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What changed in Phathom Pharmaceuticals, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Phathom Pharmaceuticals, 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.

+868 added−811 removedSource: 10-K (2024-03-07) vs 10-K (2023-02-28)

Top changes in Phathom Pharmaceuticals, Inc.'s 2023 10-K

868 paragraphs added · 811 removed · 634 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

260 edited+72 added−45 removed271 unchanged
Biggest changeWe believe the rapid onset of acid control of vonoprazan may enable as-needed use for the management of heartburn in non-erosive GERD patients as an alternative to chronic daily treatment with PPIs. 23 Daily Dosing of Vonoprazan for the Treatment of Non-Erosive GERD(PHALCON-NERD-301) In January 2023, we reported positive topline data from the primary endpoint in PHALCON-NERD-301, our Phase 3 study evaluating the efficacy and safety of vonoprazan for the daily treatment of non-erosive GERD in adults.
Biggest changeIn January 2023, we reported positive topline results for the primary endpoint of PHALCON-NERD-301, a Phase 3 study evaluating the efficacy and safety of vonoprazan for the daily treatment of heartburn associated with Non-Erosive GERD in adults, and in 2024 we plan to initiate a Phase 3 trial studying the novel dosing regimen of vonoprazan as an as needed treatment for episodic heartburn relief in adults with heartburn associated with Non-Erosive GERD, a dosing regimen not approved in the U.S. for PPIs.
H. pylori . The FDA’s approval of VOQUEZNA TRIPLE PAK and VOQUEZNA DUAL PAK was based on the results from PHALCON-HP, our Phase 3 clinical trial in the United States and Europe studying two vonoprazan-based treatment regimens for the eradication of H. pylori infection, both of which successfully met their primary endpoints and all secondary endpoints.
H. pylori . The FDA’s approval of VOQUEZNA TRIPLE PAK and VOQUEZNA DUAL PAK was based on the results from PHALCON-HP, our Phase 3 clinical trial in the United States and Europe studying two vonoprazan-based treatment regimens for the eradication of H. pylori infection, both of which successfully met their primary and all secondary endpoints.
Among all patients, the H. pylori eradication rate of vonoprazan triple therapy was superior to that of lansoprazole triple therapy in both the mITT population (80.8% vs. 68.5%; p=0.0001) and the per protocol population (85.7% vs. 70.0%; p H. pylori strains resistant to clarithromycin, the H. pylori eradication rate with vonoprazan triple therapy was superior to that of lansoprazole triple therapy in both the mITT population (65.8% vs. 31.9%; p 8 Among all patients, the H. pylori eradication rate of vonoprazan dual therapy was superior to that of lansoprazole triple therapy in both the mITT population (77.2% vs. 68.5%; p=0.0127) and the per protocol population (81.1% vs. 70.0%; p=0.0027).
Among all patients, the H. pylori eradication rate of vonoprazan triple therapy was superior to that of lansoprazole triple therapy in both the mITT population (80.8% vs. 68.5%; p=0.0001) and the per protocol population (85.7% vs. 70.0%; p H. pylori strains resistant to clarithromycin, the H. pylori eradication rate with vonoprazan triple therapy was superior to that of lansoprazole triple therapy in both the mITT population (65.8% vs. 31.9%; p Among all patients, the H. pylori eradication rate of vonoprazan dual therapy was superior to that of lansoprazole triple therapy in both the mITT population (77.2% vs. 68.5%; p=0.0127) and the per protocol population (81.1% vs. 70.0%; p=0.0027).
The objective of the PHALCON-HP trial was to compare eradication rates in all treated subjects as well as in two pre-identified subgroups of patients: those patients with clarithromycin resistant strains of H. pylori, and those patients who did not have clarithromycin or amoxicillin resistant strains of H. pylori.
The objective of the PHALCON-HP trial was to compare eradication rates in all treated subjects as well as in two pre-identified subgroups of patients: those patients with clarithromycin resistant strains of H. pylori, and those patients who did not have clarithromycin or amoxicillin resistant strains of H. pylori.
The overall adverse events for all vonoprazan arms were comparable to placebo and consistent with what was reported in previous studies. The most commonly reported adverse event was nausea (2.3% vonoprazan 10 mg, 3.1% vonoprazan 20 mg, 0.4% placebo) with no other events reported above 3.0% in either vonoprazan dose arm.
The overall adverse events for all vonoprazan arms were comparable to placebo and consistent with what was reported in previous studies. The most commonly reported adverse event was nausea (2.3% vonoprazan 10 mg, 3.1% vonoprazan 20 mg, 0.4% placebo) with no other events reported above 3.0% in either vonoprazan dose arm.
Non-Patent and Marketing Exclusivity Data and market exclusivity provisions under the FDCA can delay the submission or the approval of certain marketing applications. The FDCA provides a five-year period of non-patent data exclusivity within the United States to the first applicant to obtain approval of an NDA for a new chemical entity.
Non-Patent Data and Market Exclusivity Data and market exclusivity provisions under the FDCA can delay the submission or the approval of certain marketing applications. The FDCA provides a five-year period of non-patent data exclusivity within the United States to the first applicant to obtain approval of an NDA for a new chemical entity.
The centralized procedure is mandatory for certain types of products, such as (i) medicinal products derived from biotechnological processes, (ii) designated orphan medicinal products, (iii) advanced medicinal therapy products, or ATMPs, such as gene therapy, somatic cell-therapy or tissue-engineered medicines and (iv) medicinal products containing a new active substance indicated for the treatment of certain diseases, such as HIV/AIDS, cancer, neurodegenerative diseases, diabetes, auto-immune and other immune dysfunctions and viral diseases.
The centralized procedure is mandatory for certain types of products, such as (i) medicinal products derived from biotechnological processes, (ii) designated orphan medicinal products, (iii) advanced therapy medicinal products, or ATMPs, such as gene therapy, somatic cell-therapy or tissue-engineered medicines and (iv) medicinal products containing a new active substance indicated for the treatment of certain diseases, such as HIV/AIDS, cancer, neurodegenerative diseases, diabetes, auto-immune and other immune dysfunctions and viral diseases.
These studies test for safety, dosage tolerance, absorption, metabolism, distribution and excretion and, if possible, to gain an early indication of its effectiveness. • Phase 2 : The product candidate is administered to a limited patient population with a specified disease or condition to evaluate the preliminary efficacy, optimal dosages and dosing schedule and to identify possible adverse side effects and safety risks. • Phase 3 : The product candidate is administered to an expanded patient population to further evaluate dosage, to provide statistically significant evidence of the product’s effectiveness for its intended use(s) and to further test for safety, generally at multiple geographically dispersed clinical trial sites.
These studies test for safety, dosage tolerance, absorption, metabolism, distribution and excretion and, if possible, to gain an early indication of its effectiveness. • Phase 2 : The product candidate is administered to a limited patient population with a specified disease or condition to evaluate the preliminary efficacy, optimal dosages and dosing schedule and to identify possible adverse side effects and safety risks. 39 • Phase 3 : The product candidate is administered to an expanded patient population to further evaluate dosage, to provide statistically significant evidence of the product’s effectiveness for its intended use(s) and to further test for safety, generally at multiple geographically dispersed clinical trial sites.
Violation of any of such laws or any other governmental regulations that apply may result in significant criminal, civil and administrative penalties including damages, fines, imprisonment, disgorgement, additional reporting requirements and oversight if we become subject to a corporate integrity agreement or similar agreement to resolve allegations of non-compliance with these laws, contractual damages, reputational harm, diminished profits and future earnings, disgorgement, exclusion from participation in government healthcare programs and the curtailment or restructuring of our operations.
Violation of any of such laws or any other governmental regulations that apply may result in significant criminal, civil and administrative penalties including damages, fines, imprisonment, disgorgement, additional reporting requirements and oversight if we become subject to a corporate integrity agreement or similar agreement to resolve allegations of non-compliance with these 44 laws, contractual damages, reputational harm, diminished profits and future earnings, disgorgement, exclusion from participation in government healthcare programs and the curtailment or restructuring of our operations.
The centralized procedure is optional for any products containing a new active substance not yet authorized in the EU, or for products that constitute a significant therapeutic, scientific or technical innovation or for which the granting of a MA would be in the interest of public health in the EU. 61 • "National MAs" are issued by the competent authorities of the EU member states, only cover their respective territory, and are available for product candidates not falling within the mandatory scope of the centralized procedure.
The centralized procedure is optional for any products containing a new active substance not yet authorized in the EU, or for products that constitute a significant therapeutic, scientific or technical innovation or for which the granting of a MA would be in the interest of public health in the EU. • "National MAs" are issued by the competent authorities of the EU member states, only cover their respective territory, and are available for product candidates not falling within the mandatory scope of the centralized procedure.
Heartburn symptom relief was assessed via secondary endpoints in both the Healing and Maintenance Phases of the study based on twice daily e-diary data collection. 20 Design of US/EU Phase 3 Clinical Trial for the Healing and Maintenance of Healing of Erosive GERD Healing Phase The primary endpoint analysis of the Healing Phase was non-inferiority of vonoprazan 20 mg compared to lansoprazole 30 mg in the percentage of all patients who have complete healing of erosive GERD by Week 8.
Heartburn symptom relief was assessed via secondary endpoints in both the Healing and Maintenance Phases of the study based on twice daily e-diary data collection. 17 Design of US/EU Phase 3 Clinical Trial for the Healing and Maintenance of Healing of Erosive GERD Healing Phase The primary endpoint analysis of the Healing Phase was non-inferiority of vonoprazan 20 mg compared to lansoprazole 30 mg in the percentage of all patients who have complete healing of Erosive GERD by Week 8.
Entities that are found to be in violation of HIPAA as the result of a breach of unsecured personal health information, or PHI, a complaint about privacy practices or an audit by the HHS may be subject to significant civil, criminal and administrative fines and penalties and/or additional reporting and oversight obligations if required to enter into a resolution agreement and corrective action plan with HHS to settle allegations of HIPAA non-compliance.
Entities that are found to be in violation of HIPAA as the result of a breach of unsecured personal health information, a complaint about privacy practices or an audit by the HHS may be subject to significant civil, criminal and administrative fines and penalties and/or additional reporting and oversight obligations if required to enter into a resolution agreement and corrective action plan with HHS to settle allegations of HIPAA non-compliance.
In the modified intent-to-treat (mITT) population, H. pylori eradication rates were 84.7% for vonoprazan triple therapy and 78.5% for vonoprazan dual therapy compared to 78.8% with lansoprazole triple therapy (p H. pylori eradication rates were 90.4% with vonoprazan triple therapy and 81.2% with vonoprazan dual therapy compared to 82.1% with lansoprazole triple therapy (p In PHALCON-HP vonoprazan triple therapy and vonoprazan dual therapy also met all secondary endpoints, demonstrating superior eradication rates versus lansoprazole triple therapy in all patients and in the subgroup of patients with clarithromycin resistant strains of H. pylori .
In the modified intent-to-treat, or mITT, population, H. pylori eradication rates were 84.7% for vonoprazan triple therapy and 78.5% for vonoprazan dual therapy compared to 78.8% with lansoprazole triple therapy (p H. pylori eradication rates were 90.4% with vonoprazan triple therapy and 81.2% with vonoprazan dual therapy compared to 82.1% with lansoprazole triple therapy (p In PHALCON-HP vonoprazan triple therapy and vonoprazan dual therapy also met all secondary endpoints, demonstrating superior eradication rates versus lansoprazole triple therapy in all patients and in the subgroup of patients with clarithromycin resistant strains of H. pylori .
A commonly used benchmark of anti-secretory activity is the percentage of time in a 24-hour period that gastric pH exceeds 4.0, which we refer to as time above pH 4.0, which ranges from 40% to 71% for PPIs versus 33% for H2RAs. Given this improved pharmacodynamic profile, PPIs demonstrated improved clinical symptom relief and healing over H2RAs.
A commonly used benchmark of anti-secretory activity is the percentage of time in a 24-hour period that gastric pH exceeds 4.0, which we refer to as time above pH 4.0, which ranges from 40% to 71% for PPIs versus 33% for H2RAs. 11 Given this improved pharmacodynamic profile, PPIs demonstrated improved clinical symptom relief and healing over H2RAs.
We intend to take advantage of our management team’s GI expertise to opportunistically in-license or acquire additional innovative therapies for diseases treated by gastroenterologists. We plan to leverage our development and planned commercial infrastructure to support multiple assets targeting GI indications. 11 Acid-Related GI Diseases Overview Gastric acid is a digestive fluid formed in the stomach.
We intend to take advantage of our management team’s GI expertise to opportunistically in-license or acquire additional innovative therapies for diseases treated by gastroenterologists. We plan to leverage our development and planned commercial infrastructure to support multiple assets targeting GI indications. Acid-Related GI Diseases Overview Gastric acid is a digestive fluid formed in the stomach.
We estimate that there are approximately 115 million individuals in the United States and 145 million individuals in the EU5 infected with H. pylori . Prevalence of GERD and H. pylori Infection Treatments Treatments of acid-related GI diseases aim to provide relief of acute symptoms, healing of damaged tissue, and prevention of long-term clinical sequelae associated with chronic acid exposure.
We estimate that there are approximately 115 million individuals in the United States and 145 million individuals in the EU5 infected with H. pylori . 10 Prevalence of GERD and H. pylori Infection Treatments Treatments of acid-related GI diseases aim to provide relief of acute symptoms, healing of damaged tissue, and prevention of long-term clinical sequelae associated with chronic acid exposure.
We believe that the commercial success of Dexilant highlights the value to physicians and patients of even incremental improvements over other PPIs. History of Pharmaceutical Agents for Control of Gastric Acid 14 PPI Limitations While PPIs provide clinically meaningful symptom relief and healing for millions of patients suffering from acid-related GI diseases, they are inadequate for many patients.
We believe that the commercial success of Dexilant highlights the value to physicians and patients of even incremental improvements over other PPIs. History of Pharmaceutical Agents for Control of Gastric Acid PPI Limitations While PPIs provide clinically meaningful symptom relief and healing for millions of patients suffering from acid-related GI diseases, they are inadequate for many patients.
Antacids include commonly known OTC products, such as Alka-Seltzer, Pepto-Bismol, Rolaids, and TUMS. 13 Histamine Receptor Antagonists (H2RAs) H2RAs, first commercially available in the 1970s, decrease gastric acid secretion in order to raise gastric pH. H2RAs represented a dramatic improvement over antacids in the control of gastric acid and consequently in the management of acid-related GI diseases.
Antacids include commonly known OTC products, such as Alka-Seltzer, Pepto-Bismol, Rolaids, and TUMS. Histamine Receptor Antagonists (H2RAs) H2RAs, first commercially available in the 1970s, decrease gastric acid secretion in order to raise gastric pH. H2RAs represented a dramatic improvement over antacids in the control of gastric acid and consequently in the management of acid-related GI diseases.
Lansoprazole at Day 1 and Day 7 This improved potency and duration of pH control with vonoprazan, as measured by 24-hour pH hold time and time above pH 4.0, was evident not only at Day 1, but also at Day 7 when lansoprazole had reached its steady state (see table below). 24-hr Hold Time > pH 4.0 and Mean pH of Vonoprazan vs.
Lansoprazole at Day 1 and Day 7 This improved potency and duration of pH control with vonoprazan, as measured by 24-hour pH hold time and time above pH 4.0, was evident not only at Day 1, but also at Day 7 when lansoprazole had reached its steady state (see table below). 14 24-hr Hold Time > pH 4.0 and Mean pH of Vonoprazan vs.
The Affordable Care Act, increased the minimum level of Medicaid rebates payable by manufacturers of brand name drugs from 15.1% to 23.1%; required collection of rebates for drugs paid by Medicaid managed care organizations; required manufacturers to participate in a coverage gap discount program, in which manufacturers must agree to offer point-of-sale discounts off negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period, as a condition for the manufacturer’s outpatient drugs to be covered under Medicare Part D; imposed a non-deductible annual fee on pharmaceutical manufacturers or importers who sell certain “branded prescription drugs” to specified federal government programs, implemented a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are inhaled, infused, instilled, implanted, or injected; expanded eligibility criteria for Medicaid programs; created a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research; and established a Center for Medicare Innovation at the CMS to test innovative payment and service delivery models to lower Medicare and Medicaid spending, potentially including prescription drug spending.
The Affordable Care Act increased the minimum level of Medicaid rebates payable by manufacturers of brand name drugs from 15.1% to 23.1%; required collection of rebates for drugs paid by Medicaid managed care organizations; required manufacturers to participate in a coverage gap discount program, in which manufacturers must agree to offer point-of-sale discounts off negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period, as a condition for the manufacturer’s outpatient drugs to be covered under Medicare Part D; imposed a non-deductible annual fee on pharmaceutical manufacturers or importers who sell certain “branded prescription drugs” to specified federal government programs; implemented a new methodology by which rebates owed by manufacturers under the MDRP are calculated for drugs that are inhaled, infused, instilled, implanted, or injected; expanded eligibility criteria for Medicaid programs; created a new Patient-Centered Outcomes 46 Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research; and established a Center for Medicare and Medicaid Innovation at the CMS to test innovative payment and service delivery models to lower Medicare and Medicaid spending, potentially including prescription drug spending.
In addition, appropriate packaging must be selected and tested and stability studies must be conducted to demonstrate that the product candidate does not undergo unacceptable deterioration over its shelf life. 50 There are also requirements governing the reporting of ongoing clinical trials and completed trial results to public registries.
In addition, appropriate packaging must be selected and tested, and stability studies must be conducted to demonstrate that the product candidate does not undergo unacceptable deterioration over its shelf life. There are also requirements governing the reporting of ongoing clinical trials and completed trial results to public registries.
The FTC expects a company’s data security measures to be reasonable and appropriate in light of the sensitivity and volume of consumer information it holds, the size and complexity of its business, and the cost of available tools to improve security and reduce vulnerabilities. Individually identifiable health information is considered sensitive data that merits stronger safeguards.
The FTC expects a company’s cybersecurity measures to be reasonable and appropriate in light of the sensitivity and volume of consumer information it holds, the size and complexity of its business, and the cost of available tools to improve security and reduce vulnerabilities. Individually identifiable health information is considered sensitive data that merits stronger safeguards.
Moreover, fewer than 50% of patients in the study reported they were satisfied with their current treatment. In patients with more severe grades of erosive GERD, studies with PPIs have reported failure rates of healing of esophageal erosions exceeding 25%. Additionally, recurrence of erosions is common in healed erosive GERD patients receiving maintenance PPI therapy.
Moreover, fewer than 50% of patients in the study reported they were satisfied with their current treatment. In patients with more severe grades of Erosive GERD, studies with PPIs have reported failure rates of healing of esophageal erosions exceeding 25%. Additionally, recurrence of erosions is common in healed Erosive GERD patients receiving maintenance PPI 12 therapy.
In addition, vonoprazan is primarily metabolized by CYP3A4/5, an enzyme which has less genetic variability than CYP2C19, and may exhibit more consistent activity than PPIs across U.S. and European populations. The mechanistic and pharmacologic differences of PPIs and vonoprazan are summarized in the table below. Vonoprazan Pharmacodynamics vs.
In addition, vonoprazan is primarily metabolized by CYP3A4/5, an enzyme which has less genetic variability than CYP2C19, and may exhibit more consistent activity than PPIs across U.S. and European populations. 13 The mechanistic and pharmacologic differences of PPIs and vonoprazan are summarized in the table below: Vonoprazan Pharmacodynamics vs.
These factors have enabled vonoprazan to demonstrate more rapid and potent acid suppression versus the PPIs esomeprazole and lansoprazole in human subjects two hours after oral dosing and maintain target acid inhibition over a 24-hour period in randomized, open-label, crossover clinical trials.
These factors have enabled vonoprazan to demonstrate more rapid and potent acid suppression versus the PPIs esomeprazole and lansoprazole in human subjects two to three hours after oral dosing and maintain target acid inhibition over a 24-hour period in randomized, open-label, crossover clinical trials.
However, H. pylori eradication rates with PPI triple therapy in the 1990s have fallen to current levels of H. pylori to clarithromycin and metronidazole. A recent meta-analysis indicates that U.S. resistance rates measured from 2012 to 2016 were 20% for clarithromycin, 29% for metronidazole, and 19% for levofloxacin.
However, H. pylori eradication rates with PPI triple therapy in the 1990s have fallen to current levels of H. pylori to clarithromycin and metronidazole. A 25 recent meta-analysis indicates that U.S. resistance rates measured from 2012 to 2016 were 20% for clarithromycin, 29% for metronidazole, and 19% for levofloxacin.
Before approving an NDA, the FDA will inspect the facility or facilities where the product is manufactured. The FDA will not approve an application unless it determines that the manufacturing processes and facilities are in compliance with cGMP requirements and adequate to assure consistent production of the product within required specifications.
Before approving an NDA, the FDA will inspect the facility or facilities where the product is manufactured. The FDA will not approve an application unless it determines that the manufacturing processes and facilities are in compliance with cGMP 40 requirements and adequate to assure consistent production of the product within required specifications.
The GAIN Act provisions prohibit the grant of an exclusivity extension where the application is a supplement to an application for which an extension is in effect or has expired, is a subsequent application for a specified change to an approved product, or is an application for a product that does not meet the definition of QIDP based on the uses for which it is ultimately approved.
The GAIN Act provisions prohibit the grant of an exclusivity extension where the application is a supplement to an application for which an extension is in effect or has expired, is a 43 subsequent application for a specified change to an approved product, or is an application for a product that does not meet a definition of QIDP based on the uses for which it is ultimately approved.
Marketing Authorizations In the EU, medicinal product candidates can only be commercialized after obtaining a marketing authorization, or MA. To obtain regulatory approval of a product candidate in the EU, we must submit a Marketing Authorization Application, or MAA. The process for doing this depends, among other things, on the nature of the medicinal product.
Marketing Authorizations 48 In the EU, medicinal product candidates can only be commercialized after obtaining a marketing authorization, or MA. To obtain regulatory approval of a product candidate in the EU, we must submit a MA Application, or MAA. The process for doing this depends, among other things, on the nature of the medicinal product.
The FDA does not regulate the behavior of physicians in their choice of treatments. The FDA does, however, restrict manufacturer’s communications on the subject of off-label use of their products. However, companies may share truthful and not misleading information that is otherwise consistent with a product’s FDA-approved labelling.
The FDA does not regulate the behavior of physicians in their choice of treatments. The FDA does, however, restrict manufacturer’s communications on the subject of off-label use of their 42 products. However, companies may share truthful and not misleading information that is otherwise consistent with a product’s FDA-approved labelling.
The 340B ceiling price is calculated using a statutory formula, which is based on the AMP and rebate amount for the covered outpatient drug as calculated under the MDRP. In general, products subject to Medicaid price reporting and rebate liability are also subject to the 340B ceiling price calculation and discount requirement.
The 340B ceiling price is calculated using a statutory formula, 45 which is based on the AMP and rebate amount for the covered outpatient drug as calculated under the MDRP. In general, products subject to Medicaid price reporting and rebate liability are also subject to the 340B ceiling price calculation and discount requirement.
Regulation and Procedures Governing Marketing Authorization of Medicinal Products in the EU Non-clinical studies and clinical trials Similarly to the United States, the various phases of non-clinical and clinical research in the EU are subject to significant regulatory controls. Non-clinical studies are performed to demonstrate the health or environmental safety of new biological substances.
Regulation and Procedures Governing Marketing Authorization of Medicinal Products in the EU Non-Clinical Studies and Clinical Trials Similarly, to the United States, the various phases of non-clinical and clinical research in the EU are subject to significant regulatory controls. Non-clinical studies are performed to demonstrate the health or environmental safety of new chemical or biological substances.
These include Dexa Medica’s DLBS-2411, currently launched in the Philippines and in Phase 3 in Indonesia, Sihuan Pharmaceutical’s anaprazole, currently in Phase 3 in China, and Eisai’s azeloprazole, currently in a Phase 2 in China. 41 Intellectual Property Intellectual property, including patents, trade secrets, trademarks and copyrights, is important to our business.
These include Dexa Medica’s DLBS-2411, currently launched in the Philippines and in Phase 3 in Indonesia, Sihuan Pharmaceutical’s anaprazole, currently in Phase 3 in China, and Eisai’s azeloprazole, currently in a Phase 2 in China. Intellectual Property Intellectual property, including patents, trade secrets, trademarks and copyrights, is important to our business.
Our principal executive offices are located at 100 Campus Drive, Suite 102, Florham Park, New Jersey 07932, and our telephone number is (877) 742-8466. 65 Available Information Our internet address is www.phathompharma.com. Our investor relations website is located at https://investors.phathompharma.com.
Our principal executive offices are located at 100 Campus Drive, Suite 102, Florham Park, New Jersey 07932, and our telephone number is (877) 742-8466. Available Information Our internet address is www.phathompharma.com. Our investor relations website is located at https://investors.phathompharma.com.
The H. pylori eradication rate of vonoprazan dual therapy was superior to that of lansoprazole triple therapy in the subset of patients with H. pylori strains resistant to clarithromycin in both the mITT population (69.6% vs. 31.9%; p 32 Results of US/EU Phase 3 Clinical Trial in H. pylori Infection Primary Endpoint Analysis –Subjects without clarithromycin or amoxicillin resistant strains Secondary Endpoint Analyses – All subject and subjects with clarithromycin resistant strains Antibiotic resistance and declining eradication rates are significant clinical issues, and we believe that vonoprazan triple therapy and vonoprazan dual therapy have the potential to provide improvements over PPI-based therapies in addressing each of these issues.
The H. pylori eradication rate of vonoprazan dual therapy was superior to that of lansoprazole triple therapy in the subset of patients with H. pylori strains resistant to clarithromycin in both the mITT population (69.6% vs. 31.9%; p 27 Results of US/EU Phase 3 Clinical Trial in H. pylori Infection Primary Endpoint Analysis –Subjects without clarithromycin or amoxicillin resistant strains Secondary Endpoint Analyses – All subject and subjects with clarithromycin resistant strains Antibiotic resistance and declining eradication rates are significant clinical issues, and we believe that vonoprazan triple therapy and vonoprazan dual therapy have the potential to provide improvements over PPI-based therapies in addressing each of these issues.
Within this Japanese database, the number of patients using vonoprazan-based regimens increased from 6,594 to 28,956 patients, while the number of patients using a PPI-based regimen decreased from 11,238 to 2,629, shown in the figure below. Uptake of Vonoprazan-Based vs.
Within this Japanese database, the number of patients using vonoprazan-based regimens increased from 6,594 to 28,956 patients, while the number of patients using a PPI-based regimen decreased from 11,238 to 2,629, shown in the figure below. 24 Uptake of Vonoprazan-Based vs.
The Tablet Supply Agreement may also be terminated at any time upon written notice by either party if the other party has failed to remedy a material breach of the terms of the Tablet Supply Agreement within a specified period following receipt of written notice of such breach.
The Tablet Supply Agreement may also be terminated at any time upon 37 written notice by either party if the other party has failed to remedy a material breach of the terms of the Tablet Supply Agreement within a specified period following receipt of written notice of such breach.
In additional pre-specified secondary endpoint superiority comparisons, vonoprazan 20 mg healing rates were numerically greater than lansoprazole 30 mg in all patients at Week 2 (nominal p=0.0348) and in moderate-to-severe patients by Week 8 (nominal p Vonoprazan 20 mg was also compared to lansoprazole 30 mg in a superiority test for onset of sustained resolution of heartburn by day 3 but did not achieve statistical significance (p=0.439). 21 Results of US/EU Phase 3 Clinical Trial in the Healing of Erosive GERD Maintenance Phase Vonoprazan met the primary and all secondary endpoints in the Maintenance Phase.
In additional pre-specified secondary endpoint superiority comparisons, vonoprazan 20 mg healing rates were numerically greater than lansoprazole 30 mg in all patients at Week 2 (nominal p=0.0348) and in moderate-to-severe patients by Week 8 (nominal p Vonoprazan 20 mg was also compared to lansoprazole 30 mg in a superiority test for onset of sustained resolution of heartburn by day 3 but did not achieve statistical significance (p=0.439). 18 Results of US/EU Phase 3 Clinical Trial in the Healing of Erosive GERD Maintenance Phase Vonoprazan met the primary and all secondary endpoints in the Maintenance Phase.
The most common adverse events (≥2.0%) reported in the vonoprazan triple therapy, vonoprazan dual therapy, and lansoprazole triple therapy arms, respectively, were diarrhea (4.0%, 5.2%, and 9.6%), dysgeusia (4.3%, 0.6%, and 6.1%), abdominal pain (2.3%, 2.6% and 2.9%), headache (2.6%, 1.4%, 1.4%), vulvovaginal candidiasis (2.3%, 1.4%, 1.2%), hypertension (2.0%, 1.1%, 0.9%), and nasopharyngitis (0.3%, 2.0%, 0.9%).
The most common adverse events (≥2.0%) reported in the vonoprazan triple therapy, vonoprazan dual therapy, and lansoprazole triple therapy arms, respectively, were diarrhea (4.0%, 5.2%, and 9.6%), dysgeusia (4.3%, 29 0.6%, and 6.1%), abdominal pain (2.3%, 2.6% and 2.9%), headache (2.6%, 1.4%, 1.4%), vulvovaginal candidiasis (2.3%, 1.4%, 1.2%), hypertension (2.0%, 1.1%, 0.9%), and nasopharyngitis (0.3%, 2.0%, 0.9%).
In that trial, greater duration of pH control with vonoprazan, as measured by time above pH 4.0 was observed both on Day 1 and Day 7 (see table below). 17 24-hr Hold Time > pH 4.0 of Vonoprazan vs.
In that trial, greater duration of pH control with vonoprazan, as measured by time above pH 4.0 was observed both on Day 1 and Day 7 (see table below). 24-hr Hold Time > pH 4.0 of Vonoprazan vs.
In addition, the scope of the rights granted under any issued patents may not provide us with protection or competitive advantages against competitors with similar technology. Furthermore, our competitors may independently develop similar technologies that are outside the scope of the rights granted under any issued patents.
In addition, 35 the scope of the rights granted under any issued patents may not provide us with protection or competitive advantages against competitors with similar technology. Furthermore, our competitors may independently develop similar technologies that are outside the scope of the rights granted under any issued patents.
We agreed to make milestone payments to Takeda upon achieving certain tiered aggregate annual net sales of licensed products in the United States, Europe and Canada up a total maximum milestone amount of $250.0 million.
We agreed to make milestone payments to Takeda upon achieving certain tiered aggregate annual net sales of licensed products in the United States, Europe and Canada up a total maximum milestone amount of $250 million.
Royalties will be payable, on a product-by-product and country-by-country basis from the first commercial sale of such product in such country, until the latest of expiration of the licensed patents covering the applicable product, expiration of regulatory exclusivity in such country, or 15 years following first commercial sale in such country.
Royalties will be payable, on a product-by-product and country-by-country basis from the first commercial sale of such product in such country, until the latest of expiration of 36 the licensed patents covering the applicable product, expiration of regulatory exclusivity in such country, or 15 years following first commercial sale in such country.
The sponsor of a Fast Track product candidate has opportunities for more frequent interactions with the applicable FDA review team during product development and, once an NDA is submitted, the product candidate may be eligible for priority review.
The sponsor of a Fast Track product candidate has opportunities for more frequent interactions with the applicable FDA review team during product development and, once an NDA is submitted, the application may be eligible for priority review.
Information relating to our corporate governance is also included on our investor relations website. The information in or accessible through the SEC and our website are not incorporated into, and are not considered part of, this filing.
Information relating to our corporate governance is also included on our investor relations website. The information in or accessible through the SEC and our website are not incorporated into, and are not considered part of, this filing. 52
These diseases are detailed below: 18 • Erosive GERD : Approximately 30% of GERD patients have erosive GERD, which is classified by erosions in the gastric mucosa caused by acidic reflux of stomach contents into the esophagus.
These diseases are detailed below: • Erosive GERD : Approximately 30% of GERD patients have Erosive GERD, which is classified by erosions in the gastric mucosa caused by acidic reflux of stomach contents into the esophagus.
During the exclusivity period, the FDA may not approve or even accept for review an abbreviated new drug application, or ANDA, or an NDA submitted under Section 505(b)(2), or 505(b)(2) NDA, submitted by another company for another drug based on the same active moiety, regardless of whether the drug is intended for the same indication as the original innovative drug or for another indication, where the applicant does not own or have a legal right of reference to all the data required for approval.
During the exclusivity period, the FDA may not accept for review an abbreviated new drug application, or ANDA, or an NDA submitted under Section 505(b)(2), or 505(b)(2) NDA, submitted by another company for another drug based on the same active moiety, regardless of whether the drug is intended for the same indication as the original innovative drug or for another indication, where the applicant does not own or have a legal right of reference to all the data required for approval.
The PDCO can grant a deferral of the obligation to implement some or all of the measures of the PIP until there are sufficient data to demonstrate the efficacy and safety of the product in adults.
The PDCO can grant a deferral of the obligation to implement some or all of the measures of the PIP until there are sufficient data to 49 demonstrate the efficacy and safety of the product in adults.
We paid Takeda upfront consideration consisting of a cash payment of $25.0 million, 1,084,000 shares of common stock and a warrant to purchase 7,588,000 shares of common stock, or the Takeda Warrant.
We paid Takeda upfront consideration consisting of a cash payment of $25 million, 1,084,000 shares of common stock and a warrant to purchase 7,588,000 shares of common stock, or the Takeda Warrant.
The transition period, which ended on December 31, 2020, maintained access to the EU single market and to the global trade deals negotiated by the EU on behalf of its members.
The 50 transition period, which ended on December 31, 2020, maintained access to the EU single market and to the global trade deals negotiated by the EU on behalf of its members.
Vonoprazan’s prolonged effect is also maintained through a slow dissociation rate from the proton pumps and resupply from the bloodstream due to its seven-hour half-life. These characteristics allow vonoprazan to rapidly achieve target 24-hour acid suppression within two hours of a single dose, unlike PPIs that require three to five days to achieve stable acid suppression.
Vonoprazan’s prolonged effect is also maintained through a slow dissociation rate from the proton pumps and resupply from the bloodstream due to its approximate seven-hour half-life. These characteristics generally allow vonoprazan to rapidly achieve target 24-hour acid suppression within two to three hours of a single dose, unlike PPIs that require three to five days to achieve stable acid suppression.
In this study, vonoprazan maintained an average pH approximately two points higher than lansoprazole at Day 7. 16 Improved Onset and Potency of pH Control of Vonoprazan vs.
In this study, vonoprazan maintained an average pH approximately two points higher than lansoprazole at Day 7. Improved Onset and Potency of pH Control of Vonoprazan vs.
Our commercial success also depends in part on our ability to operate without infringing on the proprietary rights of others and to prevent others from infringing our proprietary rights.
Our commercial success also depends in part on our ability to operate without infringing on the proprietary rights of others and to 34 prevent others from infringing our proprietary rights.
The GAIN Act permits the FDA to revoke a QIDP designation only if the request for such designation contained an untrue statement of material fact.
The GAIN Act permits the FDA to revoke a QIDP designation if the request for such designation contained an untrue statement of material fact.
In both countries, the anti-secretory market is largely genericized. Ahead of the vonoprazan launch in Japan, all PPIs, other than Nexium, were available as generics. As of September 2021, generic drugs in Japan represent approximately 80% of the market by volume, compared to the United States where generics are currently approximately 90% of the market by volume.
In both countries, the anti-secretory market is largely genericized. Ahead of the vonoprazan launch in Japan, all PPIs, other than Nexium, were available as generics. As of September 2022, generic drugs in Japan represent approximately 80% of the market by volume, compared to the United States where generics are currently approximately 90% of the market by volume.
Esomeprazole at Day 1 and Day 7 Vonoprazan for the Potential Treatment of Acid-Related GI Diseases Given the shortcomings of PPI therapy, we believe that there is a significant unmet medical need for a safe and effective anti-secretory agent with rapid, potent, and durable effects.
Esomeprazole at Day 1 and Day 7 Vonoprazan for the Treatment of Acid-Related GI Diseases Given the shortcomings of PPI therapy, we believe that there is a significant unmet medical need for a safe and effective anti-secretory agent with rapid, potent, and durable anti-secretary effects.
Additionally, Jeil Pharm has initiated a Phase 3 trial in South Korea of its PCAB candidate, JP-1366, in erosive GERD, and Cinclus’ linaprazan glurate has completed a Phase 2 clinical trial in Europe. To our knowledge, none of these compounds have demonstrated superiority to PPIs in a Phase 3 clinical trial.
Reddy’s in Russia. Additionally, Jeil Pharm has initiated a Phase 3 trial in South Korea of its PCAB candidate, JP-1366, in Erosive GERD, and Cinclus’ linaprazan glurate has completed a Phase 2 clinical trial in Europe. To our knowledge, none of these compounds have demonstrated superiority to PPIs in a Phase 3 clinical trial.
The designation includes all of the Fast Track program features, as well as more intensive FDA interaction and guidance beginning as early as Phase 1 and an organizational commitment to expedite the development and review of the product candidate, including involvement of senior managers. 52 Any marketing application for a drug submitted to the FDA for approval, including a product candidate with a Fast Track designation or Breakthrough Therapy designation, may also be eligible for other types of FDA programs intended to expedite development and review, such as priority review and accelerated approval.
The designation includes all of the Fast Track program features, as well as more intensive FDA interaction and guidance beginning as early as Phase 1 and an organizational commitment to expedite the development and review of the product candidate, including involvement of senior managers. 41 Any marketing application for a drug submitted to the FDA for approval, including a product candidate with a Fast Track designation or Breakthrough Therapy designation, may also be eligible for other types of FDA programs intended to expedite development and review, such as priority review.
With respect to any future product candidates, we expect to continue to rely on third-party contract manufacturers to manufacture clinical supplies and commercial quantities of any approved product. Although we rely on contract manufacturers, we have personnel with manufacturing experience to oversee our relationships with Takeda, Sandoz, Catalent and Evonik.
With respect to any future product candidates, we expect to continue to rely on third-party contract manufacturers to manufacture clinical supplies and commercial quantities of any approved products. Although we rely on contract manufacturers, we have personnel with manufacturing experience to oversee our relationships with Sandoz, Catalent and Evonik.
Since its enactment, there have been judicial and political challenges to certain aspects of the Affordable Care Act, or ACA. On June 17, 2021, the U.S. Supreme Court dismissed the most recent judicial challenge to the ACA without specifically ruling on the constitutionality of the ACA.
Since its enactment, there have been judicial and political challenges to certain aspects of the Affordable Care Act. On June 17, 2021, the U.S. Supreme Court dismissed the most recent judicial challenge to the Affordable Care Act without specifically ruling on the constitutionality of the Affordable Care Act.
Similarly, in the healing phase of PHALCON-EE, transient elevations in ALT or AST greater than 3 times the upper limit of normal were observed in 0.4% of subjects treated with vonoprazan 20 mgs and 0.2% of subjects treated with lansoprazole.
Similarly, in the healing phase of PHALCON-EE, transient elevations in ALT or AST greater than 3 times the upper limit of normal were observed in 0.4% of subjects treated with vonoprazan 20 mg and 0.2% of subjects treated with lansoprazole.
Vonoprazan has had a similar hepatic safety profile to lansoprazole across all clinical studies conducted by Takeda, in which 1.0% of subjects treated with vonoprazan 10 mg or 20 mg and 0.8% of subjects treated with lansoprazole 15 mg or 30 mg had ALT or AST elevations greater than three times the upper limit of normal or bilirubin elevations greater than two times the upper limit of normal.
Vonoprazan has had a similar hepatic safety profile to lansoprazole across all clinical studies conducted by Takeda, in which 1.0% of subjects treated with vonoprazan 10 mg or 20 mg and 0.8% of subjects treated with lansoprazole 15 mg or 30 mg had alanine transaminase or ALT or aspartate transaminase or AST elevations greater than three times the upper limit of normal or bilirubin elevations greater than two times the upper limit of normal.
Rates of discontinuation due to adverse events in the maintenance phase were 0.7% for vonoprazan10 mg, 2.7% for vonoprazan 20 mg, and 0.7% for lansoprazole. Frequency of serious adverse events, or SAEs, in the healing phase were similar between vonoprazan 20 mg and lansoprazole at 0.6%.
Rates of discontinuation due to adverse events in the maintenance phase were 0.7% for vonoprazan 10 mg, 2.7% for vonoprazan 20 mg, and 0.7% for lansoprazole. Frequency of serious adverse events, or SAEs, in the healing phase were similar between vonoprazan 20 mg and lansoprazole at 0.6%.
Our patent portfolio comprises 10 distinct patent families protecting the technology relating to the compound vonoprazan and its synthetic intermediates, methods of synthesizing vonoprazan and related compounds, various formulations of vonoprazan products, as well as methods of treating diseases with vonoprazan and related compounds.
Our patent portfolio comprises 11 distinct patent families protecting the technology relating to the compound vonoprazan and its synthetic intermediates, methods of synthesizing vonoprazan and related compounds, various formulations of vonoprazan products, as well as methods of treating diseases with vonoprazan and related compounds.
There are two types of MAs: • "Centralized MAs" are issued by the European Commission through the centralized procedure, based on the opinion of the Committee for Medicinal Products for Human Use, or CHMP, of the EMA and are valid throughout the EU.
There are two types of MAs: • "Centralized MAs" are issued by the European Commission through the centralized procedure, based on the opinion of the Committee for Medicinal Products for Human Use, or CHMP, of the European Medicines Agency, or EMA, and are valid throughout the EU.
However, there is no guarantee that a product will be considered by the EU’s regulatory authorities to be a new chemical entity, and products may not qualify for data exclusivity.
However, there is no guarantee that a product will be considered by the EU’s regulatory authorities to be a new chemical (or biological) entity, and products may not qualify for data exclusivity.
GERD and H. pylori infection are two of the most common acid-related GI diseases and impact millions of people. The prevalence of GERD is estimated to be 20% of the U.S. population and 15% of the population in the five major countries in Europe (France, Germany, Italy, Spain and the United Kingdom) (collectively, the “EU5”).
GERD and H. pylori infection are two of the most common acid-related GI diseases and impact millions of people. The prevalence of GERD is estimated to be 20% of the U.S. population and 15% of the population in the five major countries in Europe (France, Germany, Italy, Spain and the United Kingdom), or collectively, the EU5.
In addition, we plan to seek commercial partnerships for vonoprazan in Europe and Canada, expand development of vonoprazan into other indications, dosing regimens and alternative formulations and packaging, and in-license or acquire additional clinical or commercial stage product candidates for the treatment of GI diseases in a capital efficient manner.
We plan to evaluate commercial partnerships for vonoprazan in Europe and Canada, expand development of vonoprazan into other indications, dosing regimens and alternative formulations and packaging, and in-license or acquire additional clinical or commercial stage product candidates for the treatment of GI diseases in a capital efficient manner.
In addition, Cinclus Pharma AG, or Cinclus, received qualified QIDP designation for linaprazan glurate in combination with antibiotics for the treatment of H. pylori infection, completed a Phase 2 dose selection study for erosive GERD in November 2022, and plans to initiate Phase 3 studies in 2023 for the treatment of GERD and H. pylori infection.
In addition, Cinclus Pharma AG, or Cinclus, received qualified QIDP designation for linaprazan glurate in combination with antibiotics for the treatment of H. pylori infection, completed a Phase 2 dose selection study for Erosive GERD in November 2022, and plans to initiate a Phase 3 study in 2024 for the treatment of Erosive GERD.
To address the opportunity for vonoprazan in Europe and Canada, we plan to seek one or more partners with existing commercial infrastructure and expertise in these markets.
To address the opportunity for vonoprazan in Europe and Canada, we plan to evaluate one or more partners with existing commercial infrastructure and expertise in these markets.
As a result of the chronic inflammation induced by H. pylori infection, approximately 20% of infected patients develop a range of pathologies including dyspepsia, peptic ulcer disease, gastric cancer, and mucosa-associated lymphoid tissue (MALT) lymphoma. Gastric cancer is the third most common cause of cancer-related death worldwide, and over 80% of gastric cancers are attributed to H. pylori infection.
As a result of the chronic inflammation induced by H. pylori infection, approximately 20% of infected patients develop a range of pathologies including dyspepsia, peptic ulcer disease, gastric cancer, and MALT lymphoma. Gastric cancer is the third most common cause of cancer-related death worldwide, and over 80% of gastric cancers are attributed to H. pylori infection.
Additional Vonoprazan Development Opportunities Eosinophilic esophagitis and other indications While we are initially focused on the development of vonoprazan for the treatment of GERD and H. pylori infection, we believe there are opportunities to expand the use of vonoprazan to other indications, such as eosinophilic esophagitis (EoE), in our licensed territories.
Additional Vonoprazan Development Opportunities Eosinophilic Esophagitis and Other Indications While we are initially focused on the development of vonoprazan for the treatment of GERD and H. pylori infection, we believe there are opportunities to expand the use of vonoprazan to other indications in our licensed territories.
In May 2019, we in-licensed the U.S., European, and Canadian rights to vonoprazan from Takeda. In 2021 we reported positive topline data from two pivotal Phase 3 clinical trials for vonoprazan: one for the treatment of H. pylori infection, or PHALCON-HP, and a second for the treatment of erosive GERD, also known as erosive esophagitis or EE, PHALCON-EE.
In May 2019, we in-licensed the U.S., European, and Canadian rights to vonoprazan from Takeda. In 2021 we reported positive topline data from two pivotal Phase 3 clinical trials for vonoprazan: one for the treatment of H. pylori infection, or PHALCON-HP, and a second for the treatment of Erosive GERD, or PHALCON-EE.
The FDCA alternatively provides three years of marketing exclusivity for an NDA, or supplement to an existing NDA if new clinical investigations, other than bioavailability studies, that were conducted or sponsored by the applicant are deemed by the FDA to be essential to the approval of the application, for example new indications, dosages or strengths of an existing drug.
The FDCA alternatively provides three years of non-patent market exclusivity for an NDA, or supplement to an existing NDA, if new clinical investigations, other than bioavailability studies, that were conducted or sponsored by the applicant are deemed by the FDA to be essential to the approval of the application, for example new indications, dosages or strengths of an existing drug.
The process required by the FDA before a drug may be marketed in the United States generally involves the following: • completion of preclinical laboratory tests, animal studies and formulation studies in accordance with Good Laboratory Practice, or GLP, regulations and other applicable regulations; • submission to the FDA of an investigational new drug application, or IND, which must become effective before human clinical trials may begin; • approval by an independent institutional review board, or IRB, at each clinical site before each trial may be initiated; • performance of adequate and well-controlled human clinical trials in accordance with Good Clinical Practice, or GCP, regulations to establish the safety and efficacy of the proposed drug for its intended use; • submission to the FDA of an NDA; • satisfactory completion of an FDA advisory committee review, if applicable; • satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the drug is produced to assess compliance with current Good Manufacturing Practice, or cGMP, requirements to assure that the facilities, methods and controls are adequate to preserve the drug’s identity, strength, quality and purity, and of selected clinical investigation sites to assess compliance with GCPs; and • FDA review and approval of the NDA to permit commercial marketing of the product for particular indications for use in the United States. 48 Once a pharmaceutical candidate is identified for development, it enters the preclinical testing stage.
The process required by the FDA before a drug may be marketed in the United States generally involves the following: • completion of preclinical laboratory tests, animal studies and formulation studies in accordance with Good Laboratory Practice, or GLP, regulations and other applicable regulations; • submission to the FDA of an investigational new drug application, or IND, which must become effective before human clinical trials may begin; • approval by an independent institutional review board, or IRB, at each clinical site before each trial may be initiated; • performance of adequate and well-controlled human clinical trials in accordance with Good Clinical Practice, or GCP, regulations to establish the safety and efficacy of the proposed drug for its intended use; • submission to the FDA of an NDA; • satisfactory completion of an FDA advisory committee review, if applicable; • satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the drug is produced to assess compliance with current Good Manufacturing Practice, or cGMP, requirements to assure that the facilities, 38 methods and controls are adequate to preserve the drug’s identity, strength, quality and purity, and of selected clinical investigation sites to assess compliance with GCPs; and • FDA review and approval of the NDA to permit commercial marketing of the product for particular indications for use in the United States.
Results of Phase 3 Clinical Trial in the Treatment of Non-Erosive GERD 25 As Needed Dosing of Vonoprazan for the Treatment of Non-Erosive GERD In February 2022, we announced that vonoprazan (10 mg, 20 mg and 40 mg), successfully met the primary endpoint in PHALCON-NERD-201, a Phase 2 trial evaluating three doses of vonoprazan versus placebo as an as needed treatment of non-erosive GERD.
As Needed Dosing of Vonoprazan for the Treatment of Non-Erosive GERD In February 2022, we announced that vonoprazan (10 mg, 20 mg and 40 mg), successfully met the primary endpoint in PHALCON-NERD-201, a Phase 2 trial evaluating three doses of vonoprazan versus placebo as an as needed treatment of Non-Erosive GERD.
Of patients treated with vonoprazan, 82% had complete relief of symptoms compared to 70% for esomeprazole and 76-78% for rabeprazole. Similarly, 35% of patients treated with vonoprazan demonstrated complete remission of eosinophilic esophagitis by histology, compared to 37% for esomeprazole and 31-38% for rabeprazole.
Of patients treated with vonoprazan, 82% had complete relief of symptoms compared to 70% for esomeprazole and 76-78% for rabeprazole. Similarly, 35% of patients treated with vonoprazan demonstrated complete remission of EoE by histology, compared to 37% for esomeprazole and 31-38% for rabeprazole.
Under the Medicaid Drug Rebate Program, or MDRP, as a condition of having federal funds being made available to the states for covered outpatient drugs under Medicaid, pharmaceutical manufacturers must enter into an agreement with the Secretary of Health and Human Services to pay a rebate to state Medicaid programs for each unit of covered outpatient drug dispensed to a Medicaid beneficiary and paid for by the state Medicaid program.
Under the Medicaid Drug Rebate Program, or MDRP, as a condition of having federal funds being made available to the states for covered outpatient drugs under Medicaid, and, if applicable, Medicare Part B, pharmaceutical manufacturers must enter into an agreement with the Secretary of Health and Human Services to pay a rebate to state Medicaid programs for each unit of covered outpatient drug dispensed to a Medicaid beneficiary and paid for by the state Medicaid program.
A drug is a new chemical entity if the FDA has not previously approved any other new drug containing the same active moiety, which is the molecule or ion responsible for the action of the drug substance.
A drug is a NCE if the FDA has not previously approved any other new drug containing the same active moiety, which is the molecule or ion responsible for the action of the drug substance.
In addition, the FDA may require a sponsor to conduct Phase 4 testing, which involves clinical trials designed to further assess a drug’s safety and effectiveness after NDA approval, and may require testing and surveillance programs to monitor the safety of approved products which have been commercialized.
In addition, the FDA may require a sponsor to conduct Phase 4 testing to further assess a drug’s safety and effectiveness after NDA approval, and may require testing and surveillance programs to monitor the safety of approved products which have been commercialized.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIn addition, if vonoprazan or any future product candidate receives marketing approval, and we or others later identify undesirable side effects caused by such products, a number of potentially significant negative consequences could result, including: • regulatory authorities may withdraw, suspend or limit approvals of such product, or seek an injunction against its manufacturer; • we may be required to recall a product or change the way such product is administered to patients; • regulatory authorities may require additional warnings on the label, such as a “black box” warning or a contraindication; • we may be required to implement a Risk Evaluation and Mitigation Strategy, or REMS, or similar risk management measures or create a medication guide outlining the risks of such side effects for distribution to patients; • we may be required to change the way a product is distributed or administered, conduct additional clinical trials or change the labeling of a product or be required to conduct additional post-marketing studies or surveillance; • we could be sued and held liable for harm caused to patients; • sales of the product may decrease significantly or the product could become less competitive; and • our reputation may suffer.
Biggest changeIf any of our products that receives marketing approval, including VOQUEZNA, is discovered to cause undesirable side effects, a number of potentially significant negative consequences could result, including: • withdrawal, suspension or limitation by regulatory authorities of approvals of such product; • seizure of the product by regulatory authorities; • recall of the product or changes to the manner in which it is administered; • restrictions on the marketing of the product or the manufacturing process for any component thereof; • requirement by regulatory authorities of additional warnings on the label, such as a “black box” warning or contraindications; • requirement that we implement a REMS or create a medication guide outlining the risks of such side effects for distribution to patients; • commitment to expensive additional safety studies prior to approval or post-marketing studies required by regulatory authorities of such product; • the product may become less competitive; • initiation of regulatory investigations and government enforcement actions; • initiation of legal action against us to hold us liable for harm caused to patients; and • harm to our reputation and resulting harm to physician or patient acceptance of our products.
If we obtain additional regulatory approvals for vonoprazan or regulatory approval for any future product candidate, we also expect to incur significant commercialization expenses related to product manufacturing, marketing, sales and distribution.
If we obtain additional regulatory approvals for vonoprazan or regulatory approval for any future product candidate, we also expect to incur significant additional commercialization expenses related to product manufacturing, marketing, sales and distribution.
In addition, any potential future collaborations may be terminable by our strategic partners, and we may not be able to adequately protect our rights under these agreements.
In addition, any potential future collaborations may be terminable by our strategic partners, and we may not be able adequately to protect our rights under these agreements.
Collaborations and partnerships are subject to numerous risks, which may include that: • collaborators have significant discretion in determining the efforts and resources that they will apply to collaborations; • collaborators may not pursue development and commercialization of our products or may elect not to continue or renew development or commercialization programs based on trial or test results, changes in their strategic focus due to the acquisition of competitive products, availability of funding or other external factors, such as a business combination that diverts resources or creates competing priorities; • collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our products or product candidates; 133 • a collaborator with marketing, manufacturing and distribution rights to one or more products may not commit sufficient resources to or otherwise not perform satisfactorily in carrying out these activities; • we could grant exclusive rights to our collaborators that would prevent us from collaborating with others; • collaborators may not properly maintain or defend our intellectual property rights or may use our intellectual property or proprietary information in a way that gives rise to actual or threatened litigation that could jeopardize or invalidate our intellectual property or proprietary information or expose us to potential liability; • disputes may arise between us and a collaborator that causes the delay or termination of the research, development or commercialization of our current or future products or that results in costly litigation or arbitration that diverts management attention and resources; • collaborations may be terminated, and, if terminated, may result in a need for additional capital to pursue further development or commercialization of the applicable current or future products; • collaborators may own or co-own intellectual property covering our products that results from our collaborating with them, and in such cases, we would not have the exclusive right to develop or commercialize such intellectual property; and • a collaborator’s sales and marketing activities or other operations may not be in compliance with applicable laws resulting in civil or criminal proceedings.
Collaborations and partnerships are subject to numerous risks, which may include that: • collaborators have significant discretion in determining the efforts and resources that they will apply to collaborations; • collaborators may not pursue development and commercialization of our products or may elect not to continue or renew development or commercialization programs based on trial or test results, changes in their strategic focus due to the acquisition of competitive products, availability of funding or other external factors, such as a business combination that diverts resources or creates competing priorities; • collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our products or product candidates; • a collaborator with marketing, manufacturing and distribution rights to one or more products may not commit sufficient resources to or otherwise not perform satisfactorily in carrying out these activities; • we could grant exclusive rights to our collaborators that would prevent us from collaborating with others; • collaborators may not properly maintain or defend our intellectual property rights or may use our intellectual property or proprietary information in a way that gives rise to actual or threatened litigation that could jeopardize or invalidate our intellectual property or proprietary information or expose us to potential liability; • disputes may arise between us and a collaborator that causes the delay or termination of the research, development or commercialization of our current or future products or that results in costly litigation or arbitration that diverts management attention and resources; • collaborations may be terminated, and, if terminated, may result in a need for additional capital to pursue further development or commercialization of the applicable current or future products; • collaborators may own or co-own intellectual property covering our products that results from our collaborating with them, and in such cases, we would not have the exclusive right to develop or commercialize such intellectual property; and • a collaborator’s sales and marketing activities or other operations may not be in compliance with applicable laws resulting in civil or criminal proceedings.
The commencement and completion of clinical trials can be delayed for a number of reasons, including delays related to: • the FDA, EMA or comparable foreign regulatory authorities disagreeing as to the design or implementation of our clinical trials and reaching consensus among the FDA and EMA over the design of the same clinical trial; • any failure or delay in obtaining regulatory authorizations to commence a trial; • any failure or delay in reaching an agreement with contract research organizations, or CROs, and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites; • institutional review boards, or IRBs, or other reviewing bodies refusing to approve, suspending or terminating the trial at an investigational site, precluding enrollment of additional subjects, or withdrawing their approval of the trial; • changes to clinical trial protocols; • clinical sites deviating from trial protocols or dropping out of a trial; • manufacturing or obtaining sufficient quantities of vonoprazan and any future product candidates; • inability to obtain and deliver sufficient quantities of vonoprazan and any future product candidates to clinical sites; • subjects failing to enroll or remain in our trials at the rate we expect, or failing to return for post- treatment follow-up; • subjects choosing an alternative treatment for the indication for which we are developing vonoprazan and any future product candidates, or participating in competing clinical trials; • lack of adequate funding to continue the clinical trial; • subjects experiencing severe or unexpected drug-related adverse effects; • occurrence of serious adverse events in trials of the same class of agents conducted by other companies; • selection of clinical endpoints that require prolonged periods of clinical observation or analysis of the resulting data; • a facility manufacturing vonoprazan or any future product candidates or any of their components being ordered by the FDA or comparable foreign regulatory authorities to temporarily or permanently shut down due to violations of current good manufacturing, or cGMP, regulations or other applicable requirements, or infections or cross-contaminations of product candidates in the manufacturing process; 76 • any changes to our manufacturing process that may be necessary or desired; • third-party clinical investigators losing the licenses or permits necessary to perform our clinical trials, not performing our clinical trials on our anticipated schedule or consistent with the clinical trial protocol, good clinical practices, or GCP, or other regulatory requirements; • third-party contractors not performing data collection or analysis in a timely or accurate manner; or • third-party contractors becoming debarred or suspended or otherwise penalized by the FDA or other government or regulatory authorities for violations of regulatory requirements, in which case we may need to find a substitute contractor, and we may not be able to use some or all of the data produced by such contractors in support of our marketing applications.
The commencement and completion of clinical trials can be delayed for a number of reasons, including delays related to: • the FDA, EMA or comparable foreign regulatory authorities disagreeing as to the design or implementation of our clinical trials and reaching consensus among the FDA and EMA over the design of the same clinical trial; • any failure or delay in obtaining regulatory authorizations to commence a trial; • any failure or delay in reaching an agreement with contract research organizations, or CROs, and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites; • institutional review boards, or IRBs, or other reviewing bodies refusing to approve, suspending or terminating the trial at an investigational site, precluding enrollment of additional subjects, or withdrawing their approval of the trial; • changes to clinical trial protocols; • clinical sites deviating from trial protocols or dropping out of a trial; • manufacturing or obtaining sufficient quantities of vonoprazan and any future product candidates; • inability to obtain and deliver sufficient quantities of vonoprazan and any future product candidates to clinical sites; • subjects failing to enroll or remain in our trials at the rate we expect, or failing to return for post- treatment follow-up; • subjects choosing an alternative treatment for the indication for which we are developing vonoprazan and any future product candidates, or participating in competing clinical trials; • lack of adequate funding to continue the clinical trial; • subjects experiencing severe or unexpected drug-related adverse effects; 67 • occurrence of serious adverse events in trials of the same class of agents conducted by other companies; • selection of clinical endpoints that require prolonged periods of clinical observation or analysis of the resulting data; • a facility manufacturing vonoprazan or any future product candidates or any of their components being ordered by the FDA or comparable foreign regulatory authorities to temporarily or permanently shut down due to violations of current good manufacturing, or cGMP, regulations or other applicable requirements, or infections or cross-contaminations of product candidates in the manufacturing process; • any changes to our manufacturing process that may be necessary or desired; • third-party clinical investigators losing the licenses or permits necessary to perform our clinical trials, not performing our clinical trials on our anticipated schedule or consistent with the clinical trial protocol, good clinical practices, or GCP, or other regulatory requirements; • third-party contractors not performing data collection or analysis in a timely or accurate manner; or • third-party contractors becoming debarred or suspended or otherwise penalized by the FDA or other government or regulatory authorities for violations of regulatory requirements, in which case we may need to find a substitute contractor, and we may not be able to use some or all of the data produced by such contractors in support of our marketing applications.
Disputes may arise between us and our licensors regarding intellectual property subject to a license agreement, including: • the scope of rights granted under the license agreement and other interpretation-related issues; • whether and the extent to which our technology and processes infringe on intellectual property of the licensor that is not subject to the licensing agreement; • our right to sublicense patents and other rights to third parties; • our diligence obligations with respect to the use of the licensed technology in relation to our development and commercialization of vonoprazan and any future product candidates, and what activities satisfy those diligence obligations; 120 • our right to transfer or assign the license; and • the ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our licensors and us and our partners.
Disputes may arise between us and our licensors regarding intellectual property subject to a license agreement, including: • the scope of rights granted under the license agreement and other interpretation-related issues; • whether and the extent to which our technology and processes infringe on intellectual property of the licensor that is not subject to the licensing agreement; • our right to sublicense patents and other rights to third parties; • our diligence obligations with respect to the use of the licensed technology in relation to our development and commercialization of vonoprazan and any future product candidates, and what activities satisfy those diligence obligations; • our right to transfer or assign the license; and • the ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our licensors and us and our partners.
In addition, the U.S. government has the right, under certain limited circumstances, to require us to grant exclusive, partially exclusive, or non-exclusive licenses to any of these inventions to a third party if it determines that: (i) adequate steps have not been taken to commercialize the invention; (ii) government action is necessary to meet public health or safety needs; or (iii) government action is necessary to meet requirements for public use under federal regulations (also referred to as “march-in rights”).
In addition, the U.S. government has the right, under certain limited circumstances, to require us to grant exclusive, partially exclusive, or non-exclusive licenses to any of these inventions to a third party if it determines that: (i) adequate steps have not been taken to commercialize the invention; (ii) government action is necessary to meet public health or safety needs; or (iii) government action is necessary to meet requirements for public use under federal regulations (also 101 referred to as “march-in rights”).
Misconduct by these parties could include intentional, reckless and/or negligent conduct or other unauthorized activities that violate: (i) the laws and regulations of the FDA and other similar regulatory bodies, including those laws that require the reporting of true, complete and accurate information to such regulatory bodies, (ii) manufacturing standards, including cGMP and similar requirements, or (iii) federal and state healthcare, security, fraud and abuse laws, data privacy and security laws, and other similar non-U.S. laws that require the true, complete and accurate reporting of financial information or data.
Misconduct by these parties could include intentional, reckless and/or negligent conduct or other unauthorized activities that violate: (i) the laws and regulations of the FDA and other similar regulatory bodies, including those laws that require the reporting of true, complete and accurate information to such regulatory bodies, (ii) manufacturing standards, including cGMP and similar requirements, or (iii) federal and state healthcare, security, fraud and abuse laws, data privacy and cybersecurity laws, and other similar non-U.S. laws that require the true, complete and accurate reporting of financial information or data.
However, if certain events occur prior to the end of such five-year period, including if we become a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, our annual gross revenues exceed $1.235 billion or we issue more than $1.0 billion of non-convertible debt in any three- year period, we will cease to be an emerging growth company prior to the end of such five-year period.
However, if certain events occur prior to the end of such five-year period, including if we become a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, our annual gross revenues exceed $1.235 billion or we issue more than $1 billion of non-convertible debt in any three- year period, we will cease to be an emerging growth company prior to the end of such five-year period.
Our failure, or Takeda’s, Catalent’s, Evonik’s, Sandoz’s or any other third-party manufacturer’s failure, to comply with applicable regulations could result in sanctions being imposed on us, including clinical holds, fines, injunctions, civil penalties, delays, suspension or withdrawal of approvals, seizures or recalls of product candidates or products, operating restrictions and criminal prosecutions, any of which could significantly and adversely affect supplies of our products.
Our failure, or Catalent’s, Evonik’s, Sandoz’s or any other third-party manufacturer’s failure, to comply with applicable regulations could result in sanctions being imposed on us, including clinical holds, fines, injunctions, civil penalties, delays, suspension or withdrawal of approvals, seizures or recalls of product candidates or products, operating restrictions and criminal prosecutions, any of which could significantly and adversely affect supplies of our products.
Moreover, if vonoprazan or any other future product candidates are associated with undesirable side effects in clinical trials or have characteristics that are unexpected, we may elect to abandon their development or limit their development to more narrow uses or subpopulations in which the undesirable side effects or other characteristics are less prevalent, less severe or more acceptable from a risk-benefit perspective, which may limit the commercial expectations for the product candidate, if approved.
Moreover, if vonoprazan or any other future product candidates are associated with undesirable side effects in clinical trials or have characteristics that are unexpected, we may elect to abandon their development or limit their development to more narrow uses or subpopulations in which the undesirable side effects or other characteristics are less prevalent, less severe or more 69 acceptable from a risk-benefit perspective, which may limit the commercial expectations for the product candidate, if approved.
For example: • others may be able to develop products that are similar to vonoprazan or any future product candidates but that are not covered by the claims of the patents that we own in the future or license; • we or our current and future licensors or predecessors might not have been the first to make the inventions covered by the issued patents or patent applications that we own in the future or license; • we or our current and future licensors or predecessors might not have been the first to file patent applications covering certain of the claimed inventions; • others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our intellectual property rights; • it is possible that the pending patent applications we own or license will not lead to issued patents; • issued patents that we own in the future or license may be held invalid or unenforceable, as a result of legal challenges by our competitors; • our competitors might conduct research and development activities in countries where we do not have patent rights and then use the information learned from such activities to develop competitive products for sale in our major commercial markets; • we may not develop additional proprietary technologies that are patentable; and • the patents of others may have an adverse effect on our business.
For example: • others may be able to develop products that are similar to VOQUEZNA or any future product candidates but that are not covered by the claims of the patents that we own in the future or license; • we or our current and future licensors or predecessors might not have been the first to make the inventions covered by the issued patents or patent applications that we own in the future or license; • we or our current and future licensors or predecessors might not have been the first to file patent applications covering certain of the claimed inventions; • others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our intellectual property rights; • it is possible that the pending patent applications we own or license will not lead to issued patents; • issued patents that we own in the future or license may be held invalid or unenforceable, as a result of legal challenges by our competitors; • our competitors might conduct research and development activities in countries where we do not have patent rights and then use the information learned from such activities to develop competitive products for sale in our major commercial markets; • we may not develop additional proprietary technologies that are patentable; and • the patents of others may have an adverse effect on our business.
In addition, our clinical trials must be conducted with product produced under cGMP or similar regulations. Our failure to comply with these regulations may require us to repeat clinical trials, which would delay the regulatory approval process. 87 CROs, investigators or other third parties may not devote adequate time and resources to such trials or perform as contractually required.
In addition, our clinical trials must be conducted with product produced under cGMP or similar regulations. Our failure to comply with these regulations may require us to repeat clinical trials, which would delay the regulatory approval process. CROs, investigators or other third parties may not devote adequate time and resources to such trials or perform as contractually required.
For example, over the last several years, the United States government has shut down several times and certain regulatory agencies, such as the FDA, have had to furlough critical FDA employees and stop critical activities. 85 Separately, in response to the COVID-19 pandemic, the FDA postponed most inspections of domestic and foreign manufacturing facilities at various points.
For example, over the last several years, the United States government has shut down several times and certain regulatory agencies, such as the FDA, have had to furlough critical FDA employees and stop critical activities. Separately, in response to the COVID-19 pandemic, the FDA postponed most inspections of domestic and foreign manufacturing facilities at various points.
We expect to experience pricing pressures in connection with the sale of any of our products due to the trend toward managed healthcare, the increasing influence of health maintenance organizations and additional legislative changes. The downward pressure on healthcare costs in general, particularly prescription drugs and surgical procedures and other treatments, has become very intense.
We expect to experience pricing pressures in connection with the sale of any of our products due to the trend toward managed healthcare, the increasing influence of health maintenance organizations and additional legislative changes. The downward pressure on healthcare costs in general, particularly 60 prescription drugs and surgical procedures and other treatments, has become very intense.
Such a loss of patent protection would have a material adverse impact on our business. 126 Even if resolved in our favor, litigation or other legal proceedings relating to our intellectual property rights may cause us to incur significant expenses and could distract our technical and management personnel from their normal responsibilities.
Such a loss of patent protection would have a material adverse impact on our business. Even if resolved in our favor, litigation or other legal proceedings relating to our intellectual property rights may cause us to incur significant expenses and could distract our technical and management personnel from their normal responsibilities.
This preference for U.S. industry may limit our ability to contract with non-U.S. product manufacturers for products covered by such intellectual property. 134 Risks Related to Our Common Stock The trading price of the shares of our common stock has been, and is likely to continue to be, highly volatile, and purchasers of our common stock could incur substantial losses.
This preference for U.S. industry may limit our ability to contract with non-U.S. product manufacturers for products covered by such intellectual property. Risks Related to Our Common Stock The trading price of the shares of our common stock has been, and is likely to continue to be, highly volatile, and purchasers of our common stock could incur substantial losses.
In addition, approval policies or regulations may change, and the FDA and EMA and comparable regulatory authorities have substantial discretion in the drug approval process, including the ability to delay, limit or deny approval of a product candidate for many reasons. Despite the time and expense invested in clinical development of product candidates, regulatory approval is never guaranteed.
In addition, approval policies or regulations may change, and the FDA and EMA and comparable 70 regulatory authorities have substantial discretion in the drug approval process, including the ability to delay, limit or deny approval of a product candidate for many reasons. Despite the time and expense invested in clinical development of product candidates, regulatory approval is never guaranteed.
Any delay in obtaining, or inability to obtain, applicable regulatory approvals would prevent us or any of our potential future collaborators from commercializing vonoprazan and any future product candidates. 82 Of the large number of drugs in development, only a small percentage successfully complete the FDA, EMA or foreign regulatory approval processes and are commercialized.
Any delay in obtaining, or inability to obtain, applicable regulatory approvals would prevent us or any of our potential future collaborators from commercializing vonoprazan and any future product candidates. Of the large number of drugs in development, only a small percentage successfully complete the FDA, EMA or foreign regulatory approval processes and are commercialized.
As is the case with pharmaceuticals generally, it is likely that there may be side effects and adverse events associated with vonoprazan’s or any future product candidates’ use. Results of our ongoing or future clinical trials could reveal a high and unacceptable severity and prevalence of side effects or unexpected characteristics.
As is the case with pharmaceuticals generally, it is likely that there may be side effects and adverse events associated with VOQUEZNA’s or vonoprazan’s or any future product candidates’ use. Results of our ongoing or future clinical trials could reveal a high and unacceptable severity and prevalence of side effects or unexpected characteristics.
We may expend our limited resources to pursue a particular indication or formulation for vonoprazan and fail to capitalize on product candidates, indications or formulations that may be more profitable or for which there is a greater likelihood of success. Because we have limited financial and managerial resources, we focus on specific indications and formulations for vonoprazan.
We may expend our limited resources to pursue a particular indication or formulation for vonoprazan and fail to capitalize on product candidates, indications or formulations that may be more profitable or for which there is a greater likelihood of success. Because we have limited financial and managerial resources, we focus on specific indications and formulations for VOQUEZNA.
Efforts to do so may not result in the actual acquisition or license of a particular product candidate, potentially resulting in a diversion of our management’s time and the expenditure of our resources with no resulting benefit. 83 We enrolled patients in Europe in our erosive GERD and H. pylori trials.
Efforts to do so may not result in the actual acquisition or license of a particular product candidate, potentially resulting in a diversion of our management’s time and the expenditure of our resources with no resulting benefit. We enrolled patients in Europe in our Erosive GERD and H. pylori trials.
If the FDA or comparable regulatory authority does not accept data from our clinical trials of vonoprazan and any future product candidates, it would likely result in the need for additional clinical trials, which would be costly and time consuming and delay or permanently halt our development of vonoprazan and any future product candidates.
If the FDA or comparable regulatory authority does not accept data from our clinical trials of vonoprazan and any future product candidates, it would likely result in the need for additional clinical trials, which would be costly and time consuming and delay or permanently halt our development of vonoprazan for additional indications and any future product candidates.
If reimbursement is not available or is available only at limited levels, we may not be able to successfully commercialize our products and may not be able to obtain a satisfactory financial return on products that we may develop. 95 There is significant uncertainty related to third-party payer coverage and reimbursement of newly approved products.
If reimbursement is not available or is available only at limited levels, we may not be able to successfully commercialize our products and may not be able to obtain a satisfactory financial return on products that we may develop. There is significant uncertainty related to third-party payer coverage and reimbursement of newly approved products.
Under the UPC, all European patents, including those issued prior to ratification of the European Patent Package, will by default automatically fall under the jurisdiction of the UPC. The UPC will provide our competitors with a new forum to centrally revoke our European patents, and allow for the possibility of a competitor to obtain pan-European injunctions.
Under the UPC, all European patents, including those issued prior to ratification of the European Patent Package, will by default automatically fall under the jurisdiction of the UPC. The UPC will 97 provide our competitors with a new forum to centrally revoke our European patents, and allow for the possibility of a competitor to obtain pan-European injunctions.
Failure to remedy any material weakness in our internal control over financial reporting, or to implement or maintain other effective control systems required of public companies, could also restrict our future access to the capital markets. 141 We could be subject to securities class action litigation.
Failure to remedy any material weakness in our internal control over financial reporting, or to implement or maintain other effective control systems required of public companies, could also restrict our future access to the capital markets. We could be subject to securities class action litigation.
The degree of market acceptance of vonoprazan or any future products, if approved, will depend on a number of factors, including: • demonstration of clinical efficacy and safety compared to other more-established products; • the indications for which vonoprazan or any future product candidates are approved; • the limitation of our targeted patient population and other limitations or warnings contained in any FDA-approved labeling or comparable approved labeling; • acceptance of a new drug for the relevant indication by healthcare providers and their patients; • the pricing and cost-effectiveness of our products, as well as the cost of treatment with our products in relation to alternative treatments and therapies; • our ability to obtain and maintain sufficient third-party coverage and adequate reimbursement from government healthcare programs, including Medicare and Medicaid, private health insurers and other third-party payers; • the willingness of patients to pay all, or a portion of, out-of-pocket costs associated with our products in the absence of sufficient third-party coverage or adequate reimbursement; • any restrictions on the use of our products, and the prevalence and severity of any adverse effects; • potential product liability claims; • the timing of market introduction of our products as well as competitive drugs; • the effectiveness of our or any of our potential future collaborators’ sales and marketing strategies; and • unfavorable publicity relating to the product.
The degree of market acceptance of our current products or any future products, if approved, will depend on a number of factors, including: • demonstration of clinical efficacy and safety compared to other more-established products; • the indications for which our current or any future product candidates are approved; • the limitation of our targeted patient population and other limitations or warnings contained in any FDA-approved labeling or comparable approved labeling; • acceptance of a new drug for the relevant indication by healthcare providers and their patients; 58 • the pricing and cost-effectiveness of our products, as well as the cost of treatment with our products in relation to alternative treatments and therapies; • our ability to obtain and maintain sufficient third-party coverage and adequate reimbursement from government healthcare programs, including Medicare and Medicaid, private health insurers and other third-party payers; • the willingness of patients to pay all, or a portion of, out-of-pocket costs associated with our products in the absence of sufficient third-party coverage or adequate reimbursement; • any restrictions on the use of our products, and the prevalence and severity of any adverse effects; • potential product liability claims; • the timing of market introduction of our products as well as competitive drugs; • the effectiveness of our or any of our potential future collaborators’ sales and marketing strategies; and • unfavorable publicity relating to the product.
Our ability to utilize our NOL carryforwards and other tax attributes to offset future taxable income or tax liabilities may be limited as a result of ownership changes, including potential changes in connection with our IPO or future offerings. Similar rules may apply under state tax laws.
Our ability to utilize our NOL carryforwards and other tax attributes to offset future taxable income or tax liabilities may be limited as a result of ownership changes, including changes in connection with our IPO or future offerings. Similar rules may apply under state tax laws.
If Takeda, Catalent, Evonik, Sandoz or other third-party manufacturers were to encounter any manufacturing or shipping difficulties or delays due to these factors, our ability to provide vonoprazan to patients in clinical trials, or to provide product for treatment of patients if approved, would be jeopardized.
If Catalent, Evonik, Sandoz or other third-party manufacturers were to encounter any manufacturing or shipping difficulties or delays due to these factors, our ability to provide vonoprazan to patients in clinical trials, or to provide product for treatment of patients if approved, would be jeopardized.
The occurrence of any of these events could have a material adverse effect on our business, financial condition and results of operations. Our Revenue Interest Financing Agreement could limit cash flow available for our operations and expose us to risks that could adversely affect our business, financial condition and results of operations.
The occurrence of any of these events could have a material adverse effect on our business, financial condition and results of operations. 79 Our Revenue Interest Financing Agreement could limit cash flow available for our operations and expose us to risks that could adversely affect our business, financial condition and results of operations.
In May 2022, we entered into a Revenue Interest Financing Agreement with the Initial Investors pursuant to which we can receive up to $260 million in funding from the Initial Investors, and in October 2022, we entered into the Joinder Agreement under which we can receive up to $40 million from the Additional Investor, bringing the total funding available under the Revenue Interest Financing Agreement to up to $300 million.
In May 2022, we entered into a Revenue Interest Financing Agreement with the Initial Investors pursuant to which we can receive up to $260.0 million in funding from the Initial Investors, and in October 2022, we entered into the Joinder Agreement under which we can receive up to $40 million from the Additional Investor, bringing the total funding available under the Revenue Interest Financing Agreement to up to $300 million.
We employ reputable law firms and other professionals to help us comply, and in many cases, an inadvertent lapse can be cured by payment of a late fee or by other means in accordance with rules applicable to the particular jurisdiction.
We employ 99 reputable law firms and other professionals to help us comply, and in many cases, an inadvertent lapse can be cured by payment of a late fee or by other means in accordance with rules applicable to the particular jurisdiction.
Our efforts to enforce or protect our proprietary rights related to trademarks, trade names, trade secrets, domain names, copyrights or other intellectual property may be ineffective and could result in substantial costs and diversion of resources and could adversely affect our financial condition or results of operations.
Our efforts to enforce or protect our proprietary rights related to trademarks, 100 trade names, trade secrets, domain names, copyrights or other intellectual property may be ineffective and could result in substantial costs and diversion of resources and could adversely affect our financial condition or results of operations.
If we fail to comply with our obligations under these agreements, or we are subject to bankruptcy-related proceedings, the licensor may have the right to terminate the license, in which event we would not be able to market products covered by the license.
If we fail to comply with our obligations under these agreements, or we are subject to bankruptcy-related proceedings, the licensor 90 may have the right to terminate the license, in which event we would not be able to market products covered by the license.
The facilities used by Takeda, Catalent and Evonik to manufacture vonoprazan and by Sandoz to manufacture amoxicillin and clarithromycin and to package the antibiotics and vonoprazan must be approved by the FDA and foreign regulatory authority pursuant to inspections that may be conducted after we submit marketing authorizations to the FDA and comparable foreign regulatory authorities.
The facilities used by Catalent and Evonik to manufacture vonoprazan and by Sandoz to manufacture amoxicillin and clarithromycin and to package the antibiotics and vonoprazan must be approved by the FDA and foreign regulatory authority pursuant to inspections that may be conducted after we submit marketing authorizations to the FDA and comparable foreign regulatory authorities.
Since its enactment, there have been judicial and political challenges to certain aspects of the Affordable Care Act. On June 17, 2021, the U.S. Supreme Court dismissed the most recent judicial challenge to the ACA without specifically ruling on the constitutionality of the ACA.
Since its enactment, there have been judicial and political challenges to certain aspects of the Affordable Care Act. On June 17, 2021, the U.S. Supreme Court dismissed the most recent judicial challenge to the Affordable Care Act without specifically ruling on the constitutionality of the Affordable Care Act.
Additionally, we may pursue additional in-licenses or acquisitions of development-stage assets or programs, which entails additional risk to us. Identifying, selecting and acquiring promising product candidates requires substantial technical, financial and human resources expertise.
Additionally, we may pursue additional in-licenses or acquisitions of development-stage assets or programs, which entails additional risk to us. Identifying, selecting and acquiring promising product candidates requires substantial technical, financial and 72 human resources expertise.
In addition, if any of the commercial milestones or other cash payments become due under the terms of the Takeda License, we may not have sufficient funds available to meet our obligations, which would allow Takeda to terminate the Takeda License.
In addition, if any of the commercial milestones or other cash payments become due under the terms of the Takeda License, we may not have sufficient funds available to meet our obligations, which would allow Takeda to terminate the 74 Takeda License.
In March 2020, due to efforts to combat the COVID-19 pandemic, we announced a temporary pause in randomization of new patients in our Phase 3 trials and did not recommence randomizations in either trial until June 2020.
In March 2020, due to efforts to combat the COVID-19 pandemic, we 78 announced a temporary pause in randomization of new patients in our Phase 3 trials and did not recommence randomizations in either trial until June 2020.
Our common stock has a limited trading history and the market price has fluctuated widely, and may in the future fluctuate widely, depending upon many factors such as those discussed in this “Risk Factors” section and many others, some of which are beyond our control, including the following: • a relatively low-volume trading market for our shares of common stock that could cause trades of small blocks of shares to have a significant impact on the price of our shares of common stock; • market conditions in the biopharmaceutical sector and issuance of securities analysts’ reports or recommendations; • establishment of short positions by holders or non-holders of our common stock; • an inability to obtain additional funding; • sales of our stock by insiders and stockholders, including Takeda; • our ability to enroll patients in our ongoing and any future clinical trials; • results of our clinical trials and preclinical studies, the results of clinical trials conducted by Takeda and others for vonoprazan, and the results of trials of our competitors or those of other companies in our market sector; • regulatory approval of vonoprazan and any future product candidates, or limitations to specific label indications or patient populations for its use, or changes or delays in the regulatory review process; • any termination or loss of rights under the Takeda License; • regulatory developments in the United States and foreign countries; • changes in the structure of healthcare payment systems, especially in light of reforms to the U.S. healthcare system; • the success or failure of our efforts to acquire, license or develop additional product candidates; • innovations or new products developed by us or our competitors; • announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments; • manufacturing, supply or distribution delays or shortages; • any changes to our relationship with any manufacturers, suppliers, licensors, future collaborators or other strategic partners; • achievement of expected product sales and profitability; • variations in our financial results or those of companies that are perceived to be similar to us; 135 • general economic, industry and market conditions, public health emergencies or other events or factors, many of which are beyond our control; • additions or departures of key personnel; • intellectual property, product liability or other litigation against us; • changes in our capital structure, such as future issuances of securities and the incurrence of additional debt; and • changes in accounting standards, policies, guidelines, interpretations or principles.
Our common stock has a limited trading history and the market price has fluctuated widely, and may in the future fluctuate widely, depending upon many factors such as those discussed in this “Risk Factors” section and many others, some of which are beyond our control, including the following: • a relatively low-volume trading market for our shares of common stock that could cause trades of small blocks of shares to have a significant impact on the price of our shares of common stock; • market conditions in the biopharmaceutical sector and issuance of securities analysts’ reports or recommendations; • establishment of short positions by holders or non-holders of our common stock; • an inability to obtain additional funding; • sales of our stock by insiders and stockholders, including Takeda; • our ability to enroll patients in our ongoing and any future clinical trials; • results of our clinical trials and preclinical studies, the results of clinical trials conducted by Takeda and others for vonoprazan, and the results of trials of our competitors or those of other companies in our market sector; • additional regulatory approvals of vonoprazan and approvals of any future product candidates, or limitations to specific label indications or patient populations for use of any approved products, or changes or delays in the regulatory review process; • any termination or loss of rights under the Takeda License; • regulatory developments in the United States and foreign countries; • changes in the structure of healthcare payment systems, especially in light of reforms to the U.S. healthcare system; • the success or failure of our efforts to acquire, license or develop additional product candidates; • innovations or new products developed by us or our competitors; • announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments; 102 • manufacturing, supply or distribution delays or shortages; • any changes to our relationship with any manufacturers, suppliers, licensors, future collaborators or other strategic partners; • achievement of expected product sales and profitability; • variations in our financial results or those of companies that are perceived to be similar to us; • general economic, industry and market conditions, public health emergencies or other events or factors, many of which are beyond our control; • additions or departures of key personnel; • intellectual property, product liability or other litigation against us; • changes in our capital structure, such as future issuances of securities and the incurrence of additional debt; and • changes in accounting standards, policies, guidelines, interpretations or principles.
From time to time, we or others may also disclose interim data from clinical trials. Interim data from clinical trials are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment continues and more patient data become available.
From time to time, we or others may also disclose interim data from clinical trials. Interim data from clinical trials are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment continues and more patient data 73 become available.
In addition, the GDPR increases the scrutiny of transfers of personal data from the EEA to the United States and other jurisdictions that the European Commission does not recognize as having “adequate” data protection laws.
In addition, the GDPR increases the scrutiny of transfers of personal data from the EEA and UK to the United States and other jurisdictions that the European Commission does not recognize as having “adequate” data protection laws.
Coast Guard, and the U.S. Public Health Service (including the Indian Health Service). The manufacturer must also pay rebates on products purchased by military personnel and dependents through the TRICARE retail pharmacy program.
Coast Guard, and the U.S. Public Health Service (including the Indian Health Service). The manufacturer must also pay rebates on products purchased by military personnel and dependents through the TRICARE retail 61 pharmacy program.
The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability or commercialize vonoprazan and any future product candidates, if approved. 111 We and any of our third-party manufacturers or suppliers may use potent chemical agents and hazardous materials, and any claims relating to improper handling, storage or disposal of these materials could be time consuming or costly.
The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability or commercialize vonoprazan and any future product candidates, if approved. 83 We and any of our third-party manufacturers or suppliers may use potent chemical agents and hazardous materials, and any claims relating to improper handling, storage or disposal of these materials could be time consuming or costly.
Patent terms may be inadequate to protect our competitive position on vonoprazan and any future product candidates for an adequate amount of time. Patents have a limited lifespan. In the United States, if all maintenance fees are timely paid, the natural expiration of a patent is generally 20 years from its earliest U.S. non-provisional filing date.
Patent terms may be inadequate to protect our competitive position on VOQUEZNA and any future product candidates for an adequate amount of time. Patents have a limited lifespan. In the United States, if all maintenance fees are timely paid, the natural expiration of a patent is generally 20 years from its earliest U.S. non-provisional filing date.
We may make formulation or manufacturing changes to vonoprazan or any future product candidates, in which case we may need to conduct additional preclinical studies to bridge our modified product candidates to earlier versions.
We may make 68 formulation or manufacturing changes to vonoprazan or any future product candidates, in which case we may need to conduct additional preclinical studies to bridge our modified product candidates to earlier versions.
As a result, we currently rely, and expect to continue to rely, on third parties for the manufacture of vonoprazan and related raw materials for clinical development and commercial supply.
As a result, we currently rely, and expect to continue to rely, on third parties for the manufacture of vonoprazan and supply of related raw materials for clinical development and commercial sale.
If Takeda, Catalent, Evonik or Sandoz fails to fulfill its obligations under its respective supply agreement(s), or if any of the vonoprazan drug product or drug substance supplied by Takeda, Catalent or Evonik cannot be utilized due to quality or cGMP or similar concerns, adverse findings during regulatory inspections or other reasons, our development plans and commercialization of vonoprazan, if approved, could be significantly delayed or otherwise adversely affected.
If Catalent, Evonik or Sandoz fails to fulfill its obligations under its respective supply agreement, or if any of the vonoprazan drug product or drug substance supplied by Catalent or Evonik cannot be utilized due to quality or cGMP or similar concerns, adverse findings during regulatory inspections or other reasons, our development plans and commercialization of vonoprazan, if approved, could be significantly delayed or otherwise adversely affected.
In addition, we have no control over Takeda’s, Catalent’s, Evonik’s, Sandoz’s, or any other third-party manufacturer’s ability to maintain adequate quality control, quality assurance and qualified personnel.
In addition, we have no control over Catalent’s, Evonik’s, Sandoz’s, or any other third-party manufacturer’s ability to maintain adequate quality control, quality assurance and qualified personnel.
If Takeda, Catalent, Evonik, Sandoz, or any other third-party manufacturer we contract with in the future, cannot successfully manufacture material that conforms to our specifications and the strict regulatory requirements of the FDA or others, including requirements related to the 88 manufacturing of high potency compounds, they will not be able to secure and/or maintain regulatory approval for their manufacturing facilities.
If Catalent, Evonik, Sandoz, or any other third-party manufacturer we contract with in the future, cannot successfully manufacture material that conforms to our specifications and the strict regulatory requirements of the FDA or others, including requirements related to the manufacturing of high potency compounds, they will not be able to secure and/or maintain regulatory approval for their manufacturing facilities.
We do not control the manufacturing process of, and are completely dependent on, Takeda, Catalent, Evonik and Sandoz for compliance with applicable cGMP or similar requirements.
We do not control the manufacturing process of, and are completely dependent on, Catalent, Evonik and Sandoz for compliance with applicable cGMP or similar requirements.
Since patent applications in the United States and most other countries are confidential for a period of time after filing or until issuance, we may not be certain that we or our current and future licensors are the first to either (1) file any patent application related to vonoprazan and any future product candidates or (2) invent any of the inventions claimed in the patents or patent applications.
Since patent applications in the United States and most other countries are confidential for a period of time after filing or until issuance, we may not be certain that we or our current and future licensors are the first to either (1) file any patent application related to VOQUEZNA and any future product candidates or (2) invent any of the inventions claimed in the patents or patent applications.
We may take advantage of certain of the scaled disclosures available to smaller reporting companies and will be able to take advantage of these scaled disclosures for so long as our voting and non-voting common stock held by non-affiliates is less than $250.0 million measured on the last business day of our second fiscal quarter, or our annual revenue is less than $100.0 million during the most recently completed fiscal year and our voting and non-voting common stock held by non-affiliates is less than $700.0 million measured on the last business day of our second fiscal quarter. 137 Provisions in our charter documents and under Delaware law could discourage a takeover that stockholders may consider favorable and may lead to entrenchment of management.
We may take advantage of certain of the scaled disclosures available to smaller reporting companies and will be able to take advantage of these scaled disclosures for so long as our voting and non-voting common stock held by non-affiliates is less than $250 million measured on the last business day of our second fiscal quarter, or our annual revenue is less than $100 million during the most recently completed fiscal year and our voting and non-voting common stock held by non-affiliates is less than $700 million measured on the last business day of our second fiscal quarter. 104 Provisions in our charter documents and under Delaware law could discourage a takeover that stockholders may consider favorable and may lead to entrenchment of management.
Even though we may have contractual protections with such vendors, contractors, or other organizations, notifications and follow-up actions related to a security breach could impact our reputation, cause us to incur significant costs, including legal expenses, harm customer confidence, hurt our expansion into new markets, cause us to incur remediation costs, or cause us to lose existing customers.
Even though we may have contractual protections with such vendors, contractors, or other organizations, notifications and follow-up actions related to a cybersecurity breach could impact our reputation, cause us to incur significant costs, including legal expenses, harm customer confidence, hurt our expansion into new markets, cause us to incur remediation costs, or cause us to lose existing customers.
Because patent applications are maintained as confidential for a certain period of time, until the relevant application is published we may be unaware of third-party patents that may be infringed by commercialization of vonoprazan and any future product candidates, and we cannot be certain that we were the first to file a patent application related to a product candidate or technology.
Because patent applications are maintained as confidential for a certain period of time, until the relevant application is published we may be unaware of third-party patents that may be infringed by commercialization of VOQUEZNA and any future product candidates, and we cannot be certain that we were the first to file a patent application related to a product candidate or technology.
Moreover, even if we or our future strategic partners were able to obtain a license, the rights may be nonexclusive, which could result in our competitors gaining access to the same intellectual property. In addition, we cannot be certain that we could redesign vonoprazan and any future product candidates or processes to avoid infringement, if necessary.
Moreover, even if we or our future strategic partners were able to obtain a license, the rights may be nonexclusive, which could result in our competitors gaining access to the same intellectual property. In addition, we cannot be certain that we could redesign VOQUEZNA and any future product candidates or processes to avoid infringement, if necessary.
Results from nonclinical studies and clinical trials can be interpreted in different ways. Even if we believe the nonclinical or clinical data for vonoprazan and any future product candidates are promising, such data may not be sufficient to support approval by the FDA and comparable foreign regulatory authorities.
Results from nonclinical studies and clinical trials can be interpreted in different ways. Even if we believe the nonclinical or clinical data for additional regulatory approvals for vonoprazan or for any future product candidates are promising, such data may not be sufficient to support approval by the FDA and comparable foreign regulatory authorities.
From time to time, we or others, such as Takeda, may publicly disclose preliminary or top-line data from clinical trials, which are based on a preliminary analysis of then-available data, and the results and related findings and conclusions are subject to change following a more comprehensive review of the data related to the particular study or trial.
From time to time, we or others, such as Takeda, may publicly disclose preliminary or top-line data from clinical trials that are based on a preliminary analysis of then-available data, and the results and related findings and conclusions are subject to change following a more comprehensive review of the data related to the particular study or trial.
These products may compete with vonoprazan or any future product candidates, and our patents, the patents of our current and future licensors or other intellectual property rights may not be effective or sufficient to prevent them from competing. Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions.
These products may compete with VOQUEZNA or any future product candidates, and our patents, the patents of our current and future licensors or other intellectual property rights may not be effective or sufficient to prevent them from competing. Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions.
Any patent-related legal action against us claiming damages and seeking to enjoin activities relating to vonoprazan and any future product candidates or processes could subject us to potential liability for damages, including treble damages if we were determined to willfully infringe, and require us to obtain a license to manufacture or develop vonoprazan and any future product candidates.
Any patent-related legal action against us claiming damages and seeking to enjoin activities relating to VOQUEZNA and any future product candidates or processes could subject us to potential liability for damages, including treble damages if we were determined to willfully infringe, and require us to obtain a license to manufacture or develop VOQUEZNA and any future product candidates.
Additionally, Jeil Pharm has initiated a Phase 3 trial in South Korea of its PCAB candidate, JP-1366, in erosive GERD, and Cinclus’ linaprazan glurate has completed a Phase 2 clinical trial in Europe. To our knowledge, none of these compounds have demonstrated superiority to PPIs in a Phase 3 clinical trial.
Reddy’s in Russia. Additionally, Jeil Pharm has initiated a Phase 3 trial in South Korea of its PCAB candidate, JP-1366, in Erosive GERD, and Cinclus’ linaprazan glurate has completed a Phase 2 clinical trial in Europe. To our knowledge, none of these compounds have demonstrated superiority to PPIs in a Phase 3 clinical trial.
These fluctuations may occur due to a variety of factors, many of which are outside of our control, including, but not limited to: • the timing and cost of, and level of investment in, research, development, regulatory approval and commercialization activities relating to VOQUEZNA TRIPLE PAK, VOQUEZNA DUAL PAK, VOQUEZNA or any future product candidates, which may change from time to time; • coverage and reimbursement policies with respect to VOQUEZNA TRIPLE PAK, VOQUEZNA DUAL PAK, and, if approved, VOQUEZNA or any future product candidates, and potential future drugs that compete with such products, if approved; • the cost of manufacturing vonoprazan or any future product candidates, which may vary depending on the quantity of production and the terms of our agreements with Takeda, Catalent, Evonik, Sandoz and any future third-party manufacturers; • business interruptions resulting from geopolitical actions, including war, such as the ongoing hostilities in the Ukraine, and terrorism, or natural disasters such as earthquakes, typhoons, floods and fires or public health emergencies or pandemics such as the ongoing COVID-19 pandemic; • the timing and amount of the milestone or other payments we will be required to pay to Takeda pursuant to the Takeda License; • expenditures that we may incur to acquire, develop or commercialize additional product candidates and technologies; • the level of demand for any approved products, which may vary significantly; • future accounting pronouncements or changes in our accounting policies; and • the timing and success or failure of preclinical studies or clinical trials for vonoprazan or any future product candidates or competing product candidates, or any other change in the competitive landscape of our industry, including consolidation among our competitors or partners.
These fluctuations may occur due to a variety of factors, many of which are outside of our control, including, but not limited to: • the timing and cost of, and level of investment in, research, development, regulatory approval and commercialization activities relating to our current products, or any future product candidates, which may change from time to time; • coverage and reimbursement policies with respect to our current products, or any future product candidates, and potential future drugs that compete with such products, if approved; • the cost of manufacturing of our current products or any future product candidates, which may vary depending on the quantity of production and the terms of our agreements with Catalent, Evonik, Sandoz and any future third-party manufacturers; • business interruptions resulting from geopolitical actions, including war, such as the ongoing hostilities in the Ukraine or the Middle East, and terrorism, or natural disasters such as earthquakes, typhoons, floods and fires or public health emergencies or pandemics such as the COVID-19 pandemic; • the timing and amount of the milestone or other payments we will be required to pay to Takeda pursuant to the Takeda License; • expenditures that we may incur to acquire, develop or commercialize additional product candidates and technologies; • the level of demand for any approved products, which may vary significantly; • future accounting pronouncements or changes in our accounting policies; and • the timing and success or failure of additional clinical trials for vonoprazan or preclinical studies or clinical trials for any future product candidates or competing product candidates, or any other change in the competitive landscape of our industry, including consolidation among our competitors or partners.
This evolution may create uncertainty in our business, affect our ability to operate in certain jurisdictions or to collect, store, transfer use and share personal information, 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 our ability to operate in certain jurisdictions or to collect, store, transfer, use, share and otherwise process personal information, necessitate the acceptance of more onerous obligations in our contracts, result in liability or impose additional costs on us.
Similar to the U.S. federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the healthcare fraud statute implemented under HIPAA or specific intent to violate it in order to have committed a violation; • the U.S. federal Physician Payments Sunshine Act, which requires certain manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) to report annually to the Centers for Medicare & Medicaid Services, or CMS, information related to certain payments and other “transfers of value” made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors) , certain non-physician practitioners (physician assistants, nurse practitioners, clinical nurse specialists, anesthesiologist assistants, certified registered nurse anesthetists, anesthesiology assistants and certified nurse midwives)and teaching hospitals, as well as ownership and investment interests held by the physicians described above and their immediate family members; and 108 • analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, which may apply to our business practices, including but not limited to, research, distribution, sales and marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payers, including private insurers, or by the patients themselves; state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government, or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; and state laws and regulations that require drug manufacturers to file reports relating to pricing and marketing information or which require tracking gifts and other remuneration and items of value provided to physicians, other healthcare providers and entities.
Similar to the U.S. federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the healthcare fraud statute implemented under HIPAA or specific intent to violate it in order to have committed a violation; • the U.S. federal Physician Payments Sunshine Act, which requires certain manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) to report annually to CMS, information related to certain payments and other “transfers of value” made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors) , certain non-physician practitioners (physician assistants, nurse practitioners, clinical nurse specialists, anesthesiologist assistants, certified registered nurse anesthetists, anesthesiology assistants and certified nurse midwives)and teaching hospitals, as well as ownership and investment interests held by the physicians described above 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 our business practices, including but not limited to, research, distribution, sales and marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payers, including private insurers, or by the patients themselves; state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government, or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; and state laws and regulations that require drug manufacturers to file reports relating to pricing and marketing information or which require tracking gifts and other remuneration and items of value provided to physicians, other healthcare providers and entities. 81 We may also be subject to additional regulation in the conduct of our business.
Such a stock price decline could occur even when we have met any previously publicly stated revenue or earnings guidance we may provide. 104 Our business is subject to risks arising from epidemic diseases, such as the ongoing COVID-19 pandemic.
Such a stock price decline could occur even when we have met any previously publicly stated revenue or earnings guidance we may provide. Our business is subject to risks arising from epidemic diseases, such as the COVID-19 pandemic.
If we or any of our current and future licensors were to initiate legal proceedings against a third party to enforce a patent directed at vonoprazan and any future product candidates, the defendant could counterclaim that our patent or the patent of our current or future licensor is invalid and/or unenforceable in whole or in part.
If we or any of our current and future licensors were to initiate legal proceedings against a third party to enforce a patent directed at VOQUEZNA and any future product candidates, the defendant could counterclaim that our patent or the patent of our current or future licensor is invalid and/or unenforceable in whole or in part.
The lengthy approval process as well as the unpredictability of future clinical trial results may result in our failing to obtain regulatory approval to market vonoprazan and any future product candidates, which would significantly harm our business, financial condition, results of operations and prospects.
The lengthy approval process as well as the unpredictability of future clinical trial results may result in our failing to obtain additional regulatory approvals to market vonoprazan and any future product candidates, which would significantly harm our business, financial condition, results of operations and prospects.
If the license agreement is terminated, we would lose our rights to develop and commercialize vonoprazan, which in turn would have a material adverse effect on our business, operating results and prospects. We rely on third parties to conduct our clinical trials.
If the license agreement is terminated, we would lose our rights to develop and commercialize products containing vonoprazan, which in turn would have a material adverse effect on our business, operating results and prospects. We rely on third parties to conduct our clinical trials.
Other entities may have or obtain patents or proprietary rights that could limit our ability to make, use, sell, offer for sale or import vonoprazan and any future product candidates and products that may be approved in the future, or impair our competitive position.
Other entities may have or obtain patents or proprietary rights that could limit our ability to make, use, sell, offer for sale or import VOQUEZNA and any future product candidates and products that may be approved in the future, or impair our competitive position.
Although no third party has asserted a claim of patent infringement against us as of the date of this annual report, others may hold proprietary rights that could prevent vonoprazan and any future product candidates from being marketed.
Although no third party has asserted a claim of patent infringement against us as of the date of this annual report, others may hold proprietary rights that could prevent VOQUEZNA and any future product candidates from being marketed.
The COVID-19 pandemic and mitigation measures had had an adverse impact on global economic conditions and mitigation measures regarding a future public health pandemic could have an adverse effect on our business and financial condition, including impairing our ability to raise capital when needed.
The COVID-19 pandemic and mitigation measures had an adverse impact on global economic conditions and mitigation measures regarding any future public health pandemic could have an adverse effect on our business and financial condition, including impairing our ability to raise capital when needed.
The biotechnology and pharmaceutical industries are characterized by rapidly advancing technologies, intense competition and a strong emphasis on proprietary and novel products and product candidates. Our competitors have developed, are developing or may develop products, product candidates and processes competitive with vonoprazan.
The biotechnology and pharmaceutical industries are characterized by rapidly advancing technologies, intense competition and a strong emphasis on proprietary and novel products and product candidates. Our competitors have developed, are developing or may develop products, product candidates and processes competitive with VOQUEZNA.
Further, Takeda, Catalent, Evonik, Sandoz and any other third-party manufacturers we may use may experience manufacturing or shipping difficulties due to resource constraints or as a result of natural disasters, labor disputes, unstable political environments, or public health emergencies such as the COVID-19 pandemic or ongoing hostilities in the Ukraine.
Further, Catalent, Evonik, Sandoz and any other third-party manufacturers we may use may experience manufacturing or shipping difficulties due to resource constraints or as a result of natural disasters, labor disputes, unstable political environments, or public health emergencies such as the COVID-19 pandemic or ongoing hostilities in the Ukraine and the Middle East.
If we face such litigation, it could result in substantial costs and a diversion of management’s attention and resources, which could harm our business. 142 Item 1B. Unresolve d Staff Comments Not applicable.
If we face such litigation, it could result in substantial costs and a diversion of management’s attention and resources, which could harm our business. 108 Item 1B. Unresolve d Staff Comments Not applicable.
Regardless of the merits or eventual outcome, liability claims may result in: • decreased demand for our products; • injury to our reputation and significant negative media attention; • withdrawal of clinical trial participants; • costs to defend the related litigation; 112 • a diversion of management’s time and our resources; • substantial monetary awards to trial participants or patients; • product recalls, withdrawals or labeling, marketing or promotional restrictions; • significant negative financial impact; • the inability to commercialize vonoprazan and any future product candidates; and • a decline in our stock price.
Regardless of the merits or eventual outcome, liability claims may result in: • decreased demand for our products; • injury to our reputation and significant negative media attention; • withdrawal of clinical trial participants; • costs to defend the related litigation; • a diversion of management’s time and our resources; 84 • substantial monetary awards to trial participants or patients; • product recalls, withdrawals or labeling, marketing or promotional restrictions; • significant negative financial impact; • the inability to commercialize our current products and any future product candidates; and • a decline in our stock price.
The availability of coverage and the adequacy of reimbursement by governmental healthcare programs, such as Medicare and Medicaid, private health insurers and other third-party payers are essential for most patients to be able to afford prescription medications such as VOQUEZNA TRIPLE PAK, VOQUEZNA DUAL PAK, or, if approved, VOQUEZNA or any future product candidates.
The availability of coverage and the adequacy of reimbursement by governmental healthcare programs, such as Medicare and Medicaid, private health insurers and other third-party payers are essential for most patients to be able to afford prescription medications such as VOQUEZNA, VOQUEZNA TRIPLE PAK, VOQUEZNA DUAL PAK or any future product candidates that may be approved.
Takeda has the right to develop and commercialize vonoprazan outside of the United States, Europe, and Canada and has received marketing approval for vonoprazan in certain countries in Asia and Latin America as well as in Russia.
Takeda has the right to develop and commercialize vonoprazan outside of the United States, Europe, and Canada and has received marketing approval for vonoprazan in numerous countries in Asia and Latin America as well as in Russia.
Moreover, because patent applications can take many years to issue, there may be currently pending patent applications that may later result in issued patents that vonoprazan and any future product candidates may infringe.
Moreover, because patent applications can take many years to issue, there may be currently pending patent applications that may later result in issued patents that VOQUEZNA and any future product candidates may infringe.
Any such delay or rejection could prevent us from commercializing vonoprazan and any future product candidates. If any of our relationships with these third parties terminate, we may not be able to enter into arrangements with alternative third parties or do so on commercially reasonable terms.
Any such delay or rejection could prevent us from commercializing vonoprazan for additional indications and any future product candidates. If any of our relationships with these third parties terminate, we may not be able to enter into arrangements with alternative third parties or do so on commercially reasonable terms.
Competing products could present superior treatment alternatives, including by being more effective, safer, more convenient, less expensive or marketed and sold more effectively than any products we may develop. Competitive products may make any products we develop obsolete or noncompetitive before we recover the expense of developing and commercializing vonoprazan or any future product candidates.
Competing products could present superior treatment alternatives, including by being more effective, safer, more convenient, less expensive or marketed and sold more effectively than any products we may develop. Competitive products may make any products we develop obsolete or noncompetitive before we recover the expense of developing and commercializing our current products or any future product candidates.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeFor additional information, see Note 6, Lease Commitments included in Item 15 of this Annual Report on Form 10-K.
Biggest changeFor additional information, see Note 5, Lease Commitments included in Item 15 of this Annual Report on Form 10-K.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed1 unchanged
Biggest changeRegardless of the outcome, such proceedings or claims can have an adverse impact on us because of defense and settlement costs, diversion of resources and other factors, and there can be no assurances that favorable outcomes will be obtained. Item 4. Mine Safe ty Disclosures Not applicable. 143 PART II
Biggest changeRegardless of the outcome, such proceedings or claims can have an adverse impact on us because of defense and settlement costs, diversion of resources and other factors, and there can be no assurances that favorable outcomes will be obtained. Item 4. Mine Safe ty Disclosures Not applicable. 110 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

3 edited+0 added−5 removed4 unchanged
Biggest changeSecurities Authorized for Issuance Under Equity Compensation Plans See Item 12 of Part III of this annual report on Form 10-K for information about our equity compensation plans which is incorporated by reference herein. 144 Performance Graph Not applicable.
Biggest changeIn addition, under the terms of our Loan Agreement, we are prohibited from paying any cash dividends without the consent of the lenders. Securities Authorized for Issuance Under Equity Compensation Plans See Item 12 of Part III of this annual report on Form 10-K for information about our equity compensation plans which is incorporated by reference herein.
Prior to our initial public offering, there was no public market for our common stock. Holders of Common Stock As of February 24, 2023, there were 41,973,271 shares of our common stock outstanding held by approximately 59 holders of record of our common stock.
Prior to our initial public offering, there was no public market for our common stock. Holders of Common Stock As of March 4, 2024, there were 58,477,351 shares of our common stock outstanding held by approximately 46 holders of record of our common stock.
Issuer Repurchases of Equity Securities None. Item 6. R eserved 145
Performance Graph Not applicable. Unregistered Sales of Equity Securities Not applicable. Use of Proceeds from Registered Securities Not applicable. Issuer Repurchases of Equity Securities None. Item 6. [R eserved] 111
Removed
In addition, under the terms of our Loan Agreement, we are prohibited from paying any cash dividends without the consent of the lenders.
Removed
Unregistered Sales of Equity Securities Use of Proceeds On October 24, 2019, our registration statement on Form S-1 (File No. 333-234020) was declared effective by the SEC for our initial public offering.
Removed
At the closing of the offering on October 29, 2019, we sold 10,997,630 shares of common stock, which included the exercise in full by the underwriters of their option to purchase 1,434,473 additional shares, at an initial public offering price of $19.00 per share and received gross proceeds of $209.0 million, which resulted in net proceeds to us of approximately $191.5 million, after deducting underwriting discounts and commissions of approximately $14.6 million and offering-related transaction costs of approximately $2.9 million.
Removed
None of the expenses associated with the initial public offering were paid to directors, officers, persons owning ten percent or more of any class of equity securities, or to their associates, or to our affiliates. Goldman Sachs & Co. LLC, Jefferies LLC and Evercore Group L.L.C. acted as joint book-running managers for the offering.
Removed
As of December 31, 2021 the net proceeds from our initial public offering and follow on offering had been applied as follows: $151.7 million toward the clinical development of vonoprazan and $79.7 million towards working capital and general corporate purposes. As of December 31, 2021, we had used all of the net proceeds from our IPO of approximately $191.5 million.

Item 7. Management's Discussion & Analysis

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

80 edited+56 added−23 removed37 unchanged
Biggest changeThe tranches consist of (i) a first tranche consisting of term loans in an aggregate principal amount of $100.0 million, all of which was funded on the Closing Date (the “First Advance”), (ii) a second tranche consisting of up to an additional $50.0 million, which became available to us upon achievement of the protocol-specified primary efficacy endpoints in our Phase 3 trial studying vonoprazan for the healing and maintenance of healing of erosive GERD with acceptable safety data, such that the results support the submission of a New Drug Application (“NDA”) or supplemental NDA without the need to conduct another Phase 3 study and will be available, if specified conditions are met, through December 15, 2022, see amendment to later date below, (iii) a third and fourth tranches consisting of an additional total $50.0 million, which became available to us in May 2022 upon the achievement of (a) FDA approval of our NDA for vonoprazan and amoxicillin, or its NDA for vonoprazan, amoxicillin and clarithromycin, in each case for an indication relating to the treatment of H. pylori with an approved indication on the claim that is generally consistent with that sought in our NDA submission; and (b) filing of an NDA or supplemental NDA for vonoprazan for indications relating to the healing and maintenance of healing of erosive GERD.
Biggest changeThe tranches consist of (i) a first tranche consisting of term loans in an aggregate principal amount of $100 million, all of which was funded on the Closing Date, or the First Advance, (ii) a second tranche consisting of up to an additional $50 million, (iii) a third and fourth tranches consisting of an additional total $50 million, which became available to us in May 2022.
We paid Takeda upfront consideration consisting of a cash fee of $25.0 million, 1,084,000 shares of our common stock, the Takeda Warrant to purchase 7,588,000 shares of our common stock at an exercise price of $0.00004613 per share, and issued Takeda a right to receive an additional common stock warrant, or the Takeda Warrant Right, if Takeda’s fully-diluted ownership of the Company represented less than a certain specified percentage of the fully-diluted capitalization, including shares issuable upon conversion of then outstanding convertible promissory notes, calculated immediately prior to the closing of our IPO.
We paid Takeda upfront consideration consisting of a cash fee of $25 million, 1,084,000 shares of our common stock, a warrant to purchase 7,588,000 shares of our common stock at an exercise price of $0.00004613 per share, or the Takeda Warrant, and issued Takeda a right to receive an additional common stock warrant, or the Takeda Warrant Right, if Takeda’s fully-diluted ownership of the Company represented less than a certain specified percentage of the fully-diluted capitalization, including shares issuable upon conversion of then outstanding convertible promissory notes, calculated immediately prior to the closing of our IPO.
We will remain an emerging growth company until the earliest of (i) the last day of the fiscal year following the fifth anniversary of the consummation of our IPO, (ii) the last day of the fiscal year in which we have total annual gross revenue of at least $1.235 billion, (iii) the last day of the fiscal year in which we are deemed to be a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common stock held by non-affiliates exceeded $700.0 million as of the last business day of the second fiscal quarter of such year, or (iv) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.
We will remain an emerging growth company until the earliest of (i) the last day of the fiscal year following the fifth anniversary of the consummation of our IPO, (ii) the last day of the fiscal year in which we have total annual gross revenue of at least $1.235 billion, (iii) the last day of the fiscal year in which we are deemed to be a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common stock held by non-affiliates exceeded $700 million as of the last business day of the second fiscal quarter of such year, or (iv) the date on which we have issued more than $1 billion in non-convertible debt securities during the prior three-year period.
Research and development expenses include: • salaries, payroll taxes, employee benefits, and stock-based compensation charges for those individuals involved in research and development efforts; • external research and development expenses incurred under agreements with CROs, and consultants to conduct and support our ongoing clinical trials of vonoprazan; and • costs related to the manufacturing of vonoprazan for our clinical trials.
Research and development expenses include: • salaries, payroll taxes, employee benefits, and stock-based compensation charges for those individuals involved in research and development efforts; 114 • external research and development expenses incurred under agreements with CROs, and consultants to conduct and support our ongoing clinical trials of vonoprazan; and • costs related to the manufacturing of vonoprazan for our clinical trials.
Additionally, on December 30, 2020, we entered into a Supply and Packaging Services Agreement with Sandoz, pursuant to which Sandoz has agreed to supply commercial quantities of amoxicillin capsules and clarithromycin tablets, to package these antibiotics with vonoprazan, in finished convenience packs, and to supply us with these convenience packs.
On December 30, 2020, we entered into a Supply and Packaging Services Agreement with Sandoz, pursuant to which Sandoz has agreed to supply commercial quantities of amoxicillin capsules and clarithromycin tablets, to package these antibiotics with vonoprazan, in finished convenience packs, and to supply us with these convenience packs.
The preparation of our financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities and expenses and the disclosure of contingent assets and liabilities in our financial statements and accompanying notes. We evaluate these estimates and judgments on an ongoing basis.
The preparation of our financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in our financial statements and accompanying notes. We evaluate these estimates and judgments on an ongoing basis.
We agreed to make milestone payments to Takeda upon achieving certain tiered aggregate annual net sales of licensed products in the United States, Europe and Canada up to a total maximum milestone amount of $250.0 million.
We agreed to make milestone payments to Takeda upon achieving certain tiered aggregate annual net sales of licensed products in the United States, Europe and Canada up to a total maximum milestone amount of $250 million.
At-the-Market-Offering On November 10, 2020, we entered into an Open Market Sale Agreement SM , or the Sales Agreement, with Jefferies LLC, or the Sales Agent, under which we may, from time to time, sell shares of our common stock having an aggregate offering price of up to $125.0 million through the Sales Agent, or the ATM Offering.
At-the-Market-Offerings On November 10, 2020, we entered into an Open Market Sale Agreement SM , or the Sales Agreement, with Jefferies LLC, or the Sales Agent, under which we may, from time to time, sell shares of our common stock having an aggregate offering price of up to $125 million through the Sales Agent, or the 2020 ATM Offering.
We plan to seek commercial partnerships for vonoprazan in Europe and Canada, expand development of vonoprazan into other indications, dosing regimens and alternative formulations and packaging, and in-license or acquire additional clinical or commercial stage product candidates for the treatment of GI diseases in a capital efficient manner.
We plan to evaluate commercial partnerships for vonoprazan in Europe and Canada, expand development of vonoprazan into other indications, dosing regimens and alternative formulations and packaging, and in-license or acquire additional clinical or commercial stage product candidates for the treatment of GI diseases in a capital efficient manner.
In connection with the entry into the Loan Agreement, we issued to Hercules a warrant (the “Warrant”) to purchase a number of shares of our common stock equal to 2.5% of the aggregate amount of the Term Loan advances funded, and will issue to Hercules additional warrants when future Term Loan advances are funded.
In connection with the entry into the Loan Agreement, we issued to Hercules a warrant, or the Warrant, to purchase a number of shares of our common stock equal to 2.5% of the aggregate amount of the Term Loan advances funded, and will issue to Hercules additional warrants when future Term Loan advances are funded.
We commenced our operations in 2018 and have devoted substantially all of our resources to date to organizing and staffing our company, business planning, raising capital, in-licensing our initial product candidate, vonoprazan, meeting with regulatory authorities, conducting our Phase 3 clinical trials of vonoprazan, preparing applications for regulatory approval for vonoprazan and preparing for a potential commercial launch.
We commenced our operations in 2018 and have devoted substantially all of our resources to date to organizing and staffing our company, business planning, raising capital, in-licensing our initial and approved product candidate, vonoprazan, meeting with regulatory authorities, conducting our Phase 3 clinical trials of vonoprazan, preparing applications for regulatory approval for vonoprazan and preparing our commercial launch.
Additionally, the process of testing product candidates in clinical trials is costly, and the timing of progress and expenses in these trials is uncertain. 155 Our future capital requirements will depend on many factors, including: • the initiation, type, number, scope, results, costs and timing of our clinical trials of vonoprazan, and preclinical studies or clinical trials of other potential product candidates we may choose to pursue in the future, including feedback received from regulatory authorities; • the costs and timing of manufacturing for vonoprazan or any future product candidates, including commercial scale manufacturing if any product candidate is approved; • the costs, timing and outcome of regulatory review of vonoprazan or any future product candidates; • the costs of obtaining, maintaining and enforcing our patents and other intellectual property rights; • our efforts to enhance operational systems and hire additional personnel to satisfy our obligations as a public company, including enhanced internal controls over financial reporting; • the costs associated with hiring additional personnel and consultants as our business grows, including additional executive officers and clinical development personnel; • the timing and amount of the milestone or other payments we must make to Takeda and any future licensors; • the costs and timing of establishing or securing sales and marketing capabilities for vonoprazan or any future product candidate; • our ability to achieve sufficient market acceptance, coverage and adequate reimbursement from third-party payers and adequate market share and revenue for any approved products; • patients’ willingness to pay out-of-pocket for any approved products in the absence of coverage and/or adequate reimbursement from third-party payers; • the terms and timing of establishing and maintaining collaborations, licenses and other similar arrangements; and • costs associated with any products or technologies that we may in-license or acquire.
Our future capital requirements will depend on many factors, including: • the initiation, type, number, scope, results, costs and timing of our clinical trials of vonoprazan, and preclinical studies or clinical trials of other potential product candidates we may choose to pursue in the future, including feedback received from regulatory authorities; • the costs and timing of manufacturing for vonoprazan or any future product candidates, including commercial scale manufacturing if any product candidate is approved; 120 • the costs, timing and outcome of regulatory review of vonoprazan or any future product candidates; • the costs of obtaining, maintaining and enforcing our patents and other intellectual property rights; • our efforts to enhance operational systems and hire additional personnel to satisfy our obligations as a public company, including enhanced internal controls over financial reporting; • the costs associated with hiring additional personnel and consultants as our business grows, including additional executive officers and clinical development personnel; • the timing and amount of the milestone or other payments we must make to Takeda and any future licensors; • the costs and timing of establishing or securing sales and marketing capabilities for vonoprazan or any future product candidate; • our ability to achieve sufficient market acceptance, coverage and adequate reimbursement from third-party payers and adequate market share and revenue for any approved products; • patients’ willingness to pay out-of-pocket for any approved products in the absence of coverage and/or adequate reimbursement from third-party payers; • the terms and timing of establishing and maintaining collaborations, licenses and other similar arrangements; and • costs associated with any products or technologies that we may in-license or acquire.
On the Closing Date, we issued a Warrant for 74,782 shares of common stock. The Warrant will be exercisable for a period of seven years from the date of issuance at a per-share exercise price equal to $33.43, which was the closing price of our common stock on September 16, 2021.
On the Closing Date, we issued a Warrant for 74,782 shares of common stock. The Warrant is exercisable for a period of seven years from the date of issuance at a per-share exercise price equal to $33.43, which was the closing price of our common stock on September 16, 2021.
Investing Activities Net cash used in investing activities for the years ended December 31, 2022 and 2021 was primarily due to the cash we paid for acquiring property, plant and equipment.
Investing Activities Net cash used in investing activities for the years ended December 31, 2023 and 2022 was primarily due to the cash we paid for acquiring property, plant and equipment.
These data are supplemented by the extensive existing clinical data generated by Takeda as part of their development program for vonoprazan in Japan and other markets.
These data are supplemented by the extensive existing clinical data generated by Takeda as part of its development program for vonoprazan in Japan and other markets.
Through December 31, 2022, our stock-based compensation expense consisted of recognized fair value related to our issuance of restricted stock awards, for which the fair value is determined based on the fair value of the underlying common stock, stock options, and ESPP awards. 159 Other Company Information JOBS Act As an emerging growth company under the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, we can take advantage of an extended transition period for complying with new or revised accounting standards.
Through December 31, 2023, our stock-based compensation expense consisted of recognized fair value related to our issuance of restricted stock awards, for which the fair value is determined based on the fair value of the underlying common stock, performance-based awards, stock options, and ESPP awards. 124 Other Company Information JOBS Act As an emerging growth company under the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, we can take advantage of an extended transition period for complying with new or revised accounting standards.
These contracts generally provide for termination after a notice period, and, therefore, are cancelable contracts and not included in the table above. 158 Critical Accounting Policies and Significant Judgments and Estimates Our management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States, or GAAP.
These contracts generally provide for termination after a notice period, and, therefore, are cancelable contracts. Critical Accounting Policies and Significant Judgments and Estimates Our management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States, or GAAP.
In September 2021, we submitted two new drug applications, or NDAs, for combination packs that contain vonoprazan for the treatment of H. pylori infection in adults, one in combination with amoxicillin and clarithromycin (vonoprazan triple therapy) and the other in combination with amoxicillin alone (vonoprazan dual therapy).
In September 2021, we submitted two new drug applications, or NDAs, for combination packs that contain vonoprazan for the treatment of H. pylori infection in adults, one in combination with amoxicillin and clarithromycin (vonoprazan triple therapy) and the other in combination with amoxicillin alone (vonoprazan dual therapy). In May 2022, the U.S.
However, we may be unable to raise additional funds or enter into such other arrangements when needed on favorable terms or at all, and this risk could be exacerbated by the impact of the ongoing hostilities in the Ukraine on global economic conditions.
However, we may be unable to raise additional funds or enter into such other arrangements when needed on favorable terms or at all, and this risk could be exacerbated by the impact of ongoing conflicts throughout the world and global economic conditions.
We plan to increase our research and development expenses for the foreseeable future as we continue the development of vonoprazan.
We plan to continue to invest in our research and development expenses for the foreseeable future as we continue the development of vonoprazan.
Accordingly, until such time as we can generate significant revenue from sales of products containing vonoprazan, if ever, we expect to finance our cash needs through equity offerings, our Loan Agreement, our Revenue Interest Financing Agreement, additional debt financings or other capital sources, including potential collaborations, licenses and other similar arrangements.
We have generated limited revenue to date, until such time as we can generate significant revenue from sales of our approved products containing vonoprazan, we expect to finance our cash needs through equity offerings, our Loan Agreement, our Revenue Interest Financing Agreement, additional debt financings or other capital sources, including potential collaborations, licenses and other similar arrangements.
Our operations to date have been funded primarily through the issuance of convertible promissory notes, commercial bank debt, the proceeds from our initial public offering and our follow-on public offering.
Our operations to date have been funded primarily through the issuance of convertible promissory notes, commercial bank debt, the proceeds from our initial public offering, our follow-on public offering, our ATM offering, and our Revenue Interest Financing Agreement.
The Loan Agreement provides for term loans in an aggregate principal amount of up to $200.0 million (the “Term Loan”) under multiple tranches.
The Loan Agreement provides for term loans in an aggregate principal amount of up to $200 million, or the Term Loan, under multiple tranches.
Overview We are a biopharmaceutical company focused on developing and commercializing novel treatments for gastrointestinal, or GI, diseases. Our initial approved products, VOQUEZNA TRIPLE PAK and VONOPRAZAN DUAL PAK, as well as our current product candidate, VOQUEZNA, contain vonoprazan, an oral small molecule PCAB. PCABs are a novel class of medicines that block acid secretion in the stomach.
Overview We are a biopharmaceutical company focused on developing and commercializing novel treatments for gastrointestinal, or GI, diseases. Our approved products, VOQUEZNA®, VOQUEZNA® TRIPLE PAK® and VOQUEZNA® DUAL PAK®, contain vonoprazan, an oral small molecule potassium-competitive acid blocker, or PCAB. PCABs are a novel class of medicines that block acid secretion in the stomach.
For the year ended December 31, 2022, we sold 2,414,897 shares of our common stock under the ATM Offering for net proceeds of approximately $24.6 million after deducting $0.8 million of issuance costs.
The sales agreement expired on November 9, 2023 For the year ended December 31, 2022, we sold 2,414,897 shares of our common stock under the ATM Offering for net proceeds of approximately $24.6 million after deducting $0.8 million of issuance costs.
Beginning on September 17, 2021, interest expense consists of (i) cash interest at a variable annual rate equal to the greater of (a) 5.50% and (b) the Prime Rate (as reported in the Wall Street Journal) plus 2.25% (the “Interest Rate”), (ii) payment-in-kind interest at a per annum rate of interest equal to 3.35%, and (iii) amortization of the Hercules Loan Agreement debt discount recorded in connection with the fair value of warrants issued to the lenders, the debt issuance costs incurred, and the obligation to make a final payment.
From September 17, 2021 through December 13, 2023, interest expense under the Hercules Loan consisted of (i) cash interest at a variable annual rate equal to the greater of (a) 5.50% and (b) the Prime Rate (as reported in the Wall Street Journal) plus 2.25% or the Interest Rate, (ii) payment-in-kind interest at a per annum rate of interest equal to 3.35%, and (iii) amortization of the Hercules Loan Agreement debt discount recorded in connection with the fair value of warrants issued to the lenders, the debt issuance costs incurred, and the obligation to make a final payment.
On September 27, 2022, the Company entered into an amendment to the Loan Agreement, or the Second Loan Amendment, pursuant to which the date the second tranche of funding of $50 million will remain available to the Company has been moved until May 15, 2023, rather than December 15, 2022. 152 The Term Loan will mature on October 1, 2026 (the “Maturity Date”).
On September 27, 2022, we entered into an amendment to the Loan Agreement, or the Second Loan Amendment, pursuant to which the date the second tranche of funding of $50 million will remain available to the Company has been moved until May 15, 2023, rather than December 15, 2022.
We also anticipate increased expenses related to audit, legal, regulatory, and tax-related services associated with maintaining compliance with exchange listing and SEC requirements, director and officer insurance premiums, and investor relations costs associated with operating as a public company. Interest Income Interest income consists of interest on our money market funds.
We also anticipate increased expenses related to audit, legal, regulatory, and tax-related services associated with maintaining compliance with exchange listing and SEC requirements, director and officer insurance premiums, and investor relations costs associated with operating as a public company.
We incurred $0.7 million and $1.8 million of expenses related to the Commercial Supply Agreement during the years ended December 31, 2022 and 2021, respectively. We have no remaining minimum purchase obligation related to this agreement.
We incurred $0.7 million of expenses related to the Commercial Supply Agreement during the year ended December 31, 2022. We have no remaining minimum purchase obligation related to this agreement.
Vonoprazan has shown rapid, potent, and durable anti-secretory effects and has demonstrated clinical benefits over the current standard of care as a single agent in the treatment of erosive gastroesophageal reflux disease, or erosive GERD, and in combination with antibiotics for the treatment of H. pylori infection.
Vonoprazan has also demonstrated clinical benefits over the current standard of care as a single agent in the treatment of erosive gastroesophageal reflux disease, or Erosive GERD, and in combination with antibiotics for the treatment of Helicobacter pylori , or H. pylori , infection.
Also in January 2023, we reported positive topline results from PHALCON-NERD-301, a Phase 3 study evaluating the safety and efficacy of vonoprazan for the daily treatment of adults with non-erosive GERD.
In January 2023, we reported positive topline results from PHALCON-NERD-301, a Phase 3 study evaluating the safety and efficacy of vonoprazan for the daily treatment of adults with Non-Erosive GERD, and in August 2023, we announced successful completion of the 20-week extension period of PHALCON-NERD-301.
The net purchase price after deducting underwriting discounts and commissions was $39.48 per share, which generated net proceeds of $88.8 million. We incurred an additional $0.2 million of offering expenses in connection with the public offering.
The net purchase price after deducting underwriting discounts and commissions was $11.08 per share, which generated net proceeds of $141.8 million. We incurred an additional $0.4 million of offering expenses in connection with this public offering.
From our inception through December 31, 2022, we have raised aggregate gross proceeds of $90.3 million from the issuance of convertible promissory notes, $100.0 million of debt, net proceeds from our initial public offering of $191.5 million from the sale of 10,997,630 shares of common stock, which included the exercise in full by the underwriters of their option to purchase 1,434,473 additional shares at a public offering price of $19.00 per share, after deducting underwriting discounts, commissions and offering costs, and net proceeds of $88.6 million from the sale of 2,250,000 shares of common stock at a public offering price of $39.48 per share after deducting underwriting discounts and commissions, and an additional $0.2 million in offering costs.
From our inception through December 31, 2023, we have raised aggregate gross proceeds of $90.3 million from the issuance of convertible promissory notes, $140 million of debt, net proceeds from our initial public offering of $191.5 million from the sale of 10,997,630 shares of common stock, which included the exercise in full by the underwriters of their option to purchase 1,434,473 additional shares at a public offering price of $19.00 per share, after deducting underwriting discounts, commissions and offering costs, and net proceeds of $88.6 million from the sale of 2,250,000 shares of common stock at a public offering price of $39.48 per share after deducting underwriting discounts and commissions, and an additional $0.2 million in offering costs, net proceeds of $268.1 million from the Revenue Interest Financing Agreement, net proceeds of $38.7 million from the sale of 3,929,116 shares under the ATM Offering and net proceeds of $141.4 million from the sale of 12,793,750 shares of common stock, which included the exercise in full by the underwriters of their option to purchase 1,668,750 shares, at a price of $11.75 per share, after deducting underwriting discounts and commissions.
The Term Loan bears (i) cash interest at a variable annual rate equal to the greater of (a) 5.50% and (b) the Prime Rate (as reported in the Wall Street Journal) plus 2.25% (the “Interest Rate”) and (ii) payment-in-kind interest at a per annum rate of interest equal to 3.35%.
The Term Loan bears (i) cash interest at a variable annual rate equal to the greater of (a) 9.85% and (b) the Prime Rate (as reported in the Wall Street Journal) plus 1.35%, or the Interest Rate, and (ii) payment-in-kind interest at a per annum rate of interest equal to 2.15%.
As of December 31, 2022, we had cash and cash equivalents of $155.4 million.
As of December 31, 2023, we had cash and cash equivalents of $381.4 million.
In 2021 we reported positive topline data from two pivotal Phase 3 clinical trials for vonoprazan: one for the treatment of H. pylori infection, or PHALCON-HP, and a second for the treatment of erosive GERD, PHALCON-EE. In April 2021, we reported positive topline data from PHALCON-HP, and in October 2021, we reported positive topline data from PHALCON-EE.
In May 2019, we in-licensed the U.S., European, and Canadian rights to vonoprazan from Takeda. In 2021 we reported positive topline data from two pivotal Phase 3 clinical trials for vonoprazan: one for the treatment of H. pylori infection, or PHALCON-HP, and a second for the treatment of Erosive GERD, or PHALCON-EE.
Research and development expenses were $71.4 million and $72.3 million for the years ended December 31, 2022 and 2021, respectively.
Research and development expenses were $49.9 million and $71.4 million for the years ended December 31, 2023 and 2022, respectively.
The net cash used in operating activities for the year ended December 31, 2021 was due to approximately $121.1 million spent on ongoing research and development and general and administrative activities and a $27.4 million net change in operating assets and liabilities.
The net cash used in operating activities for the year ended December 31, 2023 was due to approximately $123.9 million spent on ongoing research and development and selling, general and administrative activities and a $13.6 million net change in operating assets and liabilities.
Funding Requirements Based on our current operating plan, we believe that our existing cash and cash equivalents together with the drawdown of the remaining $100 million under our Loan Agreement with Hercules are sufficient to fund operations for at least the next twelve months and receipt of $175 million in additional milestone payments under our Revenue Interest Financing Agreement, will be sufficient to fund our operations through the end of 2024.
Funding Requirements Based on our current operating plan, we believe that our existing cash and cash equivalents together with the drawdown of the remaining $160 million under our Loan Agreement with Hercules together with anticipated product revenues, are sufficient to fund operations for at least the next twelve months and will be sufficient to fund our operations through the end of 2026.
As collateral for the obligations, we granted to Hercules a senior security interest in all of our right, title, and interest in, to and under substantially all of our property, inclusive of intellectual property.
As of December 31, 2023, we were in compliance with all applicable covenants under the Loan Agreement. As collateral for the obligations, we granted Hercules a senior security interest in all of our right, title, and interest in, to and under substantially all of our property, inclusive of intellectual property.
Based on our current operating plan, we believe that our existing cash and cash equivalents together with the drawdown of the remaining $100 million under our Loan Agreement with Hercules are sufficient to fund operations for at least the next twelve months and receipt of $175 million in additional milestone payments under our Revenue Interest Financing Agreement, will be sufficient to fund our operations through the end of 2024.
Based on our current operating plan, we believe that our existing cash and cash equivalents together with the drawdown of the remaining $160 million under our Loan Agreement with Hercules together with anticipated product revenues, are sufficient to fund operations for at least the next twelve months and will be sufficient to fund our operations through the end of 2026.
Royalties will be payable, on a product-by-product and country-by-country basis from the first commercial sale of such product in such country, until the latest of expiration of the licensed patents covering the applicable product, expiration of regulatory exclusivity in such country, or 15 years following first commercial sale in such country. 148 Components of Results of Operations Operating Expenses Research and Development To date, our research and development expenses have related to the development of vonoprazan.
Royalties will be payable, on a product-by-product and country-by-country basis from the first commercial sale of such product in such country, until the latest of expiration of the licensed patents covering the applicable product, expiration of regulatory exclusivity in such country, or 15 years following first commercial sale in such country.
General and administrative expenses were $101.0 million and $62.7 million for the years ended December 31, 2022 and 2021, respectively.
Selling, General and Administrative Expenses. Selling, general and administrative expenses were $117.9 million and $101.0 million for the years ended December 31, 2023 and 2022, respectively.
Takeda developed vonoprazan and has received marketing approval in numerous countries in Asia and Latin America as well as Russia. Vonoprazan generated approximately $850 million in net sales in its seventh] full year on the market since its approval in Japan in late 2014. In May 2019, we in-licensed the U.S., European, and Canadian rights to vonoprazan from Takeda.
Takeda Pharmaceutical Company Limited, or Takeda, developed vonoprazan and has received marketing approval in numerous countries in Asia and Latin America as well as Russia. Vonoprazan generated approximately $850 million in net sales in its seventh full year on the market since its approval in Japan in late 2014.
Under the terms of the Revenue Interest Financing Agreement, we received $100 million at the initial closing and can receive an additional $160 million upon FDA approval of vonoprazan for treatment of erosive GERD on or before March 31, 2024.
Under the terms of the Revenue Interest Financing Agreement, we received $100 million at the initial closing and received an additional $160 million upon FDA approval of vonoprazan for treatment of Erosive GERD in the fourth quarter of 2023.
Our future clinical development costs may vary significantly based on factors such as: • per patient trial costs; • the number of trials required for approval; • the number of sites included in the trials; • the countries in which the trials are conducted; • the length of time required to enroll eligible patients; • the number of patients that participate in the trials; • the number of doses evaluated in the trials; • the drop-out or discontinuation rates of patients; • potential additional safety monitoring requested by regulatory agencies; • the duration of patient participation in the trials and follow-up; • the phase of development of the product candidate; and • the efficacy and safety profile of the product candidate; 149 General and Administrative General and administrative expenses consist of salaries and employee-related costs, including stock-based compensation, for personnel in executive, finance, accounting, legal, human resources and other administrative functions, legal fees relating to intellectual property and corporate matters, and professional fees for accounting and consulting services.
Our future clinical development costs may vary significantly based on factors such as: • per patient trial costs; • the number of trials required for approval; • the number of sites included in the trials; • the countries in which the trials are conducted; • the length of time required to enroll eligible patients; • the number of patients that participate in the trials; • the number of doses evaluated in the trials; • the drop-out or discontinuation rates of patients; • potential additional safety monitoring requested by regulatory agencies; • the duration of patient participation in the trials and follow-up; • the phase of development of the product candidate; and • the efficacy and safety profile of the product candidate.
In May 2022, the FDA approved the NDAs for vonoprazan triple therapy, under the brand name VOQUEZNA TRIPLE PAK, and vonoprazan dual therapy, under the brand name VOQUEZNA DUAL PAK.
Food and Drug Administration, or FDA, approved the NDAs for vonoprazan triple therapy, under the brand name VOQUEZNA TRIPLE PAK, and vonoprazan dual therapy, under the brand name VOQUEZNA DUAL PAK.
The decrease of $0.9 million consisted of consisted of a reduction of $3.2 million of expenses related to regulatory requirements and $0.4 million of chemistry manufacturing and controls, or CMC, costs related to vonoprazan, partially offset by increases $2.7 million of personnel-related, consulting and other research expenses. General and Administrative Expenses.
The decrease of $21.5 million consisted of a reduction of $24.8 million of clinical study related expenses, $4.6 million of chemistry manufacturing and controls, or CMC, costs related to vonoprazan and $1.8 million related to consulting and other research expenses, partially offset by increases of $7.8 million of personnel-related expenses and $1.9 million of regulatory expenses.
We are also in discussions with the FDA regarding the design of a Phase 3 trial to evaluate the novel dosing regimen of vonoprazan as an as needed treatment for episodic heartburn relief in patients with non-erosive GERD, a dosing regimen not approved in the U.S. for PPIs. This trial would constitute our fourth Phase 3 trial for vonoprazan.
In addition, in 2024 we plan to initiate a Phase 3 trial evaluating the novel dosing regimen of vonoprazan as an "as-needed" treatment for episodic heartburn relief in patients with Non-Erosive GERD, a dosing regimen not approved in the United States for PPIs. This trial would constitute our fourth Phase 3 trial for vonoprazan.
Our failure to raise capital or enter into such other arrangements when needed would have a negative impact on our financial condition and could force us to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.
Our failure to raise capital or enter into such other arrangements when needed would have a negative impact on our financial condition and could force us to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves. 113 License Agreement with Takeda On May 7, 2019, we and Takeda entered into an exclusive license, or the Takeda License, pursuant to which we in-licensed the U.S., European, and Canadian rights to vonoprazan fumarate.
Interest Expense Beginning on May 3, 2022, interest expense includes interest on the Revenue Interest Financing Agreement, which is based on the imputed effective rate derived from expected future payments and the carrying value of the obligation. The Company recalculates the effective interest rate each period based on the current carrying value and the revised estimated future payments.
Interest Income Interest income consists of interest on our money market funds. 115 Interest Expense Beginning on May 3, 2022, interest expense includes interest on the Revenue Interest Financing Agreement, which is based on the imputed effective rate derived from expected future payments and the carrying value of the obligation.
In March 2022, we submitted an NDA for vonoprazan as a treatment for adults for the healing of all grades of erosive GERD, maintenance of healing of all grades of erosive GERD, and relief of heartburn associated with erosive GERD. If approved, we expect to market the product under the brand name VOQUEZNA.
While the NDAs for VOQUEZNA TRIPLE PAK and VOQUEZNA DUAL PAK were still under review by the FDA, in March 2022, we submitted an additional NDA for vonoprazan, under the brand name VOQUEZNA, as a treatment for adults for the healing of all grades of Erosive GERD, maintenance of healing of all grades of Erosive GERD, and relief of heartburn associated with Erosive GERD.
We expect such amounts will allow us to complete our ongoing Phase 3 clinical trial studying vonoprazan for non-erosive GERD (daily dosing), and , if our post-complete response letter resubmissions concerning NVP are approved by FDA, launch vonoprazan for H. pylori and erosive GERD.
We expect such amounts will allow us to complete our ongoing Phase 3 clinical trial studying vonoprazan for Non-Erosive GERD (daily dosing), and commercial activities for VOQUEZNA for H. pylori and Erosive GERD.
We anticipate that our general and administrative expenses will increase in the future to support our continued research and development activities, pre-commercial preparation activities for vonoprazan and, if any future product candidate receives marketing approval, commercialization activities.
We anticipate that our general and administrative expenses will increase in the future to support our continued research and development activities and commercialization activities.
The total amount funded by the Initial Investors and any subsequent investors is referred to herein as the “Investment Amount.” Under the Revenue Interest Financing Agreement, the Initial Investors, and subsequent to the payment of the Approval Additional Funding, the Additional Investor, are entitled to receive a 10% royalty on net sales of products containing vonoprazan.
Under the Revenue Interest Financing Agreement, the Initial Investors and the Additional Investor, are entitled to receive a 10% royalty on net sales of products containing vonoprazan.
To date, there have been no material differences between our estimates of such expenses and the amounts actually incurred. Stock-Based Compensation Expense Stock-based compensation expense represents the cost of the grant date fair value of equity awards recognized over the requisite service period of the awards (generally the vesting period) on a straight-line basis with forfeitures recognized as they occur.
Stock-Based Compensation Expense Stock-based compensation expense represents the cost of the grant date fair value of equity awards recognized over the requisite service period of the awards (generally the vesting period) on a straight-line basis with forfeitures recognized as they occur. We use the Black-Scholes valuation model to determine the fair value of our stock awards.
Revenue Interest Financing Agreement On May 3, 2022, we entered into a Revenue Interest Financing Agreement (the “Revenue Interest Financing Agreement”), with entities managed or advised by NovaQuest Capital Management (“NQ”), Sagard Holdings Manager LP (“Sagard”) and Hercules Capital, Inc.
Revenue Interest Financing Agreement On May 3, 2022, we entered into a Revenue Interest Financing Agreement, or the Revenue Interest Financing Agreement, with entities managed or advised by NovaQuest Capital Management, or NQ, Sagard Holdings Manager LP, or Sagard, and Hercules Capital, Inc., or Hercules, together with NQ and Sagard, or the Initial Investors, pursuant to which we could receive up to $260 million in funding from the Initial Investors.
The increase of $38.2 million was due to increases of $21.0 million in professional services expenses for commercial, medical affairs and other services, $15.7 million in personnel-related expenses, $1.7 million in legal and other expenses in 2022, partially offset by a $0.2 million reduction in consulting fees. Other Income (Expense).
The increase of $16.9 million was due to increases of $31.1 million in personnel-related expenses and $0.6 million of legal and other expenses, offset by decreases of $13.3 million of professional services expenses for commercial, medical affairs and other services, $1.1 million of insurance expense and $0.4 million in consulting expense. Other Income (Expense).
If the investors have not received aggregate payments of at least 100% of the Investment Amount by December 31, 2028, and at least 200% of the Investment Amount by December 31, 2037, each a Minimum Amount, then we will be obligated to make a cash payment to the investors in an amount sufficient to gross the investors up to the applicable Minimum Amount.
If the investors have not received aggregate payments of at least 100% of the Investment Amount by December 31, 2028, and at least 200% of the Investment Amount by December 31, 2037, each a Minimum Amount, then we will be obligated to make a cash payment to the investors in an amount sufficient to gross the investors up to the applicable Minimum Amount. 119 Upon the occurrence of an event of default taking place prior to April 1, 2025, between April 1, 2025 and April 1, 2028, and after April 1, 2028, we are obligated to pay 1.30 times Investment Amount, 1.65 times Investment Amount, and 2.0 times investment amount, respectively, less any amounts we previously paid pursuant to the agreement.
Loan Agreement with Hercules On September 17, 2021, (the “Closing Date”), we entered into a Loan and Security Agreement (the “Loan Agreement”) with Hercules Capital, Inc., in its capacity as administrative agent and collateral agent and as a lender (in such capacity, the “Agent” or “Hercules”) and the other financial institutions that from time to time become parties to the Loan Agreement as lenders (collectively, the “Lenders”).
(in such capacity, the Agent or Hercules), as administrative agent and collateral agent and as a lender and the other financial institutions that from time to time become parties to the Loan Agreement as lenders (collectively, the Lenders).
These letters formalize FDA’s prior request that we provide additional stability data to demonstrate that levels of NVP will remain at or below the AI throughout the proposed shelf life of the product. 146 No additional deficiencies were cited by the FDA in either letter.
The complete response letters formalized the FDA’s prior request that we provide additional stability data to demonstrate that levels of NVP will remain at or below 96 ng/day, the acceptable daily intake level (AI) for NVP established by the FDA, throughout the proposed shelf life of the product.
After the interest-only period, the principal balance and related interest will be required to be repaid in equal monthly installments and continuing until the Maturity Date.
We may make payments of interest only through the Maturity Date. After the interest-only period, the principal balance and related interest will be required to be repaid in full on the Maturity Date.
Other expense of $8.8 million for the year ended December 31, 2021 consisted of $6.8 million of interest expense and $2.0 million of charges related to early extinguishment of debt. 151 Liquidity and Capital Resources We have incurred net losses and negative cash flows from operations since our inception and anticipate we will continue to incur net losses for the foreseeable future.
Liquidity and Capital Resources We have incurred net losses and negative cash flows from operations since our inception and anticipate we will continue to incur net losses for the foreseeable future. As of December 31, 2023, we had cash and cash equivalents of $381.4 million.
Changes in future payments from previous estimates are included in current and future financing expense.
Changes in future payments from previous estimates are included in the current and future financing expense. See Note 7 "Revenue Interest Financing Liability" for additional details.
We enter into contracts in the normal course of business for our contract research services, contract manufacturing services, professional services and other services and products for operating purposes.
We have not made any payments under the Revenue Interest Financing Agreement during the years ended December 31, 2023 and 2022. We enter into contracts in the normal course of business for our contract research services, contract manufacturing services, professional services and other services and products for operating purposes.
If we are unable to raise additional funds through equity or debt financings 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 our product candidates even if we would otherwise prefer to develop and market such product candidates ourselves. 156 Including our existing cash and cash equivalents, we believe that we have sufficient working capital on hand to fund operations such that there is no substantial doubt as to our ability to continue as a going concern at the date the financial statements were issued.
If we are unable to raise additional funds through equity or debt financings 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 our product candidates even if we would otherwise prefer to develop and market such product candidates ourselves.
Financing Activities Net cash provided by financing activities for the year ended December 31, 2022 was $120 million, was due to the net proceeds from the revenue interest financing liability and issuance of common stock under the ATM Offering.
Financing Activities Net cash provided by financing activities for the year ended December 31, 2023 was $367.6 million, due to $172.7 million of net proceeds from the Revenue Interest Financing Agreement, $155.6 million due to the proceeds from the sale of common stock, and $39.3 million from the issuance of debt under our Loan Agreement, as amended, with Hercules.
The investors’ right to receive royalties on net sales will terminate when the investors have aggregate payments equal to 200% of the Investment Amount. We have not made any payments under the Revenue Interest Financing Agreement during the year ended December 31, 2022.
Under the Revenue Interest Financing Agreement, the Initial Investors and Additional Investor are entitled to receive a 10% royalty on net sales of products containing vonoprazan. The investors’ right to receive royalties on net sales will terminate when the investors have aggregate payments equal to 200% of the Investment Amount.
The net change in operating assets and liabilities primarily related to a $28.2 million decrease in accounts payable and accrued expenses (including clinical trial expenses) in support of the growth in our operating activities, partially offset by a $0.8 million decrease in prepaid and other assets.
The net change in operating assets and liabilities primarily related to a $6.9 million increase in accounts payable and accrued expenses (including interest, operating lease assets and liabilities, and clinical trial expenses), and a $20.5 million increase in prepaid assets and other current assets, accounts receivable, inventory, and other long-term assets, in support of our growth and commercial operations.
Prior to approval, in May 2021, we received qualified infectious disease product, or QIDP, designations for VOQUEZNA TRIPLE PAK and VOQUEZNA DUAL PAK, which, upon approval of these products, added five years of regulatory exclusivity to the five years of new chemical entity, or NCE, exclusivity for vonoprazan to which these products were, and future products we develop containing vonoprazan will be, entitled.
Based on our qualified infectious disease product, or QIDP, designations for VOQUEZNA TRIPLE PAK and VOQUEZNA DUAL PAK, we received an extension of five years of new chemical entity, or NCE, exclusivity based on the vonoprazan component in those NDAs.
In February 2023, we received complete response letters from the FDA relating to our erosive GERD NDA and post approval supplement relating to our approved H. pylori NDAs, both of which address specifications and controls for NVP.
After identifying this impurity, and prior to launching VOQUEZNA TRIPLE PAK and VOQUEZNA DUAL PAK, we submitted supplements to our approved NDAs with the goal of addressing this issue. However, in February 2023, we received complete response letters from the FDA relating both to our Erosive GERD NDA and to the NDA supplements for our approved H. pylori NDAs.
In February 2022, we reported positive topline results from PHALCON-NERD-201, a Phase 2 proof-of-concept study evaluating this novel dosing regimen. We plan to independently commercialize VOQUEZNA TRIPLE PAK, VOQUEZNA DUAL PAK and, if approved, VOQUEZNA, in the United States.
In February 2022, we reported positive topline results from PHALCON-NERD-201, a Phase 2 proof-of-concept study evaluating this novel dosing regimen. We plan to expand the clinical development of vonoprazan in the U.S. into eosinophilic esophagitis, or EoE, the most common type of eosinophilic gastrointestinal disease.
We have not initiated commercial launch of any products and have incurred net losses since our inception. Our net losses for the years ended December 31, 2022 and 2021 were $197.7 million and $143.9 million, respectively. As of December 31, 2022, we had an accumulated deficit of $727.1 million.
Since inception, we have incurred significant operating losses. Our net loss was $201.6 million and $197.7 million for the years ended December 31, 2023 and 2022, respectively. As of December 31, 2023, we had an accumulated deficit of $928.7 million. We expect to continue to incur operating losses for the foreseeable future.
In addition, we had the right to obtain a written commitment from a third party for up to (i) at any time prior to December 31, 2022, $15,000,000 in additional funding upon FDA approval of vonoprazan for erosive GERD (“Approval Additional Funding”), and (ii) at any time prior to June 30, 2024, $25,000,000 in additional funding for achievement of a sales milestone (“Milestone Additional Funding”, and, together with the Approval Additional Funding, the “Additional Investor Funding”).The Initial Investors had a right of first offer for any Additional Investor Funding. 153 On October 31, 2022, we entered into a Joinder and Waiver Agreement with the Initial Investors and CO Finance LVS XXXVII LLC (“the Additional Investor”), and Hercules Capital, Inc. in its capacity as administrative agent and collateral agent for itself and the lenders under that certain Loan Agreement (the “Joinder Agreement”) in respect of the Revenue Interest Financing Agreement.
Additionally, on October 31, 2022, we entered into a Joinder and Waiver Agreement with the Initial Investors and CO Finance LVS XXXVII LLC, or the Additional Investor, and Hercules Capital, Inc. in its capacity as administrative agent and collateral agent for itself and the lenders under that certain Loan Agreement, or the Joinder Agreement, in respect of the Revenue Interest Financing Agreement.
The supply agreement commits the Company to a minimum purchase obligation of approximately $3.8 million during the first 24-month period following the launch of the final product. As of December 31, 2022, we are unable to estimate the timing of future expenses and, therefore, any related payments are not included in the table above.
The supply agreement commits us to a minimum purchase obligation of approximately $3.2 million during the first 24-month period following the launch of the final product. We have incurred $0.3 million of expenses under the agreement during the year ended December 31, 2023.
Our net losses may fluctuate significantly from quarter-to-quarter and year-to-year, depending on the timing of our clinical development activities, other research and development activities and pre-commercialization activities.
The net losses we incur may fluctuate significantly from quarter to quarter and year to year.
We have not incurred any expenses under the agreement during the year ended December 31, 2022. Additionally, on May 3, 2022, we entered into a Revenue Interest Financing Agreement (the “Revenue Interest Financing Agreement”), with entities managed or advised by NovaQuest Capital Management (“NQ”), Sagard Holdings Manager LP (“Sagard”) and Hercules Capital, Inc.
Additionally, on May 3, 2022, we entered into a Revenue Interest Financing Agreement, or the Revenue Interest Financing Agreement, with entities managed or advised by NovaQuest Capital Management, or NQ, Sagard Holdings Manager LP, or Sagard, and Hercules Capital, Inc. , or Hercules, together with NQ and Sagard, the Initial Investors, and on October 31, 2022, we entered into a Joinder and Waiver Agreement with the Initial Investors and CO Finance LVS XXXVII LLC, or the Additional Investor, and Hercules Capital, Inc. in its capacity as administrative agent and collateral agent for itself and the lenders under that certain Loan Agreement, or the Joinder Agreement, in respect of the Revenue Interest Financing Agreement.
The interest amounts included herein are based on the interest rate in effect as of December 31, 2022. In addition to the contractual obligations summarized above, on May 5, 2020, we entered into a Commercial Supply Agreement with Takeda, pursuant to which Takeda will supply commercial quantities of vonoprazan bulk drug product.
Net cash provided by financing activities for the year ended December 31, 2022 was $120.0 million, due to $95.4 million of net proceeds from the Revenue Interest Financing Agreement and $24.6 million of net proceeds from the issuance of common stock under the 2020 ATM Offering. 122 Contractual Obligations and Commitments On May 5, 2020, we entered into a Commercial Supply Agreement with Takeda, pursuant to which Takeda will supply commercial quantities of vonoprazan bulk drug product.
Cash Flows The following table sets forth a summary of the net cash flow activity for each of the periods indicated (in thousands): Years Ended December 31, 2022 2021 $ Change Net cash provided by (used in): Operating activities $ (146,530 ) $ (148,457 ) $ 1,927 Investing activities (1,041 ) (328 ) (713 ) Financing activities 120,042 44,708 75,334 Net decrease in cash $ (27,529 ) $ (104,077 ) $ 76,548 Operating Activities Net cash used in operating activities was approximately $146.5 million and $148.5 million for the years ended December 31, 2022 and 2021, respectively.
Based on our current operating plan, we believe that our existing cash and cash equivalents together with the drawdown of the remaining $160 million under our Loan Agreement with Hercules together with anticipated product revenues, are sufficient to fund operations for at least the next twelve months and will be sufficient to fund our operations through the end of 2026. 121 Cash Flows The following table sets forth a summary of the net cash flow activity for each of the periods indicated (in thousands): Years Ended December 31, 2023 2022 $ Change Net cash provided by (used in): Operating activities $ (137,580 ) $ (146,530 ) $ 8,950 Investing activities (1,634 ) (1,041 ) (593 ) Financing activities 367,580 120,042 247,538 Net increase (decrease) in cash $ 228,366 $ (27,529 ) $ 255,895 Operating Activities Net cash used in operating activities was approximately $137.6 million and $146.5 million for the years ended December 31, 2023 and 2022, respectively.
Under the terms of the Joinder Agreement, the Initial Investors waived their rights of first offer regarding the Additional Investor Funding and the Additional Investor joined the Revenue Interest Financing Agreement to extend commitments for the Additional Investor Funding.
The Initial Investors waived their right of first offer for any Additional Investor Funding. The total amount funded by the Initial Investors and any subsequent investors is referred to herein as the Investment Amount.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeItem 7A. Quantitative and Qualita tive Disclosures About Market Risk Interest Rate Risk Our cash and cash equivalents consist of cash in readily available checking accounts and money market funds. As a result, the fair value of our portfolio is relatively insensitive to interest rate changes. Our long-term debt bears interest at a variable rate.
Biggest changeItem 7A. Quantitative and Qualita tive Disclosures About Market Risk Interest Rate Risk Our cash and cash equivalents consist of cash in readily available checking accounts and money market funds. As a result, the fair value of our investment portfolio is relatively insensitive to interest rate changes. Additionally, our long-term debt bears interest at a variable rate.

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