaluate further options for the use of the Discuva Platform.
On January 20, 2023, we announced that, given the License Agreement that we entered into in December 2022 and the shift in Company’s focus to oncology, we will cease further investment in the Discuva platform and evaluate further options for the use of the Discuva Platform.
Item 1. Business Overview We are a biopharmaceutical company focused on the discovery, development, and commercialization of patient-, physician-, caregiver- and societal-friendly medicinal therapies intended to improve quality of life, increase potential duration of life, and resolve serious unmet medical needs.
Item 1. Business Overview Summit Therapeutics Inc. (“we”, “Summit” or the “Company”) is a biopharmaceutical company focused on the discovery, development, and commercialization of patient-, physician-, caregiver- and societal-friendly medicinal therapies intended to improve quality of life, increase potential duration of life, and resolve serious unmet medical needs.
Trade secrets and know-how can be difficult to protect. We seek to protect our proprietary technology and processes, in part, by confidentiality agreements and invention assignment agreements with our employees, consultants, scientific advisors, contractors and commercial partners.
We seek to protect our proprietary technology and processes, in part, by confidentiality agreements and invention assignment agreements with our employees, consultants, scientific advisors, contractors and commercial partners.
Under federal law, the submission of most NDAs/BLAs is subject to an application user fee, which for federal fiscal year 2022 is $3,117,218 for an application requiring clinical data. The sponsor of the approved NDA/BLA is also subject to an annual program fee, which for the fiscal year 2022 is $369,413.
Under federal law, the submission of most NDAs/BLAs is subject to an application user fee, which for federal fiscal year 2023 is $3,242,026 for an application requiring clinical data. The sponsor of the approved NDA/BLA is also subject to an annual program fee, which for the fiscal year 2023 is $393,933.
We will continue to pursue partnerships for further development of SMT-738. Other Material Agreements The following material agreements relate to our commitments and obligations with respect to ridinilazole and SMT-738 only. The entry into the License Agreement represents a significant change in the Company’s strategy.
Other Material Agreements 5 The following material agreements relate to our commitments and obligations with respect to ridinilazole and SMT-738 only. The entry into the License Agreement represents a significant change in the Company’s strategy.
The results of this survey showed our employees to be well engaged, with a strong team spirit and strongly aligned to the Company’s mission. Compensation and Benefits We provide robust compensation and benefits programs to attract, motivate and retain our employees.
In August 2023, Summit launched an engagement survey, in which 91% of employees responded. The results of this survey showed our employees to be well engaged, with a strong team spirit and strongly aligned to the Company’s mission. Compensation and Benefits We provide competitive compensation and benefits programs to attract, motivate and retain our employees.
Our commercial opportunity could also be reduced or eliminated if the results of our clinical trials, both safety and efficacy, combined with other factors, do not lead to significant adoption of our product.
This may have the effect of making branded products less attractive from a cost perspective to buyers. Our commercial opportunity could also be reduced or eliminated if the results of our clinical trials, both safety and efficacy, combined with other factors, do not lead to significant adoption of our product.
In addition to the intellectual property patents and applications owned by the Company, following the completion of the License and Collaboration Agreement with Akeso, Summit has in-licensed the rights to various Akeso patent applications in the Licensed Territory and has rights to control prosecution of such in-licensed intellection property in the Licensed Territory in collaboration with Akeso.
Following the completion of the License and Collaboration Agreement with Akeso, Summit has in-licensed the rights to various Akeso patent applications directed to ivonescimab in specific countries and has rights to control prosecution of such in-licensed intellectual property in these specific countries in collaboration with Akeso.
In view of the co-expression of VEGF and PD-1 in the tumor microenvironment, ivonescimab, may block these two pathways more effectively and enhance the antitumor activity, as compared to combination therapy.
In view of the co-expression of VEGF and PD-1 in the tumor micro-environment (“TME”), ivonescimab, may block these two pathways more effectively and enhance the antitumor activity, as compared to combination therapy through what is believed to be a unique cooperative binding mechanism.
Under this cost sharing arrangement, we were responsible for a portion of the costs associated with each segment of work, including any costs in excess of the estimated amounts.
The contract provides for a cost-sharing arrangement under which BARDA funded a specified portion of estimated costs for the continued clinical and regulatory development of ridinilazole for CDI. Under this cost sharing arrangement, we were responsible for a portion of the costs associated with each segment of work, including any costs in excess of the estimated amounts.
A six month pediatric extension of an SPC may be obtained where the patentee has carried out an agreed pediatric investigation plan, the authorized product information includes information on the results of the studies and the product is authorized in all member states of the European Union.
The duration of an SPC is calculated as the difference between the patent’s filing date and the date of the first marketing authorization, minus five years, subject to a maximum term of five years. 19 A six month pediatric extension of an SPC may be obtained where the patentee has carried out an agreed pediatric investigation plan, the authorized product information includes information on the results of the studies and the product is authorized in all member states of the European Union.
Manufacturing We do not own or operate, and currently have no plans to establish, manufacturing facilities for the production of clinical or commercial quantities of ivonescimab, ridinilazole or SMT-738. We currently rely, and expect to continue to rely, on third parties for the manufacture of our product candidates and any products that we may develop.
Manufacturing We do not own or operate, and currently have no plans to establish, manufacturing facilities for the production of clinical or commercial quantities of ivonescimab, ridinilazole or SMT-738.
As presented at ASCO 2022, ivonescimab treatment was associated with an overall response rate (ORR) in a Phase II study in patients with NSCLC who have failed EGFR-TKI’s of 68.4% and a median Progression-Free Survival (“mPFS”) time period of 8.2 months when combined with combination chemotherapy (pemetrexed and carboplatin).
Based on data published by Akeso with a cut-off date of October 2023, ivonescimab treatment after a median follow-up time of approximately 25.8 months, was associated with an overall response rate (ORR) in a Phase II study in patients with NSCLC who have failed EGFR-TKI’s of 68.4%, a median Progression-Free Survival (“mPFS”) time period of 8.5 months, and a median Overall Survival (“mOS”) of 22.5 months when combined with combination chemotherapy (pemetrexed and carboplatin).
Ivonescimab In connection with the License Agreement, we have also agreed to enter into a supply agreement with Akeso, pursuant to which we agree to purchase a certain portion of drug substance for clinical and commercial supply (the “Supply Agreement”).
We currently rely, and expect to continue to rely, on third parties for the manufacture of our product candidates and any products that we may develop. 4 Ivonescimab In connection with the License Agreement, we have also agreed to enter into the Supply Agreement with Akeso, pursuant to which we agree to purchase a certain portion of drug substance for clinical and commercial.
Competition for ivonescimab (SMT112) Ivonescimab is a novel, potential first-in-class bispecific antibody combining the effects of immunotherapy via a blockade of PD-1 with the anti-angiogenesis effects associated with blocking of VEGF into a single molecule.
The Company’s current lead development candidate is ivonescimab, a novel, potential first-in-class bispecific antibody intending to combine the effects of immunotherapy via a blockade of PD-1 with the anti-angiogenesis effects of an anti-VEGF compound into a single molecule.
Accordingly, manufacturers must continue to expend time, money and effort in the area of production and quality control to maintain cGMP compliance. Once an approval is granted, the FDA may withdraw the approval if compliance with regulatory requirements and standards is not maintained or if problems occur after the product reaches the market.
Once an approval is granted, the FDA may withdraw the approval if compliance with regulatory requirements and standards is not maintained or if problems occur after the product reaches the market.
Member States govern the system for the approval of clinical trials in the European Union. Under this system, an applicant must obtain prior approval from the competent national authority of the E.U. Member States in which the clinical trial is to be conducted.
Under this system, an applicant must obtain prior approval from the competent national authority of the E.U. Member States in which the clinical trial is to be conducted. Furthermore, the applicant may only start a clinical trial at a specific study site after the competent ethics committee has issued a favorable opinion.
Several pharmaceutical and biotechnology companies have established themselves in the market for the treatment of NSCLC, and several additional companies are developing products for the treatment of NSCLC. Currently, the most commonly used treatments for NSCLC are several immuno-oncology drugs and chemotherapies, administered either as monotherapy or in combination with other approved therapeutics.
Currently, the most commonly used treatments for NSCLC are several immuno-oncology drugs and chemotherapies, administered either individually as monotherapy, in combination with each other, or in combination with other approved therapeutics. NSCLC treatment regimens vary due to several factors, including genetic mutations and progression of disease.
Our future operations will be focused on the development of ivonescimab and other future activities as the Company determines.
The License Agreement and transaction closed in January 2023 following customary waiting periods. The Company’s operations will be focused on the development of ivonescimab and other future activities, as the Company determines.
Our patent portfolio currently contains a total of 86 patents and patent applications. Discuva Platform Technology. Our Discuva Platform technology is currently protected by 14 granted U.S. and foreign patents. We expect patent protection for this portfolio to expire in 2032. Ridinilazole Program .
The collaboration has 1 patent issued with 14 pending and we expect that these patent applications (assuming the applications proceed to grant) will provide patent coverage for the program until 2042. Discuva Platform Technology. Our Discuva Platform technology is currently protected by 14 granted U.S. and foreign patents. We expect patent protection for this portfolio to expire in 2032.
After approval, most changes to the approved product, such as adding new indications or other labeling claims, are subject to prior FDA review and approval. There also are continuing, annual program fee requirements for any marketed products, as well as new application fees for supplemental applications with clinical data.
After approval, most changes to the approved product, such as adding new indications or other labeling claims, are subject to prior FDA review and approval.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWe may experience numerous unforeseen events during, or as a result of, clinical trials that could delay or prevent our ability to receive marketing approval for or commercialize our product candidates, including: • clinical trials of our product candidates may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional clinical trials or abandon product development programs; • the number of patients required for clinical trials of our product candidates may be larger than we anticipate, enrollment in these clinical trials may be slower than we anticipate or participants may drop out of these clinical trials at a higher rate than we anticipate for various reasons, including due to contagious diseases or illnesses, such as the novel coronavirus; • we may be unable to enroll a sufficient number of patients in our clinical trials to ensure adequate statistical power to detect any statistically significant treatment effects; • our third-party contractors may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all; • regulators, institutional review boards or independent ethics committees may not authorize us or our investigators to commence a clinical trial or conduct a clinical trial at a prospective trial site; • we may have delays in reaching or fail to reach agreement on acceptable clinical trial contracts or clinical trial protocols with prospective trial sites; • we may have to suspend or terminate clinical trials of our product candidates for various reasons, including a finding that the participants are being exposed to unacceptable health risks; • regulators, institutional review boards or independent ethics committees may require that we or our investigators materially modify the terms of our clinical research in order to meet additional requirements for receiving marketing approval, including by requiring that we enlarge our trials, broaden the scope of our research, or perform studies in addition to those we currently anticipate, which may delay our ability to obtain marketing approval or impose additional costs; • regulators, institutional review boards or independent ethics committees may require that we or our investigators suspend or terminate clinical research for various reasons, including noncompliance with regulatory requirements or a finding that the participants are being exposed to unacceptable health risks; 34 • the cost of clinical trials of our product candidates may be greater than we anticipate; • the supply or quality of our product candidates, comparator drugs or other materials necessary to conduct clinical trials of our product candidates in adolescent patients may be insufficient or inadequate, which may occur if, for example, enrollment for our clinical trial programs are delayed and the clinical supply of ivonescimab or related comparator drug manufactured for such trials was not utilized prior to its expiration and needed to be replaced, or if there were disruptions in our supply chain due to weather conditions, natural disasters or contagious diseases or illnesses, such as the novel coronavirus; and • our product candidates may have undesirable side effects or other unexpected characteristics, causing us or our investigators, regulators, institutional review boards or independent ethics committees to suspend or terminate the clinical trials.
Biggest changeWe may experience numerous unforeseen events during, or as a result of, clinical trials that could delay or prevent our ability to complete the clinical trials and receive marketing approval for or commercialize our product candidates, including: • clinical trials of our product candidates may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional clinical trials or abandon product development programs; • the number of patients required for clinical trials of our product candidates may be larger than we anticipate, enrollment in these clinical trials may be slower than we anticipate or participants may drop out of these clinical trials at a higher rate than we anticipate for various reasons, including due to contagious diseases or illnesses; • our ability to combine data from different regions and countries may be limited due to lack of consistency in data in these regions and/or countries, potentially delaying or preventing marketing approval for our product • In our multi-regional trials, we may experience delays in enrollment across one or more countries and/or regions, which may lead to variability in data and/or trial missing the required endpoints resulting in lack of approval from regulatory authorities • we may be unable to enroll a sufficient number of patients in our clinical trials to ensure adequate statistical power to detect any statistically significant treatment effects; 28 • our third-party contractors may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all; • regulators, institutional review boards or independent ethics committees may not authorize us or our investigators to commence a clinical trial or conduct a clinical trial at a prospective trial site; • we may have delays in reaching or fail to reach agreement on acceptable clinical trial contracts or clinical trial protocols with prospective trial sites; • we may have to suspend or terminate clinical trials of our product candidates for various reasons, including a finding that the participants are being exposed to unacceptable health risks; • regulators, institutional review boards or independent ethics committees may require that we or our investigators materially modify the terms of our clinical research in order to meet additional requirements for receiving marketing approval, including by requiring that we enlarge our trials, broaden the scope of our research, or perform studies in addition to those we currently anticipate, which may delay our ability to obtain marketing approval or impose additional costs; • regulators, institutional review boards or independent ethics committees may require that we or our investigators suspend or terminate clinical research for various reasons, including noncompliance with regulatory requirements or a finding that the participants are being exposed to unacceptable health risks; • the cost of clinical trials of our product candidates may be greater than we anticipate; • the supply or quality of our product candidates, comparator drugs or other materials necessary to conduct clinical trials of our product candidates in adolescent patients may be insufficient or inadequate, which may occur if, for example, enrollment for our clinical trial programs are delayed and the clinical supply of ivonescimab or related comparator drug manufactured for such trials was not utilized prior to its expiration and needed to be replaced, or if there were disruptions in our supply chain due to weather conditions, natural disasters or contagious diseases or illnesses, such as the novel coronavirus; and • our product candidates may have undesirable side effects or other unexpected characteristics, causing us or our investigators, regulators, institutional review boards or independent ethics committees to suspend or terminate the clinical trials.
Conducting preclinical testing and clinical trials is a time-consuming, expensive and uncertain process that takes years to complete, and we may never generate the necessary data or results required to obtain marketing approval and achieve product sales. In addition, our product candidates, if approved, may not achieve commercial success.
Conducting preclinical testing and clinical trials is a time-consuming, expensive and uncertain process that takes years to complete, and we may never generate the necessary data or results required to obtain marketing approval achieve product sales. In addition, our product candidates, if approved, may not achieve commercial success.
Our failure to comply with the repayment obligations and covenants described above could result in an event of default, which, if not cured or waived, and if lender accelerates, would result in us being required to repay these borrowings before their due date.
Our failure to comply with the repayment obligations and covenants described above could result in an event of default, which, if not cured or waived, and if the lender accelerates, would result in us being required to repay these borrowings before their due date.
We will be reliant on Akeso for knowledge transfer relating to manufacturing of our product candidate. The loss of any of the knowledge transferred relating to ivonescimab from Akeso may cause us to incur additional transition costs or result in delays in the manufacturing and delivery of our product candidate.
We will be reliant on Akeso for knowledge transfer relating to manufacturing of our product candidate. The loss of any of the knowledge transferred relating to ivonescimab from Akeso may cause us to incur additional transition costs or result in delays in the manufacturing and delivery of the ivonescimab product candidate.
The third-party manufacturers may not successfully carry out their contractual duties or obligations, the occurrence of which could substantially increase our costs and limit our supply of such product candidates. We may be unable to conclude agreements for commercial supply with third-party manufacturers, or may be unable to do so on acceptable terms.
We may be unable to conclude agreements for commercial supply with third-party manufacturers, or may be unable to do so on acceptable terms The third-party manufacturers may not successfully carry out their contractual duties or obligations, the occurrence of which could substantially increase our costs and limit our supply of such product candidates.
We conduct a significant portion of our operations in the United Kingdom. Because our financial statements are presented in U.S. dollars, changes in currency exchange rates have had and could have a significant effect on our operating results when our operating results are translated into pounds sterling.
We conduct a portion of our operations in the United Kingdom. Because our financial statements are presented in U.S. dollars, changes in currency exchange rates have had and could have a significant effect on our operating results when our operating results are translated into pounds sterling.
Our failure to comply with all regulatory requirements, and later discovery of previously unknown adverse events or other problems with our products, manufacturers or manufacturing processes, may yield various results, including: • litigation involving patients taking our products; • restrictions on such products, manufacturers or manufacturing processes; • restrictions on the labeling or marketing of a product; • restrictions on product distribution or use; • requirements to conduct post-marketing studies or clinical trials; • warning or untitled letters; • withdrawal of the products from the market; • refusal to approve pending applications or supplements to approved applications that we submit; • recall of products; • fines, restitution or disgorgement of profits or revenues; • suspension or withdrawal of marketing approvals; • damage to relationships with any potential collaborators; • unfavorable press coverage and damage to our reputation; • refusal to permit the import or export of our products; • product seizure; or • injunctions or the imposition of civil or criminal penalties.
Our failure to comply with all regulatory requirements, and later discovery of previously unknown adverse events or other problems with our products, manufacturers or manufacturing processes, may yield various results, including: • litigation involving patients taking our products; • restrictions on such products, manufacturers or manufacturing processes; • restrictions on the labeling or marketing of a product; • restrictions on product distribution or use; • requirements to conduct post-marketing studies or clinical trials; • warning or untitled letters; • withdrawal of the products from the market; • refusal to approve pending applications or supplements to approved applications that we submit; • recall of products; • fines, restitution or disgorgement of profits or revenues; • suspension or withdrawal of marketing approvals; • damage to relationships with any potential collaborators; • unfavorable press coverage and damage to our reputation; 42 • refusal to permit the import or export of our products; • product seizure; or • injunctions or the imposition of civil or criminal penalties.
Our current collaborations pose, and any future collaboration likely will pose, numerous risks to us, including the following: • collaborators have significant discretion in determining the efforts and resources that they will apply to these collaborations and may not perform their obligations as expected; • collaborators may de-emphasize or not pursue development and commercialization of our product candidates or may elect not to continue or renew development or commercialization programs based on clinical trial results, changes in the collaborators’ strategic focus, including as a result of a sale or disposition of a business unit or development function, or available funding, or external factors such as an acquisition that diverts resources or creates competing priorities; • collaborators may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial or abandon a product candidate, repeat or conduct new clinical trials or require a new formulation of a product candidate for clinical testing; • collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our products or product candidates if the collaborators believe that competitive products are more likely to be successfully developed or can be commercialized under terms that are more economically attractive than ours; • a collaborator with marketing and distribution rights to multiple products may not commit sufficient resources to the marketing and distribution of our product relative to other products; 30 • collaborators may not properly maintain or defend our intellectual property rights or may use our proprietary information in such a way as to invite litigation that could jeopardize or invalidate our intellectual property or proprietary information or expose us to potential litigation; • collaborators may infringe the intellectual property rights of third parties, which may expose us to litigation and potential liability; • disputes may arise between the collaborator and us as to the ownership of intellectual property arising during the collaboration; • we may grant exclusive rights to our collaborators, which would prevent us from collaborating with others; • disputes may arise between the collaborators and us that result in the delay or termination of the research, development or commercialization of our products or product candidates or that result in costly litigation or arbitration that diverts management attention and resources; and • collaborations may be terminated and, if terminated, may result in a need for additional capital to pursue further development or commercialization of the applicable product candidates.
Our current collaborations pose, and any future collaboration likely will pose, numerous risks to us, including the following: • collaborators have significant discretion in determining the efforts and resources that they will apply to these collaborations and may not perform their obligations as expected; • collaborators may de-emphasize or not pursue development and commercialization of our product candidates or may elect not to continue or renew development or commercialization programs based on clinical trial results, changes in the collaborators’ strategic focus, including as a result of a sale or disposition of a business unit or development function, or available funding, or external factors such as an acquisition that diverts resources or creates competing priorities; • collaborators may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial or abandon a product candidate, repeat or conduct new clinical trials or require a new formulation of a product candidate for clinical testing; 32 • collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our products or product candidates if the collaborators believe that competitive products are more likely to be successfully developed or can be commercialized under terms that are more economically attractive than ours; • a collaborator with marketing and distribution rights to multiple products may not commit sufficient resources to the marketing and distribution of our product relative to other products; • collaborators may not properly maintain or defend our intellectual property rights or may use our proprietary information in such a way as to invite litigation that could jeopardize or invalidate our intellectual property or proprietary information or expose us to potential litigation; • collaborators may infringe the intellectual property rights of third parties, which may expose us to litigation and potential liability; • disputes may arise between the collaborator and us as to the ownership of intellectual property arising during the collaboration; • we may grant exclusive rights to our collaborators, which would prevent us from collaborating with others; • disputes may arise between the collaborators and us that result in the delay or termination of the research, development or commercialization of our products or product candidates or that result in costly litigation or arbitration that diverts management attention and resources; and • collaborations may be terminated and, if terminated, may result in a need for additional capital to pursue further development or commercialization of the applicable product candidates.
Failure to submit timely, accurate and required information for all payments, transfers of value and ownership or investment interests may result in civil monetary penalties. • Analogous state laws and regulations, such as state anti-kickback and false claims laws, may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers, and some state laws require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government in addition to requiring drug manufacturers to report information related to payments to physicians and other health care providers or marketing expenditures.
Failure to submit timely, accurate and required information for all payments, transfers of value and ownership or investment interests may result in civil monetary penalties. • Analogous state laws and regulations, such as state anti-kickback and false claims laws, may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers, and some state laws require pharmaceutical companies to comply with the 43 pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government in addition to requiring drug manufacturers to report information related to payments to physicians and other health care providers or marketing expenditures.
Restrictions under applicable federal and state healthcare laws and regulations, include, and are not limited to, the following: • The federal healthcare anti-kickback statute prohibits, among other things, persons from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward either the referral of an individual for, or the purchase, order or recommendation of, any good or service, for which 43 payment may be made under federally funded healthcare programs such as Medicare and Medicaid.
Restrictions under applicable federal and state healthcare laws and regulations, include, and are not limited to, the following: • The federal healthcare anti-kickback statute prohibits, among other things, persons from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward either the referral of an individual for, or the purchase, order or recommendation of, any good or service, for which payment may be made under federally funded healthcare programs such as Medicare and Medicaid.
Regardless of merit or eventual outcome, liability claims may result in: • reduced resources of our management to pursue our business strategy; • decreased demand for any product candidates or products that we may develop; • injury to our reputation and significant negative media attention; • withdrawal of clinical trial participants; • significant costs to defend the related litigation; • substantial monetary awards to clinical trial participants or patients; • loss of revenue; • increased insurance costs; and • the inability to commercialize any products that we may develop.
Regardless of merit or eventual outcome, liability claims may result in: • reduced resources of our management to pursue our business strategy; • decreased demand for any product candidates or products that we may develop; • injury to our reputation and significant negative media attention; • withdrawal of clinical trial participants; • significant costs to defend the related litigation; • substantial monetary awards to clinical trial participants or patients; • loss of revenue; • increased insurance costs; and 38 • the inability to commercialize any products that we may develop.
CFIUS’s expanded jurisdiction under the Foreign Investment Risk Review Modernization Act of 2018 and implementing regulations that became effective on February 13, 2020 further includes investments that do not result in control of a U.S. business by a foreign person but afford certain foreign investors certain information or governance rights in a U.S. business that has a nexus to “critical technologies,” “critical infrastructure” and/or “sensitive personal data”.
CFIUS’s expanded jurisdiction under the Foreign Investment Risk Review Modernization Act of 2018 and implementing regulations that became effective on February 13, 2020 further includes investments that do not result in control of a U.S. business by a foreign person but afford certain foreign investors certain 45 information or governance rights in a U.S. business that has a nexus to “critical technologies,” “critical infrastructure” and/or “sensitive personal data”.
If the third parties that we engage to manufacture product for our preclinical tests and clinical trials should cease to continue to do so for any reason, including due to the novel coronavirus or another outbreak, we likely would experience delays in advancing these clinical trials while we identify and qualify replacement suppliers, and we may be unable to obtain replacement supplies on terms that are favorable to us.
If the third parties, including Akeso, that we engage to manufacture product for our preclinical tests and clinical trials should cease to continue to do so for any reason, including due to the novel coronavirus or another outbreak, we likely would experience delays in advancing these clinical trials while we identify and qualify replacement suppliers, and we may be unable to obtain replacement supplies on terms that are favorable to us.
We expect that recently enacted healthcare reforms, as well as other healthcare reform measures that may be adopted in the future, may result in additional reductions in Medicare and other healthcare funding, more rigorous coverage criteria, new payment methodologies and additional downward pressure on the price that we receive for any approved product and/or the 44 level of reimbursement physicians receive for administering any approved product we might bring to market.
We expect that recently enacted healthcare reforms, as well as other healthcare reform measures that may be adopted in the future, may result in additional reductions in Medicare and other healthcare funding, more rigorous coverage criteria, new payment methodologies and additional downward pressure on the price that we receive for any approved product and/or the level of reimbursement physicians receive for administering any approved product we might bring to market.
It is not always possible to identify and deter employee misconduct, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws, standards or regulations.
It is not always possible to identify and deter employee misconduct, and the 52 precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws, standards or regulations.
Beginning with costs incurred in 2022, the TCJA also eliminated the option to deduct research and development expenditures currently and requires taxpayers to capitalize and amortize them over five or fifteen years pursuant to Internal Revenue Code Section 174. This does not increase our effective tax rate or our cash tax payable in 2022.
Beginning with costs incurred in 2022, the TCJA also eliminated the option to deduct research and development expenditures currently and requires taxpayers to capitalize and amortize them over five or fifteen years pursuant to Internal Revenue Code Section 174. This does not increase our effective tax rate or our cash tax payable in 2022 or 2023.
Resolving an intellectual property infringement claim can be costly and time consuming and may require Summit to design around the claims of patents covering our products that may have been issued by third parties or to obtain a license, either of which would could cause us to incur additional expenses.
Resolving an intellectual property infringement claim can be costly and time consuming and may require Summit to design around the claims of patents covering our products that may have been issued by third parties or to obtain a license, either of which could cause us to incur additional expenses.
This evolution may create uncertainty in our business, affect us or our collaborators’, service providers’ and others’ ability to operate 50 in certain jurisdictions or to collect, store, transfer, use, share, and otherwise process personal data, necessitate the acceptance of more onerous obligations in our contracts, result in liability or impose additional costs on us.
This evolution may create uncertainty in our business, affect us or our collaborators’, service providers’ and others’ ability to operate in certain jurisdictions or to collect, store, transfer, use, share, and otherwise process personal data, necessitate the acceptance of more onerous obligations in our contracts, result in liability or impose additional costs on us.
Several pharmaceutical and biotechnology companies have established themselves in the market for the treatment of non-small cell lung cancer ("NSCLC"), and several additional companies are developing products for the treatment of NSCLC. Currently, the most commonly used treatments for NSCLC are several immuno-oncology drugs and chemotherapies, administered either as monotherapy or in combination with other approved therapeutics.
Several pharmaceutical and biotechnology companies have established themselves in the market for the treatment of non-small cell lung cancer (“NSCLC”), and several additional companies are developing products for the treatment of NSCLC. Currently, the most commonly used treatments for NSCLC are several immuno-oncology drugs and chemotherapies, administered either as monotherapy or in combination with other approved therapeutics.
The regulatory approval process outside the United States and Europe generally 41 includes all of the risks associated with obtaining FDA and EMA approval. In addition, some countries outside the United States and Europe require approval of the sales price of a drug before it can be marketed. In many countries, separate procedures must be followed to obtain reimbursement.
The regulatory approval process outside the United States and Europe generally includes all of the risks associated with obtaining FDA and EMA approval. In addition, some countries outside the United States and Europe require approval of the sales price of a drug before it can be marketed. In many countries, separate procedures must be followed to obtain reimbursement.
These requirements include, but are not limited to, restrictions governing promotion of an approved product, submissions of safety and other post-marketing information and reports, registration and 42 listing requirements, cGMP requirements relating to manufacturing, quality control, quality assurance and corresponding maintenance of records and documents, and requirements regarding the distribution of samples to physicians and recordkeeping.
These requirements include, but are not limited to, restrictions governing promotion of an approved product, submissions of safety and other post-marketing information and reports, registration and listing requirements, cGMP requirements relating to manufacturing, quality control, quality assurance and corresponding maintenance of records and documents, and requirements regarding the distribution of samples to physicians and recordkeeping.
Duggan, holds a substantial number of shares. Mr. Duggan’s shares have been registered for resale pursuant to an effective registration statement on Form S-3. If he 53 sells, or indicates an intention to sell, substantial amounts of shares in the public market, the trading price of our shares could decline.
Duggan, holds a substantial number of shares. Mr. Duggan’s shares have been registered for resale pursuant to an effective registration statement on Form S-3. If he sells, or indicates an intention to sell, substantial amounts of shares in the public market, the trading price of our shares could decline.
For example, while under the collaboration and license agreement with Akeso for ivonescimab, we have the right, after a set period of time, to take control of the prosecution, maintenance and enforcement of certain patent applications licensed under the agreement in the License Territory, prosecution is subject to consultation and cooperation with Akeso, except with regard 46 to patent extension.
For example, while under the collaboration and license agreement with Akeso for ivonescimab, we have the right, after a set period of time, to take control of the prosecution, maintenance and enforcement of certain patent applications licensed under the agreement in the Licensed Territory, prosecution is subject to consultation and cooperation with Akeso, except with regard to patent extension.
Such developments may also require us to 47 allocate significant resources to prevent other companies from circumventing or violating our intellectual property rights. Our attempts to prevent third parties from circumventing our intellectual property and other rights may ultimately be unsuccessful. We may also fail to take the required actions or pay the necessary fees to maintain our patents.
Such developments may also require us to allocate significant resources to prevent other companies from circumventing or violating our intellectual property rights. Our attempts to prevent third parties from circumventing our intellectual property and other rights may ultimately be unsuccessful. We may also fail to take the required actions or pay the necessary fees to maintain our patents.
However, except for contractual protections, we have limited ability to control their safeguards and actions related to such matters and these service providers may not maintain adequate information security measures. We may share or receive sensitive data with or from third parties whose information security measures may not be adequate.
However, except for contractual protections, we have limited ability to control their safeguards and actions related to 49 such matters and these service providers may not maintain adequate information security measures. We may share or receive sensitive data with or from third parties whose information security measures may not be adequate.
The cost of compliance with these obligations is high and is likely to increase in the future. These obligations may necessitate changes to our information technologies, systems and practices and to those of any service providers that process personal data on our behalf. In addition, these obligations may require us to change our business plans.
The cost of compliance with these obligations is high and is likely to increase in the future. These obligations may necessitate changes to our information 50 technologies, systems and practices and to those of any service providers that process personal data on our behalf. In addition, these obligations may require us to change our business plans.
In addition, we may 27 seek additional capital due to favorable market conditions or strategic considerations, even if we believe that we have sufficient funds for our current or future operating plans. Additional financing may not be available to us on acceptable terms, or at all.
In addition, we may seek additional capital due to favorable market conditions or strategic considerations, even if we believe that we have sufficient funds for our current or future operating plans. Additional financing may not be available to us on acceptable terms, or at all.
Our ability to utilize those net operating loss carryforwards are dependent upon our generation of future taxable income. 40 Laws and regulations affecting government contracts, such as BARDA and CARB-X , make it more costly and difficult for us to successfully conduct our business.
Our ability to utilize those net operating loss carryforwards are dependent upon our generation of future taxable income. Laws and regulations affecting government contracts, such as BARDA and CARB-X , make it more costly and difficult for us to successfully conduct our business.
This could be the case even after giving effect to patent term extensions and data exclusivity provisions preventing third parties from relying on clinical trial data filed by us for regulatory approval in support of their own applications for such approval.
This could be the case even after giving effect to patent term extensions and data exclusivity provisions preventing third parties from relying on clinical trial data filed by us for regulatory approval in support of their own applications 47 for such approval.
Additionally, the Personal Information Protection Law ("PIPL") of the People's Republic of China may apply to certain personal data processed by us, our collaborators or others on our behalf. Similar to the EU GDPR, PIPL imposes strict requirements on the processing of personal data and allows for statutory fines and penalties.
Additionally, the Personal Information Protection Law (“PIPL”) of the People’s Republic of China may apply to certain personal data processed by us, our collaborators or others on our behalf. Similar to the EU GDPR, PIPL imposes strict requirements on the processing of personal data and allows for statutory fines and penalties.
Moreover, the FDA requires us to comply with standards, commonly referred to as Good Clinical Practice, or GCP, for conducting, recording and reporting the results of clinical trials to assure that data and reported results are credible and accurate and that the rights, integrity of data and confidentiality of clinical trial participants are protected.
Moreover, the FDA requires us to comply with standards, commonly referred to as Good Clinical Practice (GCP), for conducting, recording and reporting the results of clinical trials to assure that data and reported results are credible and accurate and that the rights, integrity of data and confidentiality of clinical trial participants are protected.
The success of these potential transactions will depend, in part, on our ability to realize the anticipated growth opportunities through the successful integration of the businesses we acquire with our existing business, as well as the 33 success of the underlying business or intellectual property that we acquire or otherwise obtain rights to.
The success of these potential transactions will depend, in part, on our ability to realize the anticipated growth opportunities through the successful integration of the businesses we acquire with our existing business, as well as the success of the underlying business or intellectual property that we acquire or otherwise obtain rights to.
In addition, there is a refocus of relief towards UK activity and therefore costs outside the UK are expected to be restricted going forward with further changes anticipated following a government consultation being launched with the intention of merging the SME and RDEC schemes.
In addition, there is a refocus of relief towards UK activity and therefore costs outside the 39 UK are expected to be restricted going forward with further changes anticipated following a government consultation being launched with the intention of merging the SME and RDEC schemes.
More recently, in August 2022, President Biden signed into law the Inflation Reduction Act of 2022 (the "IRA"). Among other things, the IRA has multiple provisions that may impact the prices of drug products that are both sold into the Medicare program and throughout the United States.
More recently, in August 2022, President Biden signed into law the Inflation Reduction Act of 2022 (the “IRA”). Among other things, the IRA has multiple provisions that may impact the prices of drug products that are both sold into the Medicare program and throughout the United States.
In addition, we rely on service providers to establish and maintain appropriate information 49 technology and data security protections over the information technology systems they provide to us to operate our critical business systems (such as cloud-based infrastructure and systems, personnel email, as well as data storage and management systems).
In addition, we rely on service providers to establish and maintain appropriate information technology and data security protections over the information technology systems they provide to us to operate our critical business systems (such as cloud-based infrastructure and systems, personnel email, as well as data storage and management systems).
Our commercial revenues, if any, will be derived from sales of products that we are not planning to have commercially available for several years, if at all. Accordingly, we will need to continue to rely on additional financing to achieve our business objectives.
Our commercial revenues, if any, will be derived from sales of products that we are not planning to have commercially available for several years, if at all. Accordingly, 25 we will need to continue to rely on additional financing to achieve our business objectives.
If we enter into arrangements with third parties to perform sales and marketing services, our product revenues or the profitability of these product revenues to us are likely to be lower than if we were to market and sell any products that we 36 develop ourselves.
If we enter into arrangements with third parties to perform sales and marketing services, our product revenues or the profitability of these product revenues to us are likely to be lower than if we were to market and sell any products that we develop ourselves.
We expect that additional state and federal healthcare reform measures will be adopted in the future, any of which could limit the amounts that federal and state governments will pay for healthcare products and services, which could result in reduced demand for our product candidates or additional pricing pressures.
We expect that additional state and federal healthcare reform 44 measures will be adopted in the future, any of which could limit the amounts that federal and state governments will pay for healthcare products and services, which could result in reduced demand for our product candidates or additional pricing pressures.
Political, economic and regulatory developments may further complicate pricing negotiations, and pricing negotiations may continue after reimbursement has been obtained. Reference pricing used by various European Union member states and parallel distribution, or arbitrage between low-priced and high-priced member states, can further reduce prices.
Political, economic and regulatory developments may further complicate pricing negotiations, and pricing negotiations may continue after reimbursement has been obtained. Reference pricing used by various European Union member states and parallel distribution, 37 or arbitrage between low-priced and high-priced member states, can further reduce prices.
Diverting funds identified for other purposes for debt service may adversely affect our growth prospects. If we cannot generate sufficient cash flow from operations to service our debt, we may need to refinance our debt, dispose of assets, or issue equity to obtain necessary funds.
Diverting funds identified for other purposes for debt service may adversely affect our growth prospects. If we cannot generate sufficient cash flow from operations to service our debt, we will need to refinance our debt, dispose of assets, or issue equity to obtain necessary funds.
Securing marketing approval requires the submission of extensive preclinical and clinical data and supporting information to regulatory authorities for each therapeutic indication to establish the product candidate’s safety and efficacy. Securing marketing approval also requires the submission of information about the product manufacturing process to, and inspection of manufacturing facilities by, the regulatory authorities.
Securing marketing approval requires the submission of extensive preclinical and clinical data and supporting information to regulatory authorities for each therapeutic indication to establish the product candidate’s safety and efficacy. Securing marketing approval also requires the submission of information about the product manufacturing process to, and inspection of manufacturing facilities 40 by, the regulatory authorities.
Centers for Medicare and Medicaid Services ("CMS"), will negotiate drug prices annually for a select number of single source Part D drugs without generic or biosimilar competition. CMS will also negotiate drug prices for a select number of Part B drugs starting for payment year 2028.
Centers for Medicare and Medicaid Services (“CMS”), will negotiate drug prices annually for a select number of single source Part D drugs without generic or biosimilar competition. CMS will also negotiate drug prices for a select number of Part B drugs starting for payment year 2028.
However, for as long as we are a “smaller reporting company”, our independent registered public accounting firm will not be required to attest to the effectiveness of our internal control over financial reporting pursuant to Section 404.
However, for as long as we are a “smaller reporting company”, our independent registered public accounting firm will not be required to attest to the effectiveness of our internal control over 54 financial reporting pursuant to Section 404.
This may require 55 significant additional costs associated with resolving such action in other jurisdictions and there can be no assurance that the provisions will be enforced by a court in those other jurisdictions.
This may require significant additional costs associated with resolving such action in other jurisdictions and there can be no assurance that the provisions will be enforced by a court in those other jurisdictions.
Changes in either the patent laws or interpretation of the patent laws in the United States and other countries may diminish the value of our patents, narrow the scope of our patent protection or make enforcement more difficult or uncertain.
Changes in either the patent laws or interpretation of the 46 patent laws in the United States and other countries may diminish the value of our patents, narrow the scope of our patent protection or make enforcement more difficult or uncertain.
Our failure, or the failure of our third-party manufacturers, to comply with applicable regulations could result in sanctions being imposed on us, including fines, injunctions, civil penalties, delays, suspension or withdrawal of approvals, license revocation, seizures or recalls of product candidates or products, operating restrictions and criminal prosecutions, any of which could significantly and adversely affect supplies of our product candidates.
Our failure, or the failure of our third-party manufacturers, including Akeso,, to comply with applicable regulations could result in sanctions being imposed on us, 33 including fines, injunctions, civil penalties, delays, suspension or withdrawal of approvals, license revocation, seizures or recalls of product candidates or products, operating restrictions and criminal prosecutions, any of which could significantly and adversely affect supplies of our product candidates.
We do not know whether we would be able to take any of these actions on a timely basis, on terms satisfactory to us, or at all. 28 The Company’s failure to comply with the terms and obligations of the Note Purchase Agreement, including as a result of events beyond our control, may result in an event of default.
We do not know whether we would be able to take any of these actions on a timely basis, on terms satisfactory to us, or at all. 26 The Company’s failure to comply with the terms and obligations of the Note Purchase Agreement, including as a result of events beyond our control, may result in an event of default.
The License Agreement may be terminated by Akeso in the event of a material breach by us or if we default in the performance of any of our material obligations under the License Agreement, and such default continues for 90 days, or with respect to any breach of any undisputed payment obligations, for 60 days, or with respect to any breach of a supply requirement, for 30 days after written notice thereof.
The License Agreement may be terminated by Akeso in the event of a material breach by Summit or if we default in the performance of any of our material obligations under the License Agreement, and such default continues for 90 days, or with respect to any breach of any undisputed payment obligations, for 60 days, or with respect to any breach of a supply requirement, for 30 days after written notice thereof.
In addition, if we obtain marketing approval these potential future product candidates where we retain commercial rights or any other product candidates we develop, we expect to incur significant commercialization expenses related to product sales, marketing, distribution and manufacturing. Accordingly, we will need to obtain substantial additional funding in connection with our continuing operations.
In addition, if we obtain marketing approval for our potential future product candidates where we retain commercial rights or any other product candidates we develop, we expect to incur significant commercialization expenses related to product sales, marketing, distribution and manufacturing. Accordingly, we will need to obtain substantial additional funding in connection with our continuing operations.
We have entered into the License Agreement and will enter into a Supply Agreement with Akeso for information and drug substance that we will rely on to be used in our product candidate, and the termination or Akeso’s breach of these agreements could have a material adverse effect on our business.
We have entered into the License Agreement and will enter into a Supply Agreement with Akeso for manufacturing of drug substance and or drug product that we will rely on to be used in our product candidate, and the termination or Akeso’s breach of these agreements could have a material adverse effect on our business.
As a company with shares of common stock that are publicly traded in the United States, and particularly after we are no longer a “smaller reporting company,” we have incurred and will continue to incur significant legal, accounting and other expenses that we did not previously incur.
As a company with shares of common stock that are publicly traded in the United States, and particularly after we are no longer a “smaller reporting company”, we have incurred and will continue to incur significant legal, accounting and other expenses that we did not previously incur.
We are a “smaller reporting company” and the reduced disclosure requirements applicable to smaller reporting companies may make our shares of common stock less attractive to investors. We are a “smaller reporting company,” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended.
We are a “smaller reporting company” and the reduced disclosure requirements applicable to smaller reporting companies may make our shares of common stock less attractive to investors. We are a “smaller reporting company”, as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended.
The market price for our shares of common stock may be influenced by many factors, including: • the success of competitive products or technologies; • results of clinical trials of ivonescimab and any other product candidate that we develop; • results of clinical trials of product candidates of our competitors; • changes or developments in laws or regulations applicable to ivonescimab and any other product candidates that we develop; • our entry into, and the success of, any collaboration agreements with third parties; • developments or disputes concerning patent applications, issued patents or other proprietary rights; • the recruitment or departure of key personnel; • the level of expenses related to any of our product candidates or clinical development programs; • the results of our efforts to discover, develop, acquire or in-license additional product candidates, products or technologies; • actual or anticipated changes in estimates as to financial results, development timelines or recommendations by securities analysts; • variations in our financial results or those of companies that are perceived to be similar to us; • changes in the structure of healthcare payment systems; • market conditions in the biotechnology and pharmaceutical sectors; • regulatory or legal developments in the United States and other countries; • the societal and economic impact of public health epidemics, such as the ongoing COVID-19 pandemic, and government efforts to slow their spread; • general economic, industry and market conditions; • the trading volume of the shares on the Nasdaq Global Market; and • the other factors described in this “Risk Factors” section.
The market price for our shares of common stock may be influenced by many factors, including: • the success of competitive products or technologies; • results of clinical trials of ivonescimab and any other product candidate that we develop; • results of clinical trials of product candidates of our competitors; • changes or developments in laws or regulations applicable to ivonescimab and any other product candidates that we develop; • our entry into, and the success of, any collaboration agreements with third parties; • developments or disputes concerning patent applications, issued patents or other proprietary rights; • the recruitment or departure of key personnel; • the level of expenses related to any of our product candidates or clinical development programs; • the results of our efforts to discover, develop, acquire or in-license additional product candidates, products or technologies; • actual or anticipated changes in estimates as to financial results, development timelines or recommendations by securities analysts; • variations in our financial results or those of companies that are perceived to be similar to us; • changes in the structure of healthcare payment systems; • market conditions in the biotechnology and pharmaceutical sectors; • regulatory or legal developments in the United States and other countries; • the societal and economic impact of public health epidemics, such as the ongoing COVID-19 pandemic, and government efforts to slow their spread; • general economic, industry and market conditions; • the trading volume of the shares on the Nasdaq Global Market; and • the other factors described in this “Risk Factors” section. 53 Additionally, the stock market historically has experienced significant price and volume fluctuations.
Additionally, as actions or statements during prosecution in other territories (i.e., the non-License Territory) can impact the validity of any patent obtained in the License Territory, Akeso prosecution of its patent applications in the non-License Territory, can have an impact on patent prosecution and validity of applications/patents that we are prosecuting, maintaining or enforcing in the License Territory.
Additionally, as actions or statements during prosecution in other territories (i.e., the non-Licensed Territory) can impact the validity of any patent obtained in the Licensed Territory, Akeso prosecution of its patent applications in the non-Licensed Territory, can have an impact on patent prosecution and validity of applications/patents that we are prosecuting, maintaining or enforcing in the Licensed Territory.
In addition, both our current and our future unused U.S. federal and state tax losses and unused U.S. federal and state research and development tax credits may be subject to limitation under Sections 382 and 383 of the Internal Revenue Code ("IRC" or "the Code") of 1986, as amended, if we undergo an “ownership change,” generally defined as a greater than 50 percentage point change (by value) in its equity ownership by certain stockholders over a rolling three-year period.
In addition, both our current and our future unused U.S. federal and state tax losses and unused U.S. federal and state research and development tax credits may be subject to limitation under Sections 382 and 383 of the Internal Revenue Code (“IRC” or “the Code”) of 1986, as amended, if we undergo an “ownership change,” generally defined as a greater than 50 percentage point change (by value) in its equity ownership by certain stockholders over a rolling three-year period.
Third-party manufacturers may not be able to comply with current good manufacturing practice, or cGMP, regulations or similar regulatory requirements outside the United States.
Third-party manufacturers, including Akeso, may not be able to comply with current good manufacturing practice (cGMP), regulations or similar regulatory requirements outside the United States.
Many of our contracts with relevant stakeholders include obligations relating to the safeguard of sensitive data and a breach could lead to claims against us by such stakeholders.
Many of our contracts with relevant stakeholders include obligations relating to the safeguarding of sensitive data and a breach could lead to claims against us by such stakeholders.
Under our license and commercialization agreement with Eurofarma we have, and under any such arrangements we enter into with any third parties in the future we will likely have, limited control over the amount and timing of resources that our collaborators dedicate to the development or commercialization of our product candidates.
Under our license and commercialization agreements we have, and under any such arrangements we enter into with any third parties in the future we will likely have, limited control over the amount and timing of resources that our collaborators dedicate to the development or commercialization of our product candidates.
Our existing and future indebtedness will require interest payments and need to be repaid or refinanced and could require us to divert funds identified for other purposes to service our debt, could result in cash demands and impair our liquidity position and could result in financial risk for us.
Our existing and future indebtedness will require interest payments and need to be repaid or refinanced and could require us to divert funds identified for other purposes to service our debt. Our debt obligations could also result in cash demands and impair our liquidity position, causing financial risk for us.
Since we rely on an entity located in China, our business is subject to the risks associated with doing business in China, including: • adverse political and economic conditions, particularly those potentially negatively affecting the trade relationship between the United States and China; • trade protection measures, such as tariff increases, and import and export licensing and control requirements; • potentially negative consequences from changes in tax laws; • difficulties associated with the Chinese legal system, including increased costs and uncertainties associated with enforcing contractual obligations in China; • historically lower protection of intellectual property rights; • requirements relating to China’s data security rules and regulations; • requirements relating to China personal information protection laws • changes and volatility in currency exchange rates; • unexpected or unfavorable changes in regulatory requirements; and • difficulties in managing foreign relationships and operations generally . 38 U.S.-China trade relations may adversely impact our supply chain operations and business.
Since we rely on an entity located in China, our business is subject to the risks associated with doing business in China, including: • adverse political and economic conditions, particularly those potentially negatively affecting the trade relationship between the United States and China; • trade protection measures, such as tariff increases, and import and export licensing and control requirements; • potentially negative consequences from changes in tax laws; • difficulties associated with the Chinese legal system, including increased costs and uncertainties associated with enforcing contractual obligations in China; • historically lower protection of intellectual property rights; • requirements relating to China’s data security rules and regulations; • requirements relating to China personal information protection laws; • changes and volatility in currency exchange rates; • unexpected or unfavorable changes in regulatory requirements; and • difficulties in managing foreign relationships and operations generally .
Use of third parties to manufacture our product candidates may increase the risk that we will not have sufficient quantities of our product candidates or products or such quantities at an acceptable cost, which could delay, prevent or impair our development or commercialization efforts.
Use of third parties, including Akeso, to manufacture our product candidates may increase the risk that we will not have sufficient quantities of our product candidates or products or such quantities at an acceptable time and cost, which could delay, prevent or impair our development or commercialization efforts.
We may not be able to maintain compliance with these repayment obligations and covenants in the future and, if we fail to do so, that we may not able to obtain waivers from the lenders and/or amend the covenants.
We may not be able to maintain compliance with these repayment obligations and covenants in the future and, if we fail to do so, we may not be able to obtain waivers from the lender and/or amend the covenants.
Risks Related to our Financial and Intellectual Property Dependencies on Third Parties We depend on our relationship with, and the comprehensiveness of the intellectual property licensed from, Akeso, and termination of the License Agreement, any of the licenses under the License Agreement, or issues as to intellectual property could have a material adverse effect on our business.
Risks Related to our Financial and Intellectual Property Dependencies on Third Parties We depend on our relationship with, and the comprehensiveness of the intellectual property licensed from, Akeso, and termination of the License Agreement, or issues related to intellectual property could have a material adverse effect on our business.
In addition, if we are not able to obtain adequate supplies of our product candidates or the drug substances used to manufacture them, it will be more difficult for us to develop our product candidates and compete effectively.
In addition, if we are not able to obtain adequate supplies of our product candidates or the drug substances used to manufacture them, it will be more difficult for us to develop our product candidates and compete effectively. We rely on third parties to manufacture our product candidates.
Additionally, the ability of Summit to realize the full potential of the License Agreement may be severely limited by factors involving intellectual property rights including: • whether and to what extent our technology and processes infringe on intellectual property rights of Akeso or other third parties that are not subject to the License Agreement; • whether Akeso had the right to grant the licenses under the License Agreement; • whether third parties are entitled to compensation or equitable relief, such as an injunction, for our use of intellectual property without their authorization; • our right to sublicense patent and other rights to third parties under collaborative development relationships; • our compliance with our obligations with respect to the use of the licensed technology in relation to our development and commercialization of product candidates; 29 • ownership of specific intellectual property; • our involvement in and ability to align on the prosecution and enforcement of the licensed patents and patent applications and Akeso’s overall patent prosecution, intellectual property protection and enforcement strategies; and • the impact on payments and costs associated with commercialization if there is blocking intellectual property in or costs associated with prosecution, maintenance and enforcement under the License Agreement.
Additionally, the ability of Summit to realize the full potential of the License Agreement may be severely limited by factors involving intellectual property rights including: • whether and to what extent our technology and processes infringe on intellectual property rights of other third parties that are not subject to the License Agreement; 31 • whether third parties are entitled to compensation or equitable relief, such as an injunction, for our use of intellectual property without their authorization; • our right to sublicense patent and other rights to third parties under collaborative development relationships; • our compliance with our obligations with respect to the use of the licensed technology in relation to our development and commercialization of product candidates; • ownership of specific intellectual property; and • the impact on payments and costs associated with commercialization if there is blocking intellectual property in or costs associated with prosecution, maintenance and enforcement under the Akeso License Agreement.
Our principal stockholder and chief executive officer maintains the ability to control or significantly influence all matters submitted to stockholders for approval. As of December 31, 2022, Mr. Duggan beneficially owned, in the aggregate, shares of common stock representing approximately 81.8% of our outstanding capital stock. Mr.
Our principal stockholder and Chief Executive Officer maintains the ability to control or significantly influence all matters submitted to stockholders for approval. As of December 31, 2023, Mr. Duggan beneficially owned, in the aggregate, shares of common stock representing approximately 78.3% of our outstanding capital stock. Mr.
Patient enrollment is affected by other factors, including: • severity of the disease under investigation; • eligibility criteria for the clinical trial in question; • perceived risks and benefits of the product candidate under study; • competition for patients, time and resources at clinical trials sites from other investigational therapies in clinical trials that target the same patient population; • approval of other therapies to treat the indication that is being investigated in the clinical trial; • efforts to facilitate timely enrollment in clinical trials; • patient referral practices of physicians; • the ability to monitor patients adequately during and after treatment; and • proximity and availability of clinical trial sites for prospective patients.
Patient enrollment is affected by several factors, including, but not limited to, : • severity of the disease under investigation; • eligibility criteria for the clinical trial in question; • perceived risks and benefits of the product candidate under study; • competition for patients, time and resources at clinical trials sites from other investigational therapies in clinical trials that target the same patient population; • changes in the standard of care, including new clinical trial data; • approval of other therapies to treat the indication that is being investigated in the clinical trial; 27 • efforts to facilitate timely enrollment in clinical trials; • patient referral practices of physicians; • the ability to monitor patients adequately during and after treatment; and • proximity and availability of clinical trial sites for prospective patients.
Even if we are able to establish and maintain arrangements with third-party manufacturers, reliance on third-party manufacturers entails additional risks, including: • reliance on the third party for regulatory compliance and quality assurance; • the possible breach of the manufacturing agreement by the third party; • the possible misappropriation of our proprietary information, including our trade secrets and know-how; and • the possible termination or nonrenewal of the agreement by the third party at a time that is costly or inconvenient for us.
Even if we are able to establish and maintain arrangements with third-party manufacturers, reliance on third-party manufacturers, including Akeso, entails additional risks, including: • reliance on the third party for regulatory compliance and quality assurance; • the possible breach of the manufacturing agreement by the third party; • the possible diversion of manufacturing capacity to other customers by the third party; • the possible misappropriation of our proprietary information, including our trade secrets and know-how; and • the possible termination or non-renewal of the agreement by the third party at a time that is costly or inconvenient for us.
In addition, our competitors in NSCLC have ongoing clinical trials for product candidates that could be competitive with our product candidates, and patients who would otherwise be eligible for our clinical trials may instead enroll in clinical trials of our competitors’ product candidates or choose not to enroll in any clinical trials for various reasons, including due to fears of contagious diseases or illnesses, such as the novel coronavirus.
In addition, our competitors in NSCLC have ongoing clinical trials for product candidates that could be competitive with our product candidates, and patients who would otherwise be eligible for our clinical trials may instead enroll in clinical trials of our competitors’ product candidates or choose not to enroll in any clinical trials for various reasons, including due to fears of contagious diseases, illnesses or side effects.
Our ability to utilize those net operating loss carryforwards could be limited by an “ownership change” as described above, which could result in increased tax liability to us. As of December 31, 2022, we reported foreign gross operating loss carryforwards of $199.1 million.
Our ability to utilize those net operating loss carryforwards could be limited by an “ownership change” as described above, which could result in increased tax liability to us. As of December 31, 2023, we reported foreign gross operating loss carryforwards of $194.5 million.
Until we can generate substantial revenue and achieve profitability, we will need to raise additional capital to fund ongoing operations and capital needs. Since inception, we have incurred significant operating losses. During the year ended December 31, 2022, we incurred a net loss of $78.8 million, and cash flows used in operating activities was $41.6 million.
Until we can generate substantial revenue and achieve profitability, we will need to raise additional capital to fund ongoing operations and capital needs. Since inception, we have incurred significant operating losses. During the year ended December 31, 2023, we incurred a net loss of $614.9 million, and cash flows used in operating activities was $76.8 million.
Additionally, the stock market historically has experienced significant price and volume fluctuations. These fluctuations are often unrelated to the operating performance of particular companies. These broad market fluctuations, such as those caused by the COVID-19 pandemic, may cause declines in the trading price and market value of our common stock.
These fluctuations are often unrelated to the operating performance of particular companies. These broad market fluctuations, such as those caused by the COVID-19 pandemic, may cause declines in the trading price and market value of our common stock.
The price of our shares of common stock could decline if one or more equity research analysts downgrades such securities or if analysts issue other unfavorable commentary about us or our business.
We do not control these analysts. The price of our shares of common stock could decline if one or more equity research analysts downgrades such securities or if analysts issue other unfavorable commentary about us or our business.
As of March 7, 2023, we had a total of $100 million of indebtedness outstanding under the Note Purchase Agreement. Further, the License Agreement calls for certain additional future payment obligations and we may require additional indebtedness to fund those obligations.
As of February 19, 2024, we had a total of $100 million of indebtedness outstanding under the Note Purchase Agreement. Further, the License Agreement calls for certain additional future payment obligations and we may require additional indebtedness to fund those obligations.
The success of this product candidate will depend on a number of factors, including the following: • Ability to use data of patients from Akeso’s clinical trials in China in seeking regulatory approval; • successful completion of clinical development; • receipt of marketing approvals from applicable regulatory authorities; • establishing supply chain and commercial manufacturing arrangements with third-party manufacturers; • obtaining and maintaining patent and trade secret protection and regulatory exclusivity; • protecting our rights in our intellectual property portfolio; • establishing sales, marketing and distribution capabilities; • launching commercial sales of ivonescimab if and when approved, whether alone or in collaboration with others; • acceptance of ivonescimab, if and when approved, by patients, the medical community and third-party payors; • obtaining adequate pricing and a reimbursement profile; • ensuring no disruption in supply or lack of sufficient quantities of ivonescimab; • effectively competing with other therapies; and 26 • maintaining a continued acceptable safety profile of ivonescimab, following approval.
The success of this product candidate will depend on a number of factors, including the following: • Ability to use preclinical data and data of patients from Akeso’s clinical trials in China supporting registration studies and regulatory approval; • successful completion of global clinical development; • receipt of clinical trial approvals and future marketing approvals from applicable regulatory authorities in all the countries where we intend to conduct clinical trials and/or seek marketing approval; • establishing supply chain and commercial manufacturing arrangements with third-party manufacturers; • obtaining and maintaining patent and trade secret protection and regulatory exclusivity; • protecting our rights in our intellectual property portfolio; • establishing sales, marketing and distribution capabilities; • launching commercial sales of ivonescimab if and when approved, whether alone or in collaboration with others; • acceptance of ivonescimab, if and when approved, by patients, the medical community and third-party payors; • obtaining adequate pricing and a reimbursement profile; • ensuring no disruption in supply or lack of sufficient quantities of ivonescimab; 24 • effectively competing with other therapies; and • maintaining an acceptable safety profile of ivonescimab during development and following approval.
Even if ivonescimab or any other product candidate receives marketing approval, it may fail to achieve the degree of market acceptance by physicians, patients, third-party payors and others in the medical community necessary for commercial success.
Any of these occurrences could materially harm our business. 29 Even if ivonescimab or any other product candidate receives marketing approval, it may fail to achieve the degree of market acceptance by physicians, patients, third-party payors and others in the medical community necessary for commercial success.
If we elect or are forced to suspend or terminate any clinical trial of our product candidates, the commercial prospects of such product candidate will be harmed and our ability to 35 generate product revenues from such product candidate will be delayed or eliminated. Any of these occurrences could materially harm our business.
If we elect or are forced to suspend or terminate any clinical trial of our product candidates, the commercial prospects of such product candidate will be harmed and our ability to generate product revenues from such product candidate will be delayed or eliminated.
Risks Related to the Development and Commercialization of our Product Candidates If clinical trials of our product candidates fail to demonstrate safety and efficacy to the satisfaction of the U.S.
If clinical trials of our product candidates fail to demonstrate safety and efficacy to the satisfaction of the U.S.
Some of our competitors may be able to sustain the costs of such litigation or proceedings more effectively than we can because of their greater financial resources.
We may not have sufficient financial or other resources to adequately conduct such litigation or proceedings. Some of our competitors may be able to sustain the costs of such litigation or proceedings more effectively than we can because of their greater financial resources.
In addition, we may incur substantial costs in order to comply with current or future environmental, health and safety laws and regulations. These current or future laws and regulations may impair our research, development or production efforts.
In addition, we may incur substantial costs in order to comply with current or future environmental, health and safety laws and regulations. These current or future laws and regulations may impair our research, development or production efforts. Failure to comply with these laws and regulations also may result in substantial fines, penalties or other sanctions.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeProperties The following table provides information concerning Summit's principal leased facilities as of December 31, 2022: We maintain the following leased properties: Type/Uses Location Size Lease Expiration Executive office Oxfordshire, United Kingdom 6,781 square feet February 2027 Executive office Menlo Park, California, United States 5,777 square feet December 2025 Laboratory and office Sawston, United Kingdom 7,644 square feet October 2026 We believe our facilities are suitable and adequate to meet our needs.
Biggest changeProperties The following table provides information concerning Summit’s principal leased facilities as of December 31, 2023: We maintain the following leased properties: Type/Uses Location Size Lease Expiration Executive office Oxfordshire, United Kingdom 6,781 square feet February 2027 Executive office Menlo Park, California, United States 17,760 square feet May 2026 57 We signed a lease agreement on January 8, 2024 for executive office space for our new headquarters in Miami, Florida.
Added
The office space is approximately 9,000 square feet. The term of the lease is 64 months. Total payments for this office space is approximately $5,100 over the term of the lease. We believe our facilities are suitable and adequate to meet our needs.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeDuggan in a private placement in reliance Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D promulgated thereunder. On April 20, 2021, the Company determined, with Mr.
Biggest changeSoni in a private placement pursuant to an exception from the registration requirements under Section 4(a)(2) of the Securities Act of 1933 and Rule 506 of Regulation D promulgated thereunder. Issuer Purchases of Equity Securities Not applicable. Item 6. [RESERVED]
Duggan rectified the Duggan February Note and Duggan September Note in order to correctly reflect the parties’ intent that the Company may only prepay (i) the Duggan February Note following the completion of a public rights offering to be conducted by Summit in the approximate amount of $500 million (the “Rights Offering”), or a similar capital raise, in an amount equal to the lesser of (x) the net proceeds of the Rights Offering or such capital raise or (y) the full amount outstanding of the Duggan February Note, and (ii) Duggan September Note following the completion of a capital raising transaction subsequent to the Rights Offering in an amount equal to the lesser of (i) the net proceeds of such capital raise or (ii) the full amount outstanding of the Duggan September Note.
Duggan rectified the Duggan February Note and Duggan September Note in order to correctly reflect the parties’ intent that the Company may only prepay (i) the Duggan February Note following the completion of a public rights offering to be conducted by Summit in the approximate amount of $500 million (the “Rights Offering”), or a similar capital raise, in an amount equal to the lesser of (x) the net proceeds of the Rights Offering or such capital raise or (y) the full amount outstanding of the Duggan February Note, and (ii) the Duggan September Note following the completion of a capital raising transaction subsequent to the Rights Offering in an amount equal to the lesser of (A) the net proceeds of such capital raise or (B) the full amount outstanding of the Duggan September Note.
Such prepaid interest shall be paid in a number of shares of the Company’s common stock, par value $0.01 (“Common Stock”) equal to the dollar amount of such prepaid interest, divided by $0.7913 (the consolidated closing bid price immediately preceding the time the Company entered into the Note Purchase Agreement, plus $.01), which was 9,720,291 shares.
Such prepaid interest was to be paid in a number of shares of the Company’s common stock, par value $0.01 (“Common Stock”) equal to the dollar amount of such prepaid interest, divided by $0.7913 (the consolidated closing bid price immediately preceding the time the Company entered into the Note Purchase Agreement, plus $.01), which was 9,720,291 shares.
For all applicable periods following the February 15, 2023, interest shall accrue on the 60 outstanding principal balance of the Notes at the US prime interest rate, as reported in the Wall Street Journal, plus 50 basis points, as adjusted monthly, for three months immediately following February 15, 2023, and thereafter at the US prime rate plus 300 basis points, as adjusted monthly.
For all applicable periods following February 15, 2023, interest shall accrue on the outstanding principal balance of the Notes at the US prime interest rate, as reported in the Wall Street Journal, plus 50 basis points, as adjusted monthly, for three months immediately following February 15, 2023, and thereafter at the US prime rate plus 300 basis points, as adjusted monthly.
In addition, if the Company shall consummate a public offering, then upon the later to occur of (i) five business days after the Company receives the net cash proceeds therefrom or (ii) May 15, 2023, the Duggan February Note and the Zanganeh Note shall be prepaid by an amount equal to the lesser of (a) 100% of the amount of the net proceeds of such offering and (b) the outstanding principal amount on such Notes.
In addition, if the Company consummates a public offering, then upon the later to occur of (i) five business days after the Company receives the net cash proceeds therefrom or (ii) May 15, 2023, the Duggan February Note and the Zanganeh Note shall be prepaid by an amount equal to the lesser of (a) 100% of the amount of the net proceeds of such offering and (b) the outstanding principal amount on such Notes.
The License Agreement closed on January 17, 2023, and both Akeso and Summit entered into the Common Stock Issuance Agreement ("Issuance Agreement"). Pursuant to the License Agreement and Issuance Agreement, Akeso elected to receive 10 million shares of Company common stock in lieu of cash and was paid $274.9 million in cash as the initial upfront payment.
The License Agreement closed on January 17, 2023, and both Akeso and Summit entered into the Common Stock Issuance Agreement (“Issuance Agreement”). Pursuant to the License Agreement and Issuance Agreement, Akeso elected to receive 10 million shares of Company common stock in lieu of cash and was paid $274.9 million in cash as the initial upfront payment.
Following the issuance of the two new Promissory Notes (the “Duggan Promissory Notes”), the Duggan February Note and Duggan September Note were marked as “cancelled” on their face and replaced in their entirety by the Duggan Promissory Notes (together with the Zanganeh Note, the "Notes"). The Notes accrue interest at an initial rate of 7.5%.
Following the issuance of the two new Promissory Notes (the “Duggan Promissory Notes”), the Duggan February Note and Duggan September Note were marked as “cancelled” on their face and replaced in their entirety by the Duggan Promissory Notes (together with the Zanganeh Note, the “Notes”). The Notes accrued interest at an initial rate of 7.5%.
The maturity dates of the December 2022 Notes could be extended one or more times at the Company’s election, but in no event to a date later than September 6, 2024.
The maturity dates of the December 2022 Notes could have been extended one or more times at the Company’s election, but in no event to a date later than September 6, 2024.
Summit Therapeutics plc's American Depositary Shares ("ADSs") had traded on the Nasdaq Global Market under the symbol "SMMT" since March 2015 and its ordinary shares previously traded on AIM, a sub-market of the London Stock Exchange plc, under the symbol “SUMM”. Each ADS represented five ordinary shares of Summit Therapeutics plc.
Summit Therapeutics plc’s American Depositary Shares (“ADSs”) had traded on the Nasdaq Global Market under the symbol “SMMT” since March 2015 and its ordinary shares previously traded on AIM, a sub-market of the London Stock Exchange plc, under the symbol “SUMM”. Each ADS represented five ordinary shares of Summit Therapeutics plc.
On December 6, 2022, the Company entered into a Note Purchase Agreement (the "Note Purchase Agreement"), with Mr. Duggan and Dr. Zanganeh, pursuant to which the Company agreed to sell to each of Mr. Duggan and Dr. Zanganeh unsecured promissory notes in the aggregate amount of $520 million. Pursuant to the Note Purchase Agreement, the Company issued to Mr.
On December 6, 2022, the Company entered into a Note Purchase Agreement (the “Note Purchase Agreement”), with Mr. Robert Duggan and Dr. Maky Zanganeh, pursuant to which the Company agreed to sell to each of Mr. Duggan and Dr. Zanganeh unsecured promissory notes in the aggregate amount of $520 million.
All interest on the Notes shall be paid on the date of signing for the period through February 15, 2023.
All interest on the Notes was to be paid on the date of signing for the period through February 15, 2023.
Duggan in the amount of $100 million (the “Duggan September Note” and together with the Duggan February Note and the Zanganeh Note, the “December 2022 Notes”), which will mature and become due on September 15, 2023.
Duggan in the amount of $100 million (the “Duggan September Note” and together with the Duggan February Note and the Zanganeh Note, the “December 2022 Notes”), which was originally due on September 15, 2023.
We canceled the admission of the ordinary shares to trading on AIM on February 24, 2020. Holders of Record As of March 7, 2023, there were approximately 308 holders of record of our common stock.
We canceled the admission of the ordinary shares to trading on AIM on February 24, 2020. Holders of Record As of February 9, 2024, there were approximately 178 holders of record of our common stock.
Duggan, entered into a Note Purchase Agreement (the “2022 Note”), pursuant to which he has loaned the Company $25.0 million in exchange for the issuance by the Company of an unsecured promissory note in the amount of $25.0 million.
Recent Sales of Unregistered Securities On March 10, 2022, the Company’s Chairman and Chief Executive Officer, Mr. Duggan, entered into a Note Purchase Agreement (the “2022 Note”), pursuant to which he has loaned the Company $25.0 million in exchange for the issuance by the Company of an unsecured promissory note in the amount of $25.0 million.
Duggan and Dr. Zanganeh unsecured promissory notes in the amount of $400 million (the "Duggan February Note") and $20 million (the "Zanganeh Note"), respectively, which would mature and become due on February 15, 2023 and an unsecured promissory note to Mr.
Pursuant to the Note Purchase Agreement, the Company issued to Mr. Duggan and Dr. Zanganeh unsecured promissory notes in the amount of $400 million (the “Duggan February Note”) and $20 million (the “Zanganeh Note”), respectively, which matured and became due on February 15, 2023 59 and an unsecured promissory note to Mr.
The intended use of proceeds generated from the transactions described above includes funding the Company’s activities to support clinical and regulatory development of its assets and general corporate purposes. Issuer Purchases of Equity Securities Not applicable. Item 6. Selected Financial Data Reserved.
The intended use of proceeds generated from the transactions described above includes funding the Company’s activities to support clinical and regulatory development of its assets and general corporate purposes. On October 13, 2023, the Company entered into a Securities Purchase Agreement with Manmeet S. Soni pursuant to which Mr.
Removed
Recent Sales of Unregistered Securities On July 17, 2020, in connection with our incorporation, we issued an aggregate of 100 shares of our common stock to a nominee stockholder for $1.00. The shares were offered and issued pursuant to Section 4(2) of the Securities Act of 1933, as amended, or the "Securities Act".
Added
On February 17, 2024 the Duggan February Note was amended to extend the maturity date from September 6, 2024 to April 1, 2025.
Removed
On September 18, 2020, we issued an aggregate of 67,231,903 shares of our common stock in exchange for the entire issued share capital of Summit Therapeutics plc in a transaction exempt from registration pursuant to Section 3(a)(10) of the Securities Act. No cash was paid for these shares.
Added
For all applicable periods commencing February 17, 2024, interest shall accrue on the outstanding principal balance at the greater of 12% or the US prime interest rate, as reported in the Wall Street Journal plus 350 basis points, as adjusted monthly, compounded quarterly. Interest shall be paid upon maturity of the loan.
Removed
On November 6, 2020, in connection with the closing of a private placement for an aggregate purchase price of $50 million in cash, we issued an aggregate of 14,970,060 shares of our common stock to three investors: our Executive Chairman and Chief Executive Officer Mr. Duggan, the Mahkam Zanganeh Revocable Trust and Polar Capital Funds plc - Biotechnology Fund.
Added
Soni invested $5.0 million in the Company in exchange for 2,976,190 shares (the “Shares”) of the Company’s common stock at a purchase price of $1.68 per share. The Shares were offered and sold to Mr.
Removed
The shares were sold to each of the foregoing investors at a price of $3.34 per share of common stock. The common stock was offered and sold pursuant to an exemption from the registration requirements under Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D promulgated thereunder. On March 24, 2021, Mr.
Removed
Duggan entered into a Note Purchase Agreement (the "Initial Purchase Agreement") pursuant to which he loaned the Company $55.0 million in exchange for the issuance by the Company of an unsecured promissory note (the “Initial Note”) in the amount of $55.0 million.
Removed
The Note accrues interest at a rate per annum equal to 150% of the applicable 10 Year US Treasury rate, as adjusted monthly. The rate is initially estimated to be approximately 2.4%. The Company may prepay any portion of the Note at its option without penalty.
Removed
The Note will mature and become due upon the earlier of (i) the 59 consummation of a registered public offering with net proceeds of no less than $55.0 million, or (ii) 13 months from the date of issuance of the Note. The Note was issued to Mr.
Removed
Duggan’s agreement, to rescind both the Initial Purchase Agreement and the Initial Note issued thereunder, and repaid the principal amount of the Initial Note in full, without interest or penalty, as such the Company recognized imputed interest of $0.1 million within additional paid in capital. On April 20, 2021, subsequent to the repayment of the Initial Note, Mr.
Removed
Duggan entered into a second Note Purchase Agreement (the “Second Purchase Agreement”) pursuant to which he loaned the Company $55.0 million in exchange for the issuance by the Company of an unsecured promissory note (the “Second Note”) in the amount of $55.0 million.
Removed
The Second Note accrued interest at a rate per annum equal to 150% of the applicable 10 Year US Treasury rate, as adjusted monthly (initially estimated to be approximately 2.4%). The Company was permitted to prepay any portion of the Second Note at its option without penalty.
Removed
Pursuant to the terms of the Second Note, following consummation of the 2021 Rights Offering, the Second Note matured and all principal and interest thereunder was repaid by the Company using a portion of the proceeds of the 2021 Rights Offering. On March 10, 2022, the Company’s Chairman and Chief Executive Officer, Mr.

Item 7. Management's Discussion & Analysis

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

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Biggest changeOther Expense, Net Other expense, net is comprised of the following: (in millions) Year Ended December 31, 2022 December 31, 2021 $ Change Foreign currency loss $ (4.1) $ (2.1) $ (2.0) Interest expense on promissory notes payable to related parties (4.4) (0.2) (4.2) Investment income 1.5 — 1.5 Other income (expense), net 0.3 (0.1) 0.4 Total $ (6.7) $ (2.4) $ (4.3) Other expense, net primarily increased by $4.3 million for the year ended December 31, 2022, compared to the same period in the prior year, due to unfavorable changes in foreign currency of $2.0 million, increase in loan interest expense of $4.2 million related to the $25.0 million and $520.0 million promissory notes issued to related parties during the year (as described below), partially offset by $1.5 million of investment income related to increased balances and yields in our money-market fund and highly liquid U.S. government treasury securities. 67 Liquidity and Capital Resources Sources of Liquidity To date, we have financed our operations primarily through issuances of our common stock, payments to us under license, collaboration, and commercialization arrangements, for example, our license and commercialization agreement with Eurofarma Laboratórios SA, or Eurofarma, and development funding and other assistance from government entities, philanthropic, non-government and not-for-profit organizations for our product candidates.
Biggest changeLiquidity and Capital Resources Sources of Liquidity To date, we have financed our operations primarily through issuances of our common stock, issuance of debt, receipt of payments to us under license, collaboration, and commercialization arrangements, for example, our license and commercialization agreement with Eurofarma Laboratórios SA, or Eurofarma, development funding and other assistance from government entities, philanthropic, non-government and not-for-profit organizations for our product candidates.
For all applicable periods following the February 15, 2023, interest shall accrue on the outstanding principal balance of the Notes at the US prime interest rate, as reported in the Wall Street Journal, plus 50 basis points, as adjusted monthly, for three months immediately following February 15, 2023, and thereafter at the US prime rate plus 300 basis points, as adjusted monthly.
For all applicable periods following February 15, 2023, interest shall accrue on the outstanding principal balance of the Notes at the US prime interest rate, as reported in the Wall Street Journal, plus 50 basis points, as adjusted monthly, for three months immediately following February 15, 2023, and thereafter at the US prime rate plus 300 basis points, as adjusted monthly.
Financing Activities Net cash provided by financing activities for the year ended December 31, 2022 was $620.2 million and primarily resulted from net proceeds of $99.9 million from the rights offering in August 2022, proceeds from promissory notes from related parties of $545.0 million, partially offset by the repayment of a promissory note from a related party of $25.0 million and $0.4 million of net proceeds from the exercise of stock options.
Net cash provided by financing activities for the year ended December 31, 2022 was $620.2 million and primarily resulted from net proceeds of $99.9 million from the rights offering in August 2022, proceeds from promissory notes from related parties of $545.0 million, partially offset by the repayment of a promissory note from a related party of $25.0 million and $0.4 million of net proceeds from the exercise of stock options.
In addition, our expenses will increase if and as we: • Invest in clinical development of ivonescimab in our Licensed Territory; • conduct research and continue development of additional product candidates; • maintain and augment our intellectual property portfolio and opportunistically acquire complimentary intellectual property; • seek further regulatory advancement for ivonescimab; • invest in our manufacturing capabilities for ivonescimab and any other products for which we may obtain regulatory approval; • seek marketing approvals for any product candidates that successfully complete clinical development; • ultimately establish a sales, marketing and distribution infrastructure in jurisdictions where we have retained commercialization rights and scale up external manufacturing capabilities to commercialize any product candidates for which we receive marketing approval; • perform our obligations under our collaboration agreements; • pursue business development opportunities, including investing in other businesses, products and technologies; • experience any delays or encounter any issues with any of the above, including but not limited to failed studies, complex results, safety issues or other regulatory challenges • hire additional clinical, regulatory, scientific and administrative personnel; • expand our physical presence; • add operational, financial and management information systems and personnel, including personnel to support our product development and planned future commercialization efforts; and • borrow capital to fund our resources and have to pay interest expenses on such borrowings.
In addition, our expenses will increase if and as we: • Invest in clinical development of ivonescimab in our Licensed Territory; • conduct research and continue development of additional product candidates; • maintain and augment our intellectual property portfolio and opportunistically acquire complimentary intellectual property; • seek further regulatory advancement for ivonescimab; • invest in our manufacturing capabilities for ivonescimab and any other products for which we may obtain regulatory approval; • seek marketing approvals for any product candidates that successfully complete clinical development; • ultimately establish a sales, marketing and distribution infrastructure in jurisdictions where we have retained commercialization rights and scale up external manufacturing capabilities to commercialize any product candidates for which we receive marketing approval; • perform our obligations under our collaboration agreements; • pursue business development opportunities, including investing in other businesses, products and technologies; • experience any delays or encounter any issues with any of the above, including but not limited to failed studies, complex results, safety issues or other regulatory challenges; • hire additional clinical, regulatory, scientific and administrative personnel; • expand our physical presence; 67 • add operational, financial and management information systems and personnel, including personnel to support our product development and planned future commercialization efforts; and • borrow capital to fund our resources and have to pay interest expenses on such borrowings.
Duggan rectified the Duggan February Note and Duggan September Note in order to correctly reflect the parties’ intent that the Company may only prepay (i) the Duggan February Note following the completion of a public rights offering to be conducted by Summit in the approximate amount of $500 million (the “Rights Offering”), or a similar capital raise, in an amount equal to the lesser of (x) the net proceeds of the Rights Offering or such capital raise or (y) the full amount outstanding of the Duggan February Note, and (ii) Duggan September Note following the completion of a capital raising transaction subsequent to the Rights Offering in an amount equal to the lesser of (i) the net proceeds of such capital raise or (ii) the full amount outstanding of the Duggan September Note.
Duggan rectified the Duggan February Note and Duggan September Note in order to correctly reflect the parties’ intent that the Company may only prepay (i) the Duggan February Note following the completion of a public rights offering to be conducted by Summit in the approximate amount of $500 million (the “Rights Offering”), or a similar capital raise, in an amount equal to the lesser of (x) the net proceeds of the Rights Offering or such capital raise or (y) the full amount outstanding of the Duggan February Note, and (ii) the Duggan September Note following the completion of a capital raising transaction subsequent to the Rights Offering in an amount equal to the lesser of (A) the net proceeds of such capital raise or (B) the full amount outstanding of the Duggan September Note.
The contract ran through April 2022 and was extended through December 2022 as a no cost contract, solely to close out open activities. As of December 31, 2022, based on translation of historical foreign currency amounts in the period, an aggregate of $59.2 million of cumulative income has been recognized since contract inception.
The contract ran through April 2022 and was extended through December 2022 as a no cost contract, solely to close out open activities. As of December 31, 2023, based on translation of historical foreign currency amounts in the period, an aggregate of $59.2 million of cumulative income has been recognized since contract inception.
Key Components of our Results of Operations Revenue Revenue consists of amounts received from the license and commercialization agreement with Eurofarma Laboratórios S.A. ("Eurofarma"). We have not generated any revenue from product sales. Under the terms of the license and commercialization agreement with Eurofarma, we received an upfront payment of $2.5 million in December 2017.
Key Components of our Results of Operations Revenue Revenue consists of amounts received from the license and commercialization agreement with Eurofarma Laboratórios S.A. (“Eurofarma”). We have not generated any revenue from product sales. Under the terms of the license and commercialization agreement with Eurofarma, we received an upfront payment of $2.5 million in December 2017.
The revenue was recognized ratably over the determined performance period to reflect the transfer of control to the customer occurring over the time period that the research 62 and development services were provided. This output method is, in management’s judgment, the best measure of progress towards satisfying the performance period.
The revenue was recognized ratably over the determined performance period to reflect the transfer of control to the customer occurring over the time period that the research and development services were provided. This output method is, in management’s judgment, the best measure of progress towards satisfying the performance period.
The simplified method calculates the expected term as the average of the time-to-vesting and the contractual life of the options. • Expected volatility—The expected volatility is calculated based on historical volatility of the Company's share price. • Risk-free interest rate—The risk-free rate assumption is based on the U.S.
The simplified method calculates the expected term as the average of the time-to-vesting and the contractual life of the options. • Expected volatility—The expected volatility is calculated based on historical volatility of the Company’s share price. 72 • Risk-free interest rate—The risk-free rate assumption is based on the U.S.
The Company classifies stock-based compensation expense in the consolidated statements of operations in the same manner in which the award recipient’s payroll costs are classified. 75 Income Taxes The provision for income taxes is determined using the asset and liability approach.
The Company classifies stock-based compensation expense in the consolidated statements of operations in the same manner in which the award recipient’s payroll costs are classified. Income Taxes The provision for income taxes is determined using the asset and liability approach.
Additional debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends or other distributions.
Additional debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as 68 incurring additional debt, making capital expenditures or declaring dividends or other distributions.
Based on criteria established by His Majesty’s Revenue and Customs ("HMRC"), a portion of expenditures being carried out in relation to our pipeline research and development, clinical trials management and third-party manufacturing development activities are eligible for the SME regime and we expect such elements of research and development expenditure incurred in our UK entities will also continue to be eligible for the SME regime for future periods.
Based on criteria established by His Majesty’s Revenue and Customs (“HMRC”), a portion of expenditures being carried out in relation to our pipeline research and development, clinical trials management and third-party manufacturing development activities are eligible for the SME regime and we expect such elements of research and development expenditure incurred in our UK entities will also continue to be eligible for the SME regime for future periods.
In addition, if the Company shall consummate a public offering, then upon the later to occur of (i) five business days after the Company receives the net cash proceeds therefrom or (ii) May 15, 2023, the Duggan February Note and the Zanganeh Note shall be prepaid by an amount equal to the lesser of (a) 100% of the amount of the net proceeds of such offering and (b) the outstanding principal amount on such Notes.
In addition, if the Company consummates a public offering, then upon the later to occur of (i) five business days after the Company receives the net cash proceeds therefrom or (ii) May 15, 2023, the Duggan February Note and the Zanganeh Note shall be prepaid by an amount equal to the lesser of (a) 100% of the amount of the net proceeds of such offering and (b) the outstanding principal amount on such Notes.
Our future capital requirements will depend on many factors, including: • the costs, timing and outcome of clinical trials required for clinical development of ivonescimab; • the number and development requirements of other future product candidates that we pursue; • the costs, timing and outcome of regulatory review of ivonescimab and/or our other product candidates we develop; • the costs and timing of commercialization activities, including product sales, marketing, distribution and manufacturing, for any of our product candidates that receive marketing approval; • the extent to which we become liable for milestone payments under our Licensing Agreement for ivonescimab; • subject to receipt of marketing approval, revenue received from commercial sales of any product candidates; 69 • the costs and timing of preparing, filing and prosecuting patent applications, maintaining and protecting our intellectual property rights and defending against any intellectual property-related claims; • our ability to establish and maintain collaborations, licensing or other arrangements and the financial terms of such arrangements; • the extent to which we acquire or invest in other businesses, products and technologies; • the rate of the expansion of our physical presence; and • the extent to which we change our physical presence.
Our future capital requirements will depend on many factors, including: • the costs, timing and outcome of clinical trials required for clinical development of ivonescimab; • the costs, timing and outcome of activities related to development, validation, manufacturing and establishment of supply chain for ivonescimab; • the number and development requirements of other future product candidates that we pursue; • the costs, timing and outcome of regulatory review of ivonescimab and/or our other product candidates we develop; • the costs and timing of commercialization activities, including product sales, marketing, distribution and manufacturing, for any of our product candidates that receive marketing approval; • the extent to which we become liable for milestone payments under our Licensing Agreement for ivonescimab; • subject to receipt of marketing approval, revenue received from commercial sales of any product candidates; • the costs and timing of preparing, filing and prosecuting patent applications, maintaining and protecting our intellectual property rights and defending against any intellectual property-related claims; • our ability to establish and maintain collaborations, licensing or other arrangements and the financial terms of such arrangements; • the extent to which we acquire or invest in other businesses, products and technologies; • the rate of the expansion of our physical presence; and • the extent to which we change our physical presence.
As of December 31, 2022, we are unable to estimate the amount, timing or likelihood of achieving the milestones, making future product sales or assessing estimated forecasts for manufacturing and supplied materials which these contingent payment obligations relate to.
As of December 31, 2023, we are unable to estimate the amount, timing or likelihood of achieving the milestones, making future product sales or assessing estimated forecasts for manufacturing and supplied materials which these contingent payment obligations relate to.
Recent Accounting Pronouncements For a discussion of recent accounting pronouncements, please see Note 5 to our consolidated financial statements contained in this Annual Report on Form 10-K. 76
Recent Accounting Pronouncements For a discussion of recent accounting pronouncements, please see Note 5 to our consolidated financial statements contained in this Annual Report on Form 10-K. 73
On February 15, 2023, the $20 million Zanganeh Note matured and the Company repaid the outstanding principal balance. In connection with the closing of the Rights Offering, the $400 million Duggan Promissory Note matured and became due, and the Company repaid all principal and accrued interest thereunder using a portion of the proceeds from this Rights Offering.
On February 15, 2023, the $20 million Zanganeh Note matured and we repaid the outstanding principal balance. In connection with the closing of the Rights Offering, the $400 million Duggan Promissory Note matured and became due, and we repaid all principal and accrued interest thereunder using a portion of the proceeds from the Rights Offering.
Contractual Obligations and Commitments Fixed asset purchase commitments At December 31, 2022 and 2021, we had no capital commitments. Lease commitments The following table summarizes our lease contractual obligations as of December 31, 2022.
Contractual Obligations and Commitments Fixed asset purchase commitments At December 31, 2023 and 2022, we had no capital commitments. Lease commitments The following table summarizes our lease contractual obligations as of December 31, 2023.
This section provides an analysis of our financial results for the year ended December 31, 2022 compared to the same period in the prior year.
This section provides an analysis of our financial results for the year ended December 31, 2023 compared to the same period in the prior year.
The maturity dates of the December 2022 Notes could be extended one or more times at the Company’s election, but in no event to a date later than September 6, 2024.
The maturity dates of the December 2022 Notes could have been extended one or more times at the Company’s election, but in no event to a date later than September 6, 2024.
Such prepaid interest shall be paid in a number of shares of the Company’s Common Stock, equal to the dollar amount of such prepaid interest, divided by $0.7913 (the consolidated closing bid price immediately preceding the time the Company entered into the Note Purchase Agreement, plus $.01), which was 9,720,291 shares.
Such prepaid interest shall be paid in a number of shares of the Company’s common stock, par value $0.01 (“Common Stock”) equal to the dollar amount of such prepaid interest, divided by $0.7913 (the 70 consolidated closing bid price immediately preceding the time the Company entered into the Note Purchase Agreement, plus $.01), which was 9,720,291 shares.
Cash Flows The following table summarizes the results of our cash flows for the years ended December 31, 2022 and 2021.
Cash Flows The following table summarizes the results of our cash flows for the years ended December 31, 2023 and 2022.
We have not completed the development of any drugs. We expect to continue to incur significant expenses and increasing operating losses for at least the next few years. The net losses we incur may fluctuate significantly from quarter to quarter and year to year, due to the nature and timing of our research and development activities.
We expect to continue to incur significant expenses and increasing operating losses for at least the next few years. The net losses we incur may fluctuate significantly from quarter to quarter and year to year, due to the nature and timing of our research and development activities.
Other expense, net Other expense, net primarily consists of foreign currency net gains and losses, cash and imputed interest expense incurred related to our promissory notes to related parties, investment income related to our money market fund and investments in highly liquid U.S. treasury securities and interest income on restricted cash.
Other expense, net Other expense, net primarily consists of foreign currency net gains and losses, cash and imputed interest expense incurred related to our promissory notes to related parties and investment income related to investments in money market funds and U.S. treasury securities.
Following the issuance of the “Duggan Promissory Notes, the Duggan February Note and Duggan September Note were marked as “cancelled” on their face and replaced in their entirety by the Notes. The Notes accrue interest at an initial rate of 7.5%.
Following the issuance of the two new Promissory Notes (the “Duggan Promissory Notes”), the Duggan February Note and Duggan September Note were marked as “cancelled” on their face and replaced in their entirety by the Duggan Promissory Notes (together with the Zanganeh Note, the “Notes”). The Notes accrue interest at an initial rate of 7.5%.
The net decrease in working capital was primarily due to a $8.4 million decrease in the research and development tax credit receivable, a $4.8 million increase in accrued liabilities and accrued compensation, a $5.1 million decrease in prepaid expenses, partially offset by a $7.3 million decrease in deferred revenue and other income and a $4.1 million decrease in accounts payable.
The net decrease in working capital primarily includes an $8.4 million decrease in research and development tax credit receivable, a $5.1 million decrease in prepaid expenses, a $4.8 million increase in accrued liabilities, and a $1.6 million increase in accrued compensation, partially offset by a $7.3 million decrease in deferred revenue and income, a $4.1 million decrease in accounts payable, and a $1.1 million decrease in lease liabilities.
On December 6, 2022, the Company entered into a Note Purchase Agreement, with Mr. Duggan and Dr. Zanganeh, pursuant to which the Company agreed to sell to each of Mr. Duggan and Dr. Zanganeh unsecured promissory notes in the aggregate amount of $520 million. Pursuant to the Note Purchase Agreement, the Company issued to Mr. Duggan and Dr.
Debt commitments On December 6, 2022, we entered into a Note Purchase Agreement (the “Note Purchase Agreement”), with Mr. Robert Duggan and Dr. Maky Zanganeh, pursuant to which the Company agreed to sell to each of Mr. Duggan and Dr. Zanganeh unsecured promissory notes in the aggregate amount of $520 million.
If we are unable to raise additional funds through equity or debt financings or other arrangements when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.
If we are unable to raise additional funds through equity or debt financings or other arrangements when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves, which could materially adversely affect our business prospects or our ability to continue operations.
We have also received income from research and development ("R&D") tax credits, which consist of the R&D tax credit received in the United Kingdom ("U.K."). We benefit from two U.K. research and development tax credit cash rebate regimes: Small and Medium Enterprise Program ("SME Program") and the Research and Development Expenditure Credit Program ("RDEC Program").
We have also received income from research and development (“R&D”) tax credits, which consist of the R&D tax credit received in the United Kingdom (“U.K.”). We benefit from two U.K. research and development tax credit cash rebate regimes: Small and Medium Enterprise Program (“SME Program”) and the Research and Development Expenditure Credit Program (“RDEC Program”).
U.K. research and development tax credits decreased by $10.7 million for the year ended December 31, 2022, compared to the same period in the prior year, due to a decrease in clinical and manufacturing activity spend associated with the ridinilazole Phase III clinical program, which was ceased during the third quarter of 2022, and resulted in a decrease in tax credits claimed, coupled with a decrease in eligible expenses claimed due to recent changes in tax legislation.
U.K. research and development tax credits decreased by $3.5 million for the year ended December 31, 2023, compared to the same period in the prior year, due to a decrease in clinical and manufacturing activity spend associated with the ridinilazole Phase III clinical program, which resulted in a decrease in tax credits claimed in the U.K., coupled with a decrease in eligible expenses claimed due to recent changes in U.K. tax legislation.
These include: 63 • costs incurred in conducting our preclinical studies and clinical trials through contract research organizations, including preclinical toxicology, pharmacology, formulation and manufacturing work; • laboratory and vendor expenses incurred in relation to our preclinical and non-clinical studies; • costs incurred in supply chain development and scale up activities to support product registration; • employee related expenses, which include salary, benefits and stock-based compensation, for our research and development staff; and • facilities, depreciation and other expenses, which include direct and allocated expenses for rent and maintenance of facilities, insurance and other supplies.
These include: • costs incurred in conducting our preclinical studies and clinical trials through contract research and development organizations, including, but not limited to, preclinical toxicology, pharmacology, formulation and manufacturing work, as well as regulatory, operational, drug supply and treatment costs related to conducting the study; • laboratory and vendor expenses incurred in relation to our preclinical, non-clinical and clinical studies; • costs incurred in supply chain development and scale up activities to support product registration; • employee related expenses, which include salary, benefits and stock-based compensation, for our research and development staff; • costs incurred in development and conduct of training and education related our development candidates; and • facilities, depreciation and other expenses, which include direct and allocated expenses for rent and maintenance of facilities, insurance and other supplies.
Legal Proceedings We are not currently subject to any material legal proceedings. 72 Critical Accounting Policies and Significant Judgments and Estimates Our management’s discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with United States generally accepted accounting principles.
Critical Accounting Policies and Significant Judgments and Estimates Our management’s discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with United States generally accepted accounting principles.
We believe the fair value for these indemnification obligations is minimal. Accordingly, we have not recognized any liabilities relating to these obligations as of December 31, 2022.
We believe the fair value for these indemnification obligations is minimal. Accordingly, we have not recognized any liabilities relating to these obligations as of December 31, 2023. Legal Proceedings We are not currently subject to any material legal proceedings.
General and Administrative Expenses (in millions) Year Ended December 31, 2022 December 31, 2021 $ Change Compensation related costs $ 11.5 $ 9.7 $ 1.8 Stock-based compensation 7.6 6.9 0.7 Legal and professional fees 3.7 2.6 1.1 Other general and administrative expenses 3.9 4.4 (0.5) Total $ 26.7 $ 23.6 $ 3.1 General and administrative expenses increased by $3.1 million, compared to the same period in the prior year, primarily due to an increase of $1.8 million in compensation related costs and an increase of $0.7 million in stock-based compensation as the Company is focused on building our executive management team to support the growth of the Company, and an increase of $1.1 million in legal and professional fees to support our financings and business development efforts during the year.
(in millions) Year Ended December 31, 2023 December 31, 2022 $ Change Compensation related costs, excluding stock-based compensation $ 10.1 $ 9.7 $ 0.4 Stock-based compensation 9.7 7.6 2.1 Legal fees and professional services (1) 6.9 5.5 1.4 Other general and administrative expenses 3.6 3.9 (0.3) Total $ 30.3 $ 26.7 $ 3.6 General and administrative expenses increased by $3.6 million for the year ended December 31, 2023, compared to the same period in the prior year, primarily due to an increase of $2.1 million in stock-based compensation as the Company is focused on building its executive management team to continue supporting the growth of the Company, and an increase of $1.4 million in legal and professional services related to corporate projects and transactions.
Management have concluded that this indicated the carrying amount of the acquired Discuva Platform intangible asset may not be recoverable and hence performed an assessment using a probability-weighted approach to determine the undiscounted cash flows of the asset, which indicated that an impairment exists.
Management also concluded that this indicated the carrying amount of the acquired Discuva Platform intangible asset may not be recoverable and performed an assessment to calculate the fair value of the asset using a probability-weighted approach which was compared to the carrying value of the asset.
In September 2017, we were awarded a funding contract from the Biomedical Advanced Research and Development Authority ("BARDA"), part of the Office of the Assistant Secretary for Preparedness and Response at the United States Department of Health and Human Services, in support of our Ri-CoDIFy clinical trials and clinical development of ridinilazole.
In September 2017, we were awarded a contract from the Biomedical Advanced Research and Development Authority (“BARDA”), part of the Office of the Assistant Secretary for Preparedness and Response at the United States Department of Health and Human Services, to fund, in part, the clinical and regulatory development of ridinilazole for the treatment of infections caused by C. difficile .
We expect that our research and development and general and administrative expenses will continue to be significant in connection with our ongoing research and development efforts. As a result, we will need to seek additional funding in the future to fund operations.
We expect that our research and development and general and administrative expenses will continue to be significant in connection with our ongoing research and development efforts.
The Management's Discussion and Analysis of Financial Condition and Results of Operations, or MD&A, describes principal factors affecting the results of our operations, financial condition and liquidity, as well as our critical accounting policies and estimates that require significant judgment and thus have the most significant potential impact on our Consolidated Financial Statements.
Risk Factors” of this Annual Report on Form 10-K, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. 60 The Management’s Discussion and Analysis of Financial Condition and Results of Operations, or MD&A, describes principal factors affecting the results of our operations, financial condition and liquidity, as well as our critical accounting policies and estimates that require significant judgment and thus have the most significant potential impact on our Consolidated Financial Statements.
Our future operations will be focused on the development of ivonescimab and other future activities as the Company determines.
The License Agreement and transaction closed in January 2023 following customary waiting periods. Our operations will be focused on the development of ivonescimab and other future activities, as the Company determines.
This revenue was recognized ratably over the performance period the research and development services were provided. The decrease for the year ended December 31, 2022 compared to the same period in the prior year is attributed to the achievement of a milestone related to this agreement in September of 2021.
This revenue was recognized ratably over the determined performance period that the research and development services were provided. The decrease for the year ended December 31, 2023 compared to the same period in the prior year is attributed to the total milestones received of $4.8 million being fully recognized ratably over the determined performance period, which ended during 2022.
As of December 31, 2022, total contractual commitments, excluding leases 71 commitments and debt commitments, are estimated to be approximately $11.5 million and the majority of these commitments are due within one year.
Most contracts provide for termination upon notice, and therefore are cancellable contracts. As of December 31, 2023, total contractual commitments, excluding leases commitments and debt commitments, are estimated to be approximately $37.7 million and the majority of these commitments are due within one year.
Impairment of Intangible Assets In December 2017, we expanded our activities in the field of infectious diseases with the acquisition of Discuva Limited, a privately held United Kingdom-based company. Through this acquisition, we obtained a bacterial genetics platform and a suite of software-based technologies (collectively termed our “Discuva Platform”), which facilitates the discovery and development of new mechanism antibiotics.
Through this acquisition, we obtained a bacterial genetics platform and a suite of software-based technologies (collectively termed our “Discuva Platform”), which facilitates the discovery and development of new mechanism antibiotics.
Net cash used in operating activities for the year ended December 31, 2021 was $72.6 million and resulted from a net loss of $88.6 million, which included non-cash charges of $16.1 million, which is primarily comprised of $12.8 million of stock-based compensation, and a $0.1 million net increase in working capital.
Net cash used in operating activities for the year ended December 31, 2022 was $41.6 million and resulted from a net loss of $78.8 million, which included non-cash charges of $28.6 million and a $8.6 million net decrease in working capital.
The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, and expenses and the disclosure of contingent assets and liabilities in our financial statements.
The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, and expenses and the disclosure of contingent assets and liabilities in our financial statements. On an ongoing basis, we evaluate our estimates and judgments, including those related to accrued research and development expenses, stock-based compensation and income taxes.
Actual results may differ from these estimates under different assumptions or conditions. We believe the following critical accounting policies affect the most significant judgments, assumptions and estimates we use in preparing the consolidated financial statements: Revenue Recognition The Company accounts for revenue using Accounting Standards Codification ("ASC") 606 ("ASC 606").
Actual results may differ from these estimates under different assumptions or conditions. 71 We believe the following critical accounting policies affect the most significant judgments, assumptions and estimates we use in preparing the consolidated financial statements: Acquired In-Process Research and Development The Company may enter into agreements with collaboration partners for the development and commercialization of its products.
These payments were initially reported as deferred revenue in the balance sheet and were recognized as revenue ratably over the determined performance period. Revenue recognized during the years ended December 31, 2022 and 2021 related to the upfront payment and the first two enrollment milestones earned in accordance with our revenue recognition policy.
Revenue recognized during the year ended December 31, 2022 related to the upfront payment and the first two enrollment milestones earned in accordance with our revenue 61 recognition policy.
Other commitments We enter into contracts in the normal course of business with various third parties for clinical trials, preclinical research studies and testing, manufacturing and other services and products for operating purposes. Most contracts provide for termination upon notice, and therefore are cancellable contracts.
The estimated future principal payments are $0 and $100,000,000 for 2024 and 2025, respectively, as the note matures on April 1, 2025. Other commitments We enter into contracts in the normal course of business with various third parties for clinical trials, preclinical research studies and testing, manufacturing and other services and products for operating purposes.
As a result, the current arrangement concluded as of June 30, 2022, however we have the ability to recognize reimbursements for any milestone payments related to work incurred subsequent to this date in accordance with this agreement. Operating Expenses The majority of our operating expenses since inception have consisted of research and development activities and general and administrative costs.
During the quarter ended September 30, 2022, CARB-X announced changes to its funding arrangements and terms and conditions. As a result, the current arrangement concluded as of June 30, 2022, however we have the ability to recognize reimbursements for any milestone payments related to work incurred subsequent to this date in accordance with this agreement.
Research and Development Expenses Research and development expenses consist of all costs associated with our research and development activities.
Operating Expenses The majority of our operating expenses since inception have consisted of research and development activities and general and administrative costs. 62 Research and Development Expenses Research and development expenses consist of all costs associated with our research and development activities.
Zanganeh the unsecured Duggan February Note in the amount of $400 million and $20 million Zanganeh Note, respectively, which would mature and become due on February 15, 2023 and an unsecured Duggan September Note to Mr. Duggan in the amount of $100 million, which will mature and become due on September 15, 2023.
Pursuant to the Note Purchase Agreement, the Company issued to Mr. Duggan and Dr. Zanganeh unsecured promissory notes in the amount of $400 million (the “Duggan February Note”) and $20 million (the “Zanganeh Note”), respectively, which matured and became due on February 15, 2023 and an unsecured promissory note to Mr.
As of December 31, 2022, based on translation of historical foreign currency amounts in the period, $2.9 million of cumulative income has been recognized since contract inception. During the quarter ended September 30, 2022, CARB-X announced changes to its funding arrangements and terms and conditions.
The award committed initial funding of up to $4.1 million with the possibility of up to another $3.7 million based on the achievement of future milestones. As of December 31, 2023, based on translation of historical foreign currency amounts in the period, $2.9 million of cumulative income has been recognized since contract inception.
During the year ended December 31, 2022, we incurred a net loss of $78.8 million, and cash flows used in operating activities was $41.6 million.
During the year ended December 31, 2023, we incurred a net loss of $614.9 million, and cash flows used in operating activities was $76.8 million. As of December 31, 2023 we had an accumulated deficit of $993.3 million, cash and cash equivalents and short-term investments in U.S. treasury securities of $186.2 million.
The net increase in working capital was primarily due to a $6.0 million increase in the research and development tax credit receivable, a $1.7 million decrease in accounts payable, a $1.1 million increase in accounts receivable, a $1.1 million decrease in lease liabilities and a $0.8 million decrease in deferred revenue, partially offset by a $8.2 million increase in accrued liabilities and accrued compensation and a $2.3 million decrease in prepaid expenses. 70 Investing Activities Net cash used in investing activities for the years ended December 31, 2022 and 2021of $0.6 million and $0.3 million, respectively, was for the purchase of property and equipment.
The net increase in working capital is primarily due to a $3.7 million increase in other long-term assets, a $2.4 million decrease in accrued liabilities, and a $2.2 million decrease in lease liabilities , partially offset by a $4.2 million decrease in the research and development tax credit receivable and a $2.3 million increase in accounts payable.
(in millions) Year Ended December 31, 2022 Year Ended December 31, 2021 Net cash used in operating activities $ (41.6) $ (72.6) Net cash used in investing activities $ (0.6) $ (0.3) Net cash provided by financing activities $ 620.2 $ 77.9 Operating Activities Net cash used in operating activities for the year ended December 31, 2022 was $41.6 million and resulted from a net loss of $78.8 million, which included non-cash charges of $37.2 million, which is primarily comprised of $11.9 million of stock-based compensation, $8.5 million impairment charge, $4.3 million non-cash interest expense, $2.5 million of amortization and depreciation charges, $2.6 million unrealized foreign exchange loss and a $8.6 million net decrease in working capital.
(in millions) Year Ended December 31, 2023 Year Ended December 31, 2022 Net cash used in operating activities $ (76.8) $ (41.6) Net cash used in investing activities $ (587.8) $ (0.6) Net cash provided by financing activities $ 86.5 $ 620.2 Operating Activities Net cash used in operating activities for the year ended December 31, 2023 was $76.8 million and resulted from a net loss of $614.9 million, which included an adjustment of $475.0 million in cash payments related to investing activities for the purchase of in-process research and development from Akeso under the terms of the License Agreement and the associated direct transaction costs and non-cash charges of $65.5 million and a net increase in working capital of $2.4 million.
In particular, we have received funding from BARDA, CARB-X, Innovate UK, Wellcome Trust and a number of not-for-profit organizations. On March 24, 2021, pursuant to an unsecured promissory note we received net proceeds of $55.0 million.
In particular, we have received funding from BARDA, CARB-X, Innovate UK, Wellcome Trust and a number of not-for-profit organizations. We have devoted substantially all of our efforts to research and development, including clinical trials. We have not completed the development of any drugs.
Grant income received from CARB-X increased by $0.6 million for the year ended December 31, 2022, compared to the same period in the prior year due to an increase in spend to progress the preclinical candidate SMT-738 from the DDS-04 series for development in the fight against multidrug resistant infections, specifically CRE infections.
Grant income received from CARB-X decreased by $1.8 million for the year ended December 31, 2023, compared to the same period in the prior year due to the CARB-X arrangement for our preclinical candidate SMT-738 concluding in 2022. We do not expect further income under this arrangement.
Simultaneously, we received an award from the Trustees of Boston University under the Combating Antibiotic Resistant Bacteria Biopharmaceutical Accelerator program ("CARB-X") to progress this candidate through preclinical development and Phase Ia clinical trials. The award commits initial funding of up to $4.1 million with the possibility of up to another $3.7 million based on the achievement of future milestones.
In May 2021, we started development of a new preclinical candidate, SMT-738, for development in the fight against multi-drug resistant infections, specifically Carbapenem-resistant Enterobacteriaceae (“CRE”) infections. Simultaneously, we received an award from the Trustees of Boston University under the Combating Antibiotic Resistant Bacteria Biopharmaceutical Accelerator program (“CARB-X”) to progress this candidate through preclinical development and Phase Ia clinical trials.
Ivonescimab, known as AK112 in China and Australia, and also as SMT112 in the United States, Canada, Europe, and Japan, is a novel, potential first-in-class bispecific antibody intending to combine the benefits of immunotherapy via a blockade of PD-1 with the anti-angiogenesis benefits of an anti-VEGF into a single molecule.
Our pipeline of product candidates is designed with the goal to become the patient-friendly, new-era standard-of-care medicines, in the therapeutic area of oncology. Our current lead development candidate is ivonescimab, a novel, potential first-in-class bispecific antibody intending to combine the effects of immunotherapy via a blockade of PD-1 with the anti-angiogenesis effects of an anti-VEGF compound into a single molecule.
This impairment charge is presented as impairment of intangible assets in the consolidated statements of operations and comprehensive loss. 66 Other Operating Income Other operating income is comprised of the following: (in millions) Year Ended December 31, 2022 December 31, 2021 $ Change Funding income from BARDA $ 8.1 $ 4.6 $ 3.5 Research and development tax credits 4.5 15.2 (10.7) Grant income from CARB-X 1.8 1.2 0.6 Total $ 14.4 $ 21.0 $ (6.6) Funding income from BARDA increased by $3.5 million for the year ended December 31, 2022, compared to the same period in the prior year, primarily due to the accrual of the remaining clinical trial costs associated with ridinilazole as a result of our decision to seek partners or a divestiture related to ridinilazole as the path forward for the clinical development of the asset.
Other Operating Income The table below summarizes our other operating income by category for the year ended December 31, 2023 and 2022, respectively: (in millions) Year Ended December 31, 2023 December 31, 2022 $ Change Funding income from BARDA $ — $ 8.1 $ (8.1) Research and development tax credits 1.0 4.5 (3.5) Grant income from CARB-X — 1.8 (1.8) Total $ 1.0 $ 14.4 $ (13.4) Funding income from BARDA decreased by $8.1 million for the year ended December 31, 2023, compared to the same periods in the prior year, due to management’s decision to terminate all prior development and marketing activities related to ridinilazole.
SMT-738 is the first of a novel class of precision antibiotics that has been in preclinical development and has been undergoing investigational new drug (“IND”) enabling activities. We will continue to pursue partnerships for further development of SMT-738. We have devoted substantially all of our efforts to research and development, including clinical trials.
All prior development and marketing activities related to ridinilazole have been terminated. Our anti-infectives portfolio includes SMT-738, the first of a novel class of precision antibiotics for combating multidrug resistant infections, specifically carbapenem-resistant Enterobacteriaceae (“CRE”) infections. We will continue to pursue partnerships for further development of SMT-738.
The last day of the fiscal year following the fifth anniversary of our initial public offering in March 2015 was December 31, 2020, hence we have ceased to be an emerging growth company. 64 Results of Operations Comparison of the Year Ended December 31, 2022 to the Year Ended December 31, 2021 (in millions) Year Ended December 31, 2022 December 31, 2021 $ Change Revenue $ 0.7 $ 1.8 $ (1.1) Operating expenses: Research and development 52.0 85.4 (33.4) General and administrative 26.7 23.6 3.1 Impairment of intangible assets 8.5 — 8.5 Total operating expenses 87.2 109.0 (21.8) Other operating income 14.4 21.0 (6.6) Operating loss (72.1) (86.2) 14.1 Other expense, net (6.7) (2.4) (4.3) Loss before income taxes (78.8) (88.6) 9.8 Net loss $ (78.8) $ (88.6) $ 9.8 Revenue Revenue for the years ended December 31, 2022 and 2021 relates to revenue from our license and commercialization agreement with Eurofarma Laboratórios S.A ("Eurofarma").
We have recorded a full valuation allowance against the deferred tax assets with respect to these tax losses in excess of our deferred tax liabilities in each jurisdiction because we do not consider it more likely than not that there will be suitable taxable profits in the foreseeable future based on the evidence available against which to offset these losses. 63 Results of Operations Comparison of the Year Ended December 31, 2023 to the Year Ended December 31, 2022 (in millions) Year Ended December 31, 2023 December 31, 2022 $ Change Revenue $ — $ 0.7 $ (0.7) Operating expenses: Research and development 59.4 52.0 7.4 In-process research and development 520.9 — 520.9 General and administrative 30.3 26.7 3.6 Impairment of intangible assets — 8.5 (8.5) Total operating expenses 610.6 87.2 523.4 Other operating income 1.0 14.4 (13.4) Operating loss (609.6) (72.1) (537.5) Other expense, net (5.3) (6.7) 1.4 Loss before income taxes (614.9) (78.8) (536.1) Net loss $ (614.9) $ (78.8) $ (536.1) Revenue Revenue for the year ended December 31, 2022 relates to revenue from our license and commercialization agreement with Eurofarma Laboratórios S.A. for ridinilazole, the Company’s product candidate for treating patients suffering from Clostridioides difficile infection, also known as C. difficile infection .
Our pipeline of product candidates is designed with the goal to become the patient-friendly, new-era standard-of-care medicines, in the therapeutic area of oncology. On December 5, 2022, we entered into a Collaboration and License Agreement (the “License Agreement”) with Akeso, Inc. and its affiliates (“Akeso”) pursuant to which we are partnering with Akeso to in-license its breakthrough bispecific antibody, ivonescimab.
On December 5, 2022, we entered into a Collaboration and License Agreement (the “License Agreement”) with Akeso, Inc. and its affiliates (“Akeso”) pursuant to which the Company has in-licensed ivonescimab. Through the License Agreement, we obtained the rights to develop and commercialize ivonescimab in the United States, Canada, Europe, and Japan (the “Licensed Territory”).
Payment due by period (in millions) Total Less than 1 year Between 1 and 3 years Between 3 and 5 years More than 5 years Operating lease obligations $4.9 $1.5 $3.4 $ — $ — Debt commitments December 2022 Promissory Notes On December 6, 2022, we entered into the Note Purchase Agreement, with Mr. Duggan and Dr.
Payment due by period (in millions) Total Less than 1 year Between 1 and 3 years Between 3 and 5 years More than 5 years Operating lease obligations $6.6 $2.8 $3.8 $ — $ — The table above does not include the lease agreement signed by the Company on January 8, 2024 for executive office space for its new headquarters in Miami, Florida.
Net cash provided by financing activities for the year ended December 31, 2021, was $77.9 million and primarily resulted from net proceeds of $74.8 million from the rights offering in May 2021, proceeds from the promissory notes from a related party of $110.0 million, partially offset by repayments of the promissory notes from a related party of $110.0 million and $3.1 million of net proceeds received from the exercise of stock options.
Financing Activities Net cash provided by financing activities for the year ended December 31, 2023 was $86.5 million and was primarily due to net proceeds received of $104.1 million (net of paid issuance costs) related to the issuance of common stock from the 2023 Rights Offering and net of the extinguishment of $395.3 million of principal and accrued interest due and payable by us under 69 the $400 million Duggan Promissory Note in satisfaction of the subscription price for the shares subscribed by Mr.
Based on the assessment to compare the fair value of the asset to its carrying amount, an impairment charge of $8.5 million was recognized during the year ended December 31, 2022, representing the aggregate carrying amount of the intangible asset.
An impairment charge of $8.5 million which represented the carrying value of the Discuva Platform was recognized for the year ended December 31, 2022. This impairment charge is presented as impairment of intangible assets in the consolidated statements of operations and comprehensive loss.
On September 28, 2022, we determined that we would seek partners or a divestiture of ridinilazole, our lead product candidate for treating patients suffering from Clostridioides difficile infection, also known as C. difficile infection, or CDI, as the path forward for the clinical development of the asset.
The entry into the License Agreement with Akeso represents a significant change in our strategy and its future operations will be focused on the development of ivonescimab and other future activities as the Company determines. Our portfolio includes ridinilazole, a product candidate for treating patients suffering from Clostridioides difficile infection, also known as C. difficile infection, or CDI.
Zanganeh the Duggan February Note and the Zanganeh Note, respectively, which would mature and become due on February 15, 2023 and the Duggan September Note to Mr. Duggan, which will mature and become due on September 15, 2023.
Duggan in the amount of $100 million (the “Duggan September Note” and together with the Duggan February Note and the Zanganeh Note, the “December 2022 Notes”), which was originally due on September 15, 2023.
Removed
Risk Factors” of this Annual Report on Form 10-K, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
Added
We have begun our development for ivonescimab in non-small cell lung cancer (“NSCLC”), specifically launching Phase III clinical trials in the following indications: a) ivonescimab combined with chemotherapy in patients with epidermal growth factor receptor (“EGFR”)-mutated, locally advanced or metastatic non-squamous NSCLC who have progressed after treatment with a third-generation EGFR tyrosine kinase inhibitor (“TKI”) (“HARMONi”); and b) ivonescimab combined with chemotherapy in first-line metastatic squamous NSCLC patients (“HARMONi-3”) As of the date of these financial statements, both studies are enrolling patients.
Removed
Ivonescimab was engineered to bring two well established oncology targeted mechanisms together. Through the License Agreement, we obtained the rights to develop and commercialize SMT112 in the United States, Canada, Europe, and Japan (the “Licensed Territory”). The License Agreement and transaction closed on January 17, 2023 following customary waiting periods.
Added
These payments were initially reported as deferred revenue in the balance sheet and were recognized as revenue ratably over the determined performance period. There was no revenue recognized for the year ended December 31, 2023.
Removed
The entry into the License Agreement represents a significant change in the Company’s strategy. All prior development and marketing activities relating to ridinilazole are being terminated. All business activities related to anti-infectives are being reviewed for partnership opportunities for potential further development.
Added
The contract provides for a cost-sharing arrangement under which BARDA funded a specified portion of estimated costs for the continued clinical and regulatory development of ridinilazole for CDI. Under this cost sharing arrangement, we were responsible for a portion of the costs associated with each segment of work, including any costs in excess of the estimated amounts.
Removed
As a result of this determination, we discontinued our only active study for 61 ridinilazole, a pediatric clinical trial evaluating ridinilazole for treating adolescent patients with CDI. We are currently involved in activities related to closeout of ridinilazole clinical trials. Our other product candidate, SMT-738, has been in development for combating multidrug resistant infections, specifically carbapenem-resistant Enterobacteriaceae (“CRE”) infections.
Added
The awarded contract, as amended in 2019 and 2020, provided for total award up to $72.5 million, and total amount of committed funding to $62.4 million. As of December 31, 2023, based on translation of historical foreign currency amounts in the period, the Company has recognized $59.2 million of cumulative income since contract inception.
Removed
We may be unable to raise sufficient funds through equity or debt financings, or other arrangements when needed based on our liquidity needs acceptable terms, or at all. Recent Developments In addition to the events detailed in the Company Overview section above, the following other recent developments have occurred.
Added
We are currently not anticipating receipt of additional milestone payments under this agreement given Company’s determination that it would seek partners or a divestiture of ridinilazole as the path forward for the clinical development of the asset.
Removed
On February 15, 2023, the $20 million Zanganeh Note matured and the Company repaid the outstanding principal balance. On March 1, 2023, we closed our Rights Offering, which was fully subscribed. We received aggregate gross proceeds from the Rights Offering of $500 million from the sale of 476,190,471 shares of our common stock at a price per share of $1.05.
Added
Operating Expenses Research and Development Expenses The table below summarizes our research and development expenses by category for the year ended December 31, 2023 and 2022, respectively.
Removed
Issuance costs associated with the Rights Offering were approximately $0.5 million. In connection with the closing of the Rights Offering, a promissory note with the principal amount of $400 million, issued by us to our Executive Chairman and Chief Executive Officer, Mr.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

6 edited+2 added−0 removed10 unchanged
Biggest changeTo minimize this risk, we maintain our portfolio of cash, cash equivalents which is invested in a variety of short term securities, including money market funds and investments in highly liquid U.S. treasury securities.
Biggest changeTo minimize this risk, we maintain our portfolio of cash, cash equivalents and short-term investments which are invested in a variety of short term securities, including money market funds and investments in U.S. treasury securities.
Operating transaction foreign currency gains and losses are included in the determination of net income in our statements of operations. We monitor our exposure to foreign currency exchange rate risk. Exposures are generally managed through natural hedging via the currency denomination of cash balances and any impact currently is not material to us.
Operating transaction foreign currency gains and losses are included in the determination of net loss in our statements of operations. We monitor our exposure to foreign currency exchange rate risk. Exposures are generally managed through natural hedging via the currency denomination of cash balances and any impact currently is not material to us.
For all applicable periods following the February 15, 2023, interest shall accrue on the outstanding principal balance at the United States prime interest rate, as reported in the Wall Street Journal, plus 50 basis points, as adjusted monthly, for three months immediately following February 15, 2023, and thereafter at the United States prime rate plus 300 basis points, as adjusted monthly.
For all applicable periods following February 15, 2023, interest accrued on the outstanding principal balance at the United States prime interest rate, as reported in the Wall Street Journal, plus 50 basis points, as adjusted monthly, for three months immediately following February 15, 2023, and thereafter at the United States prime rate plus 300 basis points, as adjusted monthly.
Credit Risk We consider all of our material counterparties to be creditworthy. We consider the credit risk for each of our counterparties to be low and do not have a significant concentration of credit risk at any of our counterparties. We have a $5.8 million of research and development tax credits outstanding at December 31, 2022.
Credit Risk We consider all of our material counterparties to be creditworthy. We consider the credit risk for each of our counterparties to be low and do not have a significant concentration of credit risk at any of our counterparties. We have $1.8 million of research and development tax credits outstanding at December 31, 2023.
As of December 31, 2022, the principal balance payable was $520 million, the outstanding principal balance is subject to a variable interest rate from February 15, 2023. As of March 7, 2023, the principal balance payable was $100 million.
As of December 31, 2022, the principal balance payable was $520 million, the outstanding principal balance is subject to a variable interest rate from February 15, 2023. As of December 31, 2023, the principal balance outstanding was $100.0 million.
Given that these receivables related to U.K. research and development tax credit cash rebate regimes and given our history of collection, it is highly unlikely that these amounts will not be collected. 77
Given that these receivables relate to U.K. research and development tax credit cash rebate regimes and given our history of collection, it is highly unlikely that these amounts will not be collected. 74
Added
On February 17, 2024 the Duggan February Note was amended to extend the maturity date from September 6, 2024 to April 1, 2025.
Added
For all applicable periods commencing February 17, 2024, interest shall accrue on the outstanding principal balance at the greater of 12% or the US prime interest rate, as reported in the Wall Street Journal plus 350 basis points, as adjusted monthly, compounded quarterly. Interest shall be paid upon maturity of the loan.

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