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What changed in Praxis Precision Medicines, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Praxis Precision Medicines, 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.

+455 added−400 removedSource: 10-K (2024-03-05) vs 10-K (2023-02-07)

Top changes in Praxis Precision Medicines, Inc.'s 2023 10-K

455 paragraphs added · 400 removed · 321 edited across 4 sections

Item 1. Business

Business — how the company describes what it does

84 edited+41 added−31 removed198 unchanged
Biggest changeOur competitors fall primarily into the following groups of treatment: • T-type calcium channel inhibitor programs in development targeting ET, including that of Jazz Pharmaceuticals, as well as other programs in clinical development targeting other mechanisms of action and approved therapies, such as propranolol, and off-label therapies, such as primidone. 12 Table of Contents • Sodium channel blocker or similar programs in development for DEEs, including those of SK-Pharma, Xenon Pharmaceuticals, Neurocrine Biosciences and Stoke Therapeutics, as well as other programs in clinical development targeting other mechanisms of action and approved therapies including other existing ion channel blockers.
Biggest changeOur competitors fall primarily into the following groups of treatment: • T-type calcium channel inhibitor programs in development targeting ET, including that of Jazz Pharmaceuticals, as well as other programs in clinical development targeting other mechanisms of action such as GABA by Sage Therapeutics, and approved therapies, such as propranolol, and off-label therapies, such as primidone. • Sodium channel blocker or similar ion channel-targeting programs in development for focal epilepsy, including those of SK-Pharma, Xenon Pharmaceuticals, and Biohaven Pharmaceuticals, as well as other programs in clinical development targeting other mechanisms of action including those from Longboard Pharmaceuticals, Marinus Pharmaceuticals and Stoke Therapeutics, and approved therapies including other existing ion channel blockers. 12 Table of Contents Many of our competitors have substantially greater financial resources, expertise and capabilities in research and development, the regulatory approval process, manufacturing and marketing than we do.
As a last line therapy, a small subset of patients will opt for invasive procedures such as gamma knife and MRI guided focused ultrasound thalamotomy, where part 9 Table of Contents of the thalamus involved in the cerebello-thalamo-cortical, or CTC, circuit is ablated, or deep brain stimulation, or DBS, where an electrode is implanted to deliver therapeutic electrical stimulation to the thalamus.
As a last line therapy, a small subset of patients will opt for invasive procedures such as gamma knife and MRI guided focused ultrasound thalamotomy, where part of the thalamus involved in the cerebello-thalamo-cortical, or CTC, circuit is ablated, or deep brain stimulation, or DBS, where an electrode is implanted to deliver therapeutic electrical stimulation to the 9 Table of Contents thalamus.
A third family is directed to pharmaceutical formulations of PRAX-562, methods of use in treating diseases such as pediatric 13 Table of Contents epilepsy, cephalgia, short-lasting unilateral neuralgiform headache attacks with conjunctival injection, or SUNCT, and tearing and short-lasting unilateral neuralgiform headache attacks with cranial autonomic symptoms, or SUNA, and methods of making PRAX-562, and expires in 2040.
A third family is directed to pharmaceutical formulations of PRAX-562, methods of use in treating diseases such as pediatric epilepsy, cephalgia, short-lasting unilateral neuralgiform headache attacks with conjunctival injection, or SUNCT, and tearing and short-lasting unilateral neuralgiform headache attacks with cranial autonomic symptoms, or SUNA, and 13 Table of Contents methods of making PRAX-562, and expires in 2040.
We expect to rely on third parties for our manufacturing 15 Table of Contents processes and the production of all clinical supply drug substance and drug product and currently expect to continue to do so for commercial supplies of our product candidates, if approved.
We expect to rely on third parties for our manufacturing processes and the production of all clinical supply drug substance and drug product and currently expect to 15 Table of Contents continue to do so for commercial supplies of our product candidates, if approved.
The sponsor must take out a clinical trial insurance policy, and in most EU member states, the sponsor is liable to provide ‘no fault’ compensation to any study subject injured in the clinical trial. 24 Table of Contents The regulatory landscape related to clinical trials in the EU has been subject to recent changes.
The sponsor must take out 24 Table of Contents a clinical trial insurance policy, and in most EU member states, the sponsor is liable to provide ‘no fault’ compensation to any study subject injured in the clinical trial. The regulatory landscape related to clinical trials in the EU has been subject to recent changes.
In the United States, numerous federal and state laws and regulations, including data breach notification laws, health information privacy and security laws, including the Health Insurance Portability and Accountability Act, or HIPAA, and federal and state consumer protection laws and regulations that govern the collection, use, disclosure, and protection of health-related and other personal information could apply now or in the future to our operations or the operations of our partners.
In the United States, numerous federal and state laws and regulations, including data breach notification laws, health information privacy and security laws, including the Health Insurance Portability and Accountability Act of 1996, or HIPAA, and federal and state consumer protection laws and regulations that govern the collection, use, disclosure, and protection of health-related and other personal information could apply now or in the future to our operations or the operations of our partners.
Progress reports summarizing the results of clinical trials and nonclinical studies, among other information, must be submitted at least annually to the FDA and written IND safety reports must be submitted to the FDA and investigators if serious and unexpected suspected adverse events occur, findings from other studies of the same or similar drug or from animal or in vitro testing suggest a significant risk, or there is an increased incidence of a serious suspected adverse reaction compared to that in the protocol or investigator brochure.
While the IND is active, progress reports summarizing the results of clinical trials and nonclinical studies, among other information, must be submitted at least annually to the FDA and written IND safety reports must be submitted to the FDA and investigators if serious and unexpected suspected adverse events occur, findings from other studies of the same or similar drug or from animal or in vitro testing suggest a significant risk, or there is an increased incidence of a serious suspected adverse reaction compared to that in the protocol or investigator brochure.
Regulation of drug products and healthcare laws and regulations outside of the United States Our product candidates may be subject in the future to laws and regulations related to drug products and health care imposed by jurisdictions outside of the United States, including the European Union, or EU, which may include, for instance, applicable post-marketing requirements, including safety surveillance, anti-fraud and abuse laws and implementation of corporate compliance programs and reporting of payments or other transfers of value to healthcare professionals.
Regulation of drug products and healthcare laws and regulations outside of the United States Our product candidates may be subject in the future to laws and regulations related to drug products and health care imposed by jurisdictions outside of the United States, including the EU which may include, for instance, applicable post-marketing requirements, including safety surveillance, anti-fraud and abuse laws and implementation of corporate compliance programs and reporting of payments or other transfers of value to healthcare professionals.
Specifically, the FDA’s acceptance of data from trials conducted outside of the United States and not under an IND is subject to certain conditions, including that the clinical trial must be well designed and conducted in accordance with GCPs, and the FDA must be able to validate the data from the study through an on-site inspection, if necessary.
Specifically, the FDA’s acceptance of data from trials conducted outside of the United States and not under an IND is subject to certain conditions, including that the clinical trial must be conducted in accordance with GCPs, and the FDA must be able to validate the data from the study through an on-site inspection, if necessary.
There is only one approved pharmacotherapy for ET, a beta blocker (propranolol), approved by the FDA in 1967, that offers limited efficacy and poor tolerability and is contraindicated for comorbidities that affect a significant share of the ET population. Other CNS drugs are used off-label, though similarly are characterized by limited efficacy and poor tolerability.
There is only one approved pharmacotherapy for ET, a beta blocker (propranolol), approved by the FDA for ET in 1986, that offers limited efficacy and poor tolerability and is contraindicated for comorbidities that affect a significant share of the ET population. Other CNS drugs are used off-label, though similarly are characterized by limited efficacy and poor tolerability.
T-type Calcium channel blockers We own six patent families directed to T-type Calcium channel blockers. One patent family discloses and claims compositions of matter of certain T-type calcium channel modulators, including ulixacaltamide. This patent family has issued in many major pharmaceutical markets and is pending in others and expires in 2029.
T-type Calcium channel blockers We own twelve patent families directed to T-type Calcium channel blockers. One patent family discloses and claims compositions of matter of certain T-type calcium channel modulators, including ulixacaltamide. This patent family has issued in many major pharmaceutical markets and is pending in others and expires in 2029.
In the United States, third-party payors include federal and state healthcare programs, government authorities, private manage care providers, private health insurers and other 23 Table of Contents organizations. For products administered under the supervision of a physician, obtaining coverage and adequate reimbursement may be particularly difficult because of the higher prices often associated with such drugs.
In the United States, third-party payors include federal and state healthcare programs, government authorities, private manage care providers, private health insurers and other organizations. For products administered under the supervision of a physician, obtaining coverage and adequate reimbursement may be particularly difficult because of the higher prices often associated with such drugs.
Orphan exclusivity will not bar approval of another product under certain circumstances, including if a subsequent product with the same active ingredient for the same indication is shown to be clinically superior to the approved product on the basis of greater efficacy or safety, or to provide a major contribution to patient care, or if the company with orphan drug exclusivity is not able to meet market demand.
Orphan exclusivity will not bar approval of another product under certain circumstances, including if a subsequent product with the same active ingredient for the same disease or condition is shown to be clinically superior to the approved product on the basis of greater efficacy or safety, or to provide a major contribution to patient care, or if the company with orphan drug exclusivity is not able to meet market demand.
Furthermore, the FDA or the sponsor may suspend or terminate a clinical trial at any time on various grounds, including a finding that the research subjects are being exposed to an unacceptable health risk.
Similarly, the FDA or the sponsor may suspend or terminate a clinical trial at any time on various grounds, including a finding that the research subjects are being exposed to an unacceptable health risk.
The FDCA also provides three years of marketing exclusivity when an NDA, or a supplement to an existing NDA, includes new clinical investigations, other than bioavailability studies, conducted or sponsored by the applicant that 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 also provides three years of non-patent exclusivity when an NDA, or a supplement to an existing NDA, includes new clinical investigations, other than bioavailability studies, conducted or sponsored by the applicant that 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.
In addition, certain state and non-U.S. laws, such as the California Consumer Privacy Act of 2018, the California Privacy Rights Act of 2020, and the General Data Protection Regulation, or GDPR, and the U.K.
In addition, certain state and non-U.S. laws, such as the California Consumer Privacy Act of 2018, or CCPA, the California Privacy Rights Act of 2020, or CPRA, and the General Data Protection Regulation, or GDPR, and the U.K.
A company must request orphan drug designation before submitting an NDA. If the request is granted, the FDA will disclose the identity of the therapeutic agent and its potential use.
A sponsor must request orphan drug designation before submitting an NDA. If the request is granted, the FDA will disclose the identity of the therapeutic agent and its potential use.
In such a case, the IND may be placed on clinical hold and the IND sponsor and the FDA must resolve any outstanding concerns or questions before the clinical trial can begin. Submission of an IND therefore may or may not result in FDA authorization to begin a clinical trial.
In such a case, the IND may be placed on clinical hold and the IND sponsor and the FDA must resolve any outstanding concerns or questions before the clinical trial can begin. Submission of an IND therefore may or 16 Table of Contents may not result in FDA authorization to begin a clinical trial.
Outside of the United States, the provision of health care, including the pricing of pharmaceutical products, is subject to governmental control in many countries, and efforts to control prices and costs, including legislative action, will likely continue as countries attempt to manage healthcare expenditures.
Outside of the United States, the provision of health care, including the pricing of 25 Table of Contents pharmaceutical products, is subject to governmental control in many countries, and efforts to control prices and costs, including legislative action, will likely continue as countries attempt to manage healthcare expenditures.
A subset of epilepsies are rare, monogenic DEEs characterized by early onset (less than 2 years of age), frequent seizures, abnormal epileptiform EEG activity, developmental impairment and resistance to available antiepileptic drugs, or AEDs.
A subset of epilepsies are rare, monogenic DEEs characterized by early onset (less than 2 years of age), frequent seizures, abnormal epileptiform EEG activity, developmental impairment and resistance to available AEDs.
Congress has only authorized the Rare Pediatric Disease Priority Review Voucher program until September 30, 2024. Consequently, sponsors of marketing applications approved after that date will not receive the voucher unless Congress reauthorizes the program.
Congress has only authorized the Rare Pediatric 19 Table of Contents Disease Priority Review Voucher program until September 30, 2024. Consequently, sponsors of marketing applications approved after that date will not receive the voucher unless Congress reauthorizes the program.
Fundamentals of brain electrophysiology and mechanisms dictating seizure genesis are conserved across species and, consequently, animal models of seizures and epilepsy enable a clinically predictive and 10 Table of Contents therefore efficient drug development path.
Fundamentals of brain electrophysiology and mechanisms dictating seizure genesis are conserved across species and, consequently, animal models of seizures and epilepsy enable a clinically predictive and therefore efficient drug development path.
It is our intent to identify and qualify additional manufacturers to provide active pharmaceutical ingredient and fill-and-finish services prior to submission of a new drug application, or NDA, to the FDA for any product candidates that complete clinical development.
It is our intent to identify and qualify additional manufacturers to provide active pharmaceutical ingredient and fill-and-finish services prior to submission of a NDA to the FDA for any product candidates that complete clinical development.
In Phase 3, the product candidate is administered to an expanded patient population, generally at geographically dispersed clinical trial sites, in well-controlled clinical trials to generate enough data to statistically evaluate the efficacy and safety of the product candidate for approval, to establish the overall risk-benefit profile of the product candidate, and to provide adequate information for the labeling of the product candidate.
In Phase 3, the product candidate is administered to an expanded patient population, generally at geographically dispersed clinical trial sites, in well-controlled clinical trials to generate enough data to provide substantial evidence of the efficacy and safety of the product candidate, to establish the overall risk-benefit profile of the product candidate, and to provide adequate information for the labeling of the product candidate.
Similarly, an IRB can suspend or terminate approval of a clinical trial at its institution for a variety of reasons, including if the clinical trial is not being conducted 17 Table of Contents in accordance with the IRB’s requirements or if the drug has been associated with unexpected serious harm to patients.
An IRB can also suspend or terminate approval of a clinical trial at its institution for a variety of reasons, including if the clinical trial is not being conducted in accordance with the IRB’s requirements or if the drug has been associated with unexpected serious harm to patients.
Topline results for both cohorts are expected in the second half of 2023. Rare, monogenic DEEs Epilepsies are common neurological disorders characterized by brain excitation-inhibition, or E/I, imbalance. Hyperexcitability can lead to abnormal synchronization of neurons and neuronal circuits, which is the electrical basis of a seizure.
Topline results for both cohorts are expected in mid-year 2024. Rare, monogenic DEEs Epilepsies are common neurological disorders characterized by brain excitation-inhibition, or E/I, imbalance. Hyperexcitability can lead to abnormal synchronization of neurons and neuronal circuits, which is the electrical basis of a seizure.
The first has claims directed to a method of treating SCN2A gain of function neurological diseases using certain ASOs. This patent family is pending in the United States and expires in 2041. The second is directed to methods of treating SCN2A-related disorders using SCN2A inhibitors and expires in 2043.
The first has claims directed to a method of treating SCN2A gain of function neurological diseases using certain ASOs. This patent family is pending in the United States and expires in 2041. The second is directed to methods of treating SCN2A-related disorders using SCN2A inhibitors and expires in 2043. KCNT1 blockers We own sixteen patent families directed to KCNT1 blockers.
Moreover, on March 11, 2021, President Biden signed the American Rescue Plan Act of 2021 into law, which eliminates the statutory Medicaid drug rebate cap, currently set at 100% of a drug’s average manufacturer price, for single source and innovator multiple source drugs, beginning January 1, 2024.
Moreover, on March 11, 2021, President Biden signed the American Rescue Plan Act of 2021 into law, which eliminated the statutory Medicaid drug rebate cap for single source and innovator multiple source drugs, beginning January 1, 2024. The rebate was previously capped at 100% of a drug's average manufacturer price.
Clinical trials of medicinal products in the EU must be conducted in accordance with EU and national regulations and the International Conference on Harmonization, or ICH, guidelines on good clinical practices, or GCP, as well as the applicable regulatory requirements and the ethical principles that have their origin in the Declaration of Helsinki.
Clinical trials of medicinal products in the EU must be conducted in accordance with EU and national regulations and the International Council for Harmonization of Technical Requirements for Pharmaceuticals for Human Use, or ICH, guidelines on good clinical practices, or GCP, as well as the applicable regulatory requirements and the ethical principles that have their origin in the Declaration of Helsinki.
Our global network of CROs and scientists affords us the flexibility to conduct research and development activities in diverse geographic locations to help accelerate development timelines and limit geographic risks. 4. Apply patient-guided development strategies.
Our global network of CROs and scientists affords us the flexibility to conduct research and development activities in diverse geographic locations to help accelerate development timelines and limit geographic risks.
As part of the RogCon Agreement, we agreed to provide up-front consideration of $2.1 million, consisting of a $1.0 million deposit, $0.7 million in cash reimbursements for certain historical costs 14 Table of Contents previously incurred by RogCon and $0.4 million for the retirement of existing loan balances as of September 11, 2019.
As part of the RogCon Agreement, we agreed to provide up-front consideration of $2.1 million, consisting of a $1.0 million deposit, $0.7 million in cash reimbursements for certain historical costs previously incurred by RogCon and $0.4 million for the retirement of existing loan balances as of September 11, 2019. 14 Table of Contents Subsequent to September 11, 2019, we will reimburse RogCon for its out-of-pocket costs incurred for activities performed under the RogCon Agreement.
While the Clinical Trials Directive required a separate clinical trial application, or CTA, to be submitted in each member state, to both the competent national health authority and an independent ethics committee, much like the FDA and IRB respectively, the CTR introduces a centralized process and only requires the submission of a single application to all member states concerned.
While the Clinical Trials Directive required a separate clinical trial application, or CTA, to be submitted in each member state in which the clinical trial takes place, to both the competent national health authority and an independent ethics committee, much like the FDA and IRB respectively, the CTR introduces a centralized process and only requires the submission of a single application for multi-center trials.
As a condition of approval, the FDA generally requires that a sponsor of a drug receiving accelerated approval perform adequate and well-controlled confirmatory clinical trials to verify and describe the predicted effect on IMM or other clinical endpoint.
As a condition of approval, the FDA generally requires that a sponsor of a drug receiving accelerated approval perform adequate and well-controlled confirmatory clinical trials to verify and describe the predicted effect on IMM or other clinical endpoint, and may require that such confirmatory trials be underway prior to granting accelerated approval.
CLINICAL STAGE PROGRAMS We have advanced four product candidates to clinical stage, including three small molecules through the Cerebrum™ platform and one ASO through the Solidus™ platform: Ulixacaltamide for Essential Tremor and Parkinson’s disease Our most advanced program, ulixacaltamide, is a differentiated and highly selective small molecule inhibitor of T-type calcium channels currently being studied for the treatment of Essential Tremor, or ET, in a Phase 2b study, and for the treatment of Parkinson’s disease, or PD, in a proof of concept, Phase 2 study.
CLINICAL STAGE PROGRAMS We have advanced four product candidates to clinical stage, including three small molecules through the Cerebrum™ platform and one ASO through the Solidus™ platform: Ulixacaltamide for Essential Tremor Our most advanced program, ulixacaltamide, is a differentiated and highly selective small molecule inhibitor of T-type calcium channels currently in Phase 3 clinical development for the treatment of Essential Tremor, or ET.
Ulixacaltamide Phase 2b Essential1 study The Essential1 study is a multi-center, randomized, double-blind, placebo-controlled, dose-range finding Phase 2b clinical trial evaluating the efficacy, safety and tolerability of once-daily treatment of ulixacaltamide compared to placebo after 56 days in participants with moderate-to-severe ET.
Essential1 study The Essential1 study was a multi-center, randomized, double-blind, placebo-controlled, dose-range finding Phase 2b clinical trial evaluating the efficacy, safety and tolerability of once-daily treatment of ulixacaltamide compared to placebo after 56 days in participants with moderate-to-severe ET. Topline results for the Phase 2b Essential1 study were announced in the first quarter of 2023.
PRAX-628 Phase 1 first-in-human study We initiated a Phase 1 healthy volunteer study of PRAX-628 in the fourth quarter of 2022 to evaluate the tolerability, PK, pharmacodynamics and food effect of PRAX-628 across single and multiple ascending dose cohorts.
PRAX-628 Phase 1 first-in-human study We initiated a Phase 1 healthy volunteer study of PRAX-628 in the fourth quarter of 2022 to evaluate the tolerability, pharmacokinetics, or PK, pharmacodynamics, or PD, and food effect of PRAX-628 across single and multiple ascending dose cohorts. Topline results from the study were announced in the second quarter of 2023.
We also observed survival benefits following administration of a 11 Table of Contents mouse ASO to a group of mice after onset of disease and around the time of onset of mortality. PRAX-222 has received ODD and RPD from the FDA, and ODD from the EMA for the treatment of SCN2A-DEE.
We also observed survival benefits following administration of a mouse ASO to a group of mice after onset of disease and around the time of onset of mortality. Elsunersen has received ODD and RPD from the FDA, and ODD and PRIority MEdicines, or PRIME, designation from the EMA for the treatment of SCN2A-DEE.
A CRL will describe all of the deficiencies in the NDA, except that where the FDA determines that the data supporting the application are inadequate to support approval, the FDA may issue the CRL without first conducting required inspections and/or reviewing proposed labeling.
An approval letter authorizes commercial marketing of the drug with specific prescribing information and for specific indications. A CRL will describe all of the deficiencies in the NDA, except that where the FDA determines that the data supporting the application are inadequate to support approval, the FDA may issue the CRL without first conducting required inspections and/or reviewing proposed labeling.
PRAX-222 EMBRAVE study In September 2022, we announced plans to initiate the PRAX-222 EMBRAVE study for the treatment of pediatric patients with early-onset SCN2A-DEE, after the FDA allowed us to proceed under an Investigational New Drug, or IND, application for the initial dose cohort, or Part 1 of the study.
Elsunersen EMBRAVE study In the second quarter of 2023, we initiated the EMBRAVE study for the treatment of pediatric patients with early-onset SCN2A-DEE, after the FDA allowed us to proceed under an Investigational New Drug, or IND, application for the initial dose cohort, or Part 1 of the study.
Coverage, pricing and reimbursement Significant uncertainty exists as to the coverage and reimbursement status of any product candidates for which we obtain regulatory approval. Sales of any products for which we receive regulatory approval for commercial sale will depend, in part, on the extent to which third-party payors provide coverage and establish adequate reimbursement levels for such drug products.
Sales of any products for which we receive regulatory approval for commercial sale 23 Table of Contents will depend, in part, on the extent to which third-party payors provide coverage and establish adequate reimbursement levels for such drug products.
In identifying our employer value proposition, we have highlighted the following aspects of working at Praxis: • Building. Our approach to building a robust clinical pipeline provides a platform and forum for exploration and innovation. At Praxis, we are all involved in building the company together, and as a flat and agile organization, each employee has an impact.
Our approach to build and progress a robust clinical pipeline provides a platform for exploration and innovation. At Praxis, we are all involved in building the company together, and as a flat and agile organization, each employee has an impact.
Led by our clinical-stage product candidate, PRAX-222, Solidus™ has also generated novel ASOs with preclinical proof of mechanism, including PRAX-080, for which we expect to nominate a development candidate for the treatment of PCDH19 in the second half of 2023, PRAX-090 and PRAX-100, and the platform is uniquely positioned to continue discovering and advancing new ASOs for novel genetic CNS targets. 7 Table of Contents Below is a summary of our portfolio: *PRAX-020 (KCNT1) is a research collaboration with UCB Biopharma SRL +PRAX-080 (PCDH19), PRAX-090 (SYNGAP1) & PRAX-100 (SCN2A-LoF) ASOs are a collaboration with The Florey Institute of Neuroscience and Mental Health Our Strategy & Approach to Drug Development We leverage the genetics of epilepsy as a gateway for CNS drug discovery and development.
The platform is uniquely positioned to continue discovering and advancing other new ASOs for novel genetic CNS targets. 7 Table of Contents Below is a summary of our portfolio: *PRAX-020 (KCNT1) is a research collaboration with UCB Biopharma SRL +PRAX-080 (PCDH19), PRAX-090 (SYNGAP1) & PRAX-100 (SCN2A-LoF) ASOs are a collaboration with The Florey Institute of Neuroscience and Mental Health Our Strategy & Approach to Drug Development We leverage the genetics of epilepsy as a gateway for CNS drug discovery and development.
Orphan product exclusivity means that the FDA may not approve any other applications for the same product for the same disease or condition for seven years. If a drug or drug product designated as an orphan product ultimately receives marketing approval for an indication broader than what was designated in its orphan product application, it may not be entitled exclusivity.
If a drug or drug product designated as an orphan product ultimately receives marketing approval for a disease or condition broader than what was designated in its orphan product application, it may not be entitled exclusivity.
COMPETITION The biopharmaceutical industry is characterized by rapidly advancing technologies, strong competition and an emphasis on proprietary products. While we believe that our technology, knowledge, experience and scientific personnel provide us with competitive advantages, we face substantial competition from many different sources, including large and small pharmaceutical and biotechnology companies, academic research institutions, governmental agencies and public and private institutions.
While we believe that our technology, knowledge, experience and scientific personnel provide us with competitive advantages, we face substantial competition from many different sources, including large and small pharmaceutical and biotechnology companies, academic research institutions, governmental agencies and public and private institutions.
Pediatric exclusivity, if granted, adds six months to existing regulatory exclusivity periods. This six-month exclusivity may be granted based on the voluntary completion of a pediatric trial in accordance with an FDA-issued “Written Request” for such a trial.
Pediatric exclusivity, if granted, adds six months to existing regulatory exclusivity periods or patent terms. This six-month exclusivity may be granted based on the voluntary completion of a pediatric trial in accordance with an FDA-issued “Written Request” for such a trial. The FDA's issuance of a written request does not obligate the sponsor to complete the requested pediatric studies.
Concurrent with clinical trials, companies usually complete additional animal studies and also must develop additional information about the chemistry and physical characteristics of the drug as well as finalize a process for manufacturing the product in commercial quantities in accordance with cGMP requirements.
In certain instances, the FDA may mandate the performance of Phase 4 clinical trials as a condition or requirement of approval of an NDA. 17 Table of Contents Concurrent with clinical trials, companies usually complete additional animal studies and also must develop additional information about the chemistry and physical characteristics of the drug as well as finalize a process for manufacturing the product in commercial quantities in accordance with cGMP requirements.
PRAX-222 for SCN2A-DEE PRAX-222 is a clinical-stage ASO designed to down-regulate Na V 1.2 expression, an effect that has demonstrated disease-modifying activity in animal models of SCN2A epileptic encephalopathy.
It is estimated that there are approximately 2,000 patients in the United States with SCN8A-DEE. Elsunersen for SCN2A-DEE Elsunersen is a clinical-stage ASO designed to down-regulate Na V 1.2 expression, an effect that has demonstrated disease-modifying activity in animal models of SCN2A epileptic encephalopathy.
U.S. drug product marketing exclusivity Market exclusivity provisions under the FDCA can delay the submission or the approval of certain marketing applications. For example, the FDCA provides a five-year period of non-patent data exclusivity within the United States to the first applicant to gain approval of an NDA for a new chemical entity.
For example, the FDCA provides a five-year period of non-patent data exclusivity within the United States to the first applicant to gain approval of an NDA for a new chemical entity.
The sixth patent family is directed to the adjunctive use of a beta blocker and/or certain anticonvulsants with ulixacaltamide and expires in 2043.
A third family is directed to titration methods of using ulixacaltamide and expires in 2041. A fourth patent family is directed to certain analog compounds of ulixacaltamide and expires in 2040. A fifth patent family is directed to the adjunctive use of a beta blocker and/or certain anticonvulsants with ulixacaltamide and expires in 2043.
KCNT1 blockers We own eleven patent families directed to KCNT1 blockers including ten families related to our KCNT1 program and one family related to ASOs. Ten patent families disclose and claim small molecule KCNT1 blockers and methods of use in treating diseases such as epilepsy, including epilepsy having certain KCNT1 mutations, and expire between 2040 and 2043.
These patent families disclose and claim small molecule KCNT1 blockers and methods of use in treating diseases, such as epilepsy, including epilepsy having certain KCNT1 mutations, and expire between 2040 and 2043. GABA A receptor positive allosteric modulators We own five patent families directed to GABA A receptor positive allosteric modulators.
We currently source all of our non-clinical and clinical compound supply through third-party contract development and manufacturing organizations, or CDMOs. For clinical supply, we rely on CDMOs to manufacture drug substance and drug product in accordance with the FDA’s current Good Manufacturing Practices, or cGMP.
For clinical supply, we rely on CDMOs to manufacture drug substance and drug product in accordance with the FDA’s current Good Manufacturing Practices, or cGMP.
Subsequent to September 11, 2019, we will reimburse RogCon for its out-of-pocket costs incurred for activities performed under the RogCon Agreement. We expense these costs as incurred as research and development. Expenses incurred for all periods presented were not material. Additionally, RogCon has agreed to certain defined exclusivity obligations.
We expense these costs as incurred as research and development. Expenses incurred for all periods presented were not material. Additionally, RogCon has agreed to certain defined exclusivity obligations.
The FDA may also revoke any priority review voucher if the rare pediatric disease drug for which the voucher was awarded is not marketed in the United States within one year following the date of approval. 19 Table of Contents For purposes of this program, a “rare pediatric disease” is a (a) serious or life-threatening disease in which the serious or life-threatening manifestations primarily affect individuals aged from birth to 18 years; and (b) rare diseases or conditions within the meaning of the Orphan Drug Act.
For purposes of this program, a “rare pediatric disease” is a (a) serious or life-threatening disease in which the serious or life-threatening manifestations primarily affect individuals aged from birth to 18 years; and (b) rare diseases or conditions within the meaning of the Orphan Drug Act.
Non-clinical studies must be conducted in compliance with the principles of good laboratory practice, or GLP, as set forth in EU Directive 2004/10/EC.
Non-clinical (pharmaco-toxicological) studies must be conducted in compliance with the principles of good laboratory practice, or GLP, as set forth in EU Directive 2004/10/EC (unless otherwise justified for certain particular medical products, e.g., radio-pharmaceutical precursors for radio-labeling purposes).
PRAX-562 has been generally well-tolerated in three Phase 1 studies and has demonstrated biomarker changes indicative of voltage-gated sodium channel, or NaV channel, blocking effects. PRAX-562 has received Orphan Drug Designation, or ODD, and Rare Pediatric Disease Designation, or RPD, from the FDA, and ODD from the European Medicines Agency, or EMA, for the treatment of SCN2A-DEE and SCN8A-DEE, respectively.
PRAX-562 has received Orphan Drug Designation, or ODD, and Rare Pediatric Disease Designation, or RPD, from the FDA, and ODD from the European Medicines Agency, or EMA, for the treatment of SCN2A-DEE and SCN8A-DEE, respectively.
We are committed to developing our culture and our employees through our company core values – Trust , Ownership , Curiosity and Results . It is the strength of our culture and our work environment that allow us to attract top talent to Praxis.
It is the strength of our culture and our work environment that allow us to attract top talent to Praxis.
After evaluating the NDA and all related information, including the advisory committee recommendation, if any, and inspection reports regarding the manufacturing facilities, sponsor, and clinical trial sites, the FDA may issue either an approval letter or a complete response letter, or CRL. An approval letter authorizes commercial marketing of the drug with specific prescribing information and for specific indications.
The FDA must send a non-compliance letter to any sponsor that fails to submit the required assessment, keep a deferral current or fails to submit a request for approval of a pediatric formulation. 18 Table of Contents After evaluating the NDA and all related information, including the advisory committee recommendation, if any, and any inspection reports regarding the manufacturing facilities, sponsor, and clinical trial sites, the FDA may issue either an approval letter or a complete response letter, or CRL.
However, despite the plethora of marketed treatments, up to 30% of patients remain refractory to treatment. There are two forms of therapeutically relevant sodium current: (1) persistent sodium current and (2) peak sodium current.
Focal epilepsy patients are treated with sodium channel targeting antiepileptic drugs, or AEDs, such as Tegretol (carbamazepine), Lamictal (lamotrigine), Xcopri (cenobamate) and many others. However, despite the plethora of marketed treatments, up to 30% of patients remain refractory to treatment. There are two forms of therapeutically relevant sodium current: (1) persistent sodium current and (2) peak sodium current.
Privacy and security laws, regulations, and other obligations are constantly evolving, may conflict with each other to make compliance efforts more challenging, and can result in investigations, proceedings, or actions that lead to significant penalties and restrictions on data processing. 25 Table of Contents Laws and regulations governing international operations If we further expand our operations outside of the United States, we must dedicate additional resources to comply with numerous laws and regulations in each jurisdiction in which we plan to operate.
Privacy and security laws, regulations, and other obligations are constantly evolving, may conflict with each other to make compliance efforts more challenging, and can result in investigations, proceedings, or actions that lead to significant penalties and restrictions on data processing.
The FDA does not always meet its goal dates, and the review process can be extended by FDA requests for additional information or clarification and a sponsor’s process to respond to such inquiries.
The FDA does not always meet its goal dates, and the review process can be extended for a three-month period by the FDA to review information deemed a "major amendment" to the application.
The SCN2A gene encodes the NaV1.2 subunit of brain sodium channels, which control neuronal excitability by regulating the flow of sodium ions into neurons. This movement of sodium ions is a major component of generating electrical signals called action potentials, the way in which the cells communicate.
This movement of sodium ions is a major component of generating electrical signals called action potentials, the way in which the cells communicate.
In this patent family, PRAX-562 is covered by a patent that has granted in the United States (U.S. 11,014,931), and patent applications pending in other potentially commercially relevant jurisdictions, which expire in 2039. A second family discloses other persistent sodium current blockers and generically claims PRAX-562, as well as methods of treating diseases such as pediatric epilepsy.
A second family discloses other persistent sodium current blockers and generically claims PRAX-562, as well as methods of treating diseases such as pediatric epilepsy. This patent family is pending in multiple jurisdictions and expires in 2037.
An IND is a request for authorization from the FDA to administer an investigational product to humans and must become effective before human clinical trials may begin.
An IND is a request for authorization from the FDA to administer an investigational product to humans and must become effective before human clinical trials may begin. The IND automatically becomes effective 30 days after receipt by the FDA, unless the FDA, within the 30-day time period, raises safety concerns or questions about the proposed clinical trial.
Two patents are granted in the United States (U.S. 10,562,930 and U.S. 10,927,141), which expire in 2039. A second patent family is directed to alternative salt forms of PRAX-114, which expires in 2042. Other patent applications cover methods of use and processes for making related to PRAX-114, which expire from 2041 to 2043.
One patent family discloses and claims salts and polymorphs of PRAX-114. Two patents are granted in the United States, which expire in 2039. A second patent family is directed to alternative salt forms of PRAX-114, and a U.S. patent has issued, which expires in 2042.
Currently, there are no approved treatments for SCN2A-DEE, and the standard-of-care typically involves a regimen of many concurrent anti-seizure medications as well as medications for comorbidities. Despite these interventions, it is estimated that more than 80% of early-onset SCN2A-DEE patients live with uncontrolled seizures, and approximately 75% live with severe intellectual disability.
Currently, there are no approved treatments for SCN2A-DEE, and the standard-of-care typically involves a regimen of many concurrent anti-seizure medications as well as medications for comorbidities.
It is estimated that there are at least 1,500 patients in the United States with GoF changes in SCN2A leading to epileptic encephalopathy. SCN8A-DEE SCN8A-DEE is a rare DEE caused by a gain-of-function variant in the SCN8A gene. Similar to SCN2A-DEE, patients with SCN8A-DEE suffer from recurrent, typically drug-resistant seizures, which start as early as the first day of life.
SCN8A-DEE SCN8A-DEE is a rare DEE caused by a gain-of-function variant in the SCN8A gene. Similar to SCN2A-DEE, patients with SCN8A-DEE suffer from recurrent, typically drug-resistant seizures, which start as early as the first day of life. The seizures can be of multiple different types, up to dozens per day, with poor response to current treatment options.
The study is expected to initiate in the first quarter of 2023, with two cohorts in early-onset SCN2A-DEE and SCN8A-DEE patients.
PRAX-562 Phase 2 EMBOLD study In the first quarter of 2023, we initiated the PRAX-562 Phase 2 EMBOLD study for the treatment of pediatric patients with DEEs, with two cohorts in early-onset SCN2A-DEE and SCN8A-DEE patients.
PRAX-562 for rare, monogenic DEEs PRAX-562 is a first-in-class preferential inhibitor of persistent sodium current, presently in development for the treatment of rare developmental and epileptic encephalopathies, or DEEs. In-vivo studies of PRAX-562 have demonstrated dose-dependent block of seizures up to complete inhibition of seizure activity in SCN2A, SCN8A and other DEE mouse models.
PRAX-562 for rare, monogenic Developmental and Epileptic Encephalopathies 10 Table of Contents PRAX-562 is a first-in-class preferential inhibitor of persistent sodium current, presently in development for the treatment of rare developmental and epileptic encephalopathies, or DEEs.
In the United States alone, it is estimated that focal epilepsy affects approximately two million people. Focal epilepsy is characterized by seizures that originate in one side or area of the brain and affects one side of the body. Focal epilepsy patients are treated with sodium channel targeting AEDs, such as Tegretol (carbamazepine), Lamictal (lamotrigine), Xcopri (cenobamate) and many others.
Focal Epilepsy Focal epilepsy is the most common type of epilepsy, accounting for approximately 60% of all cases. In the United States alone, it is estimated that focal epilepsy affects approximately two million people. Focal epilepsy is characterized by seizures that originate in one side or area of the brain and affects one side of the body.
The seizures can be of multiple different types, up to dozens per day, with poor response to current treatment options. Patients with SCN8A-DEE have significant cognitive disabilities, ranging from moderate to severe, often have movement disorders, such as dystonia or ataxia, and have problems in other body systems such as the gastrointestinal or ocular systems.
Patients with SCN8A-DEE have significant cognitive disabilities, ranging from moderate to severe, often have movement disorders, such as dystonia or ataxia, and have problems in other body systems such as the gastrointestinal or ocular systems. SCN8A-DEE patients also may experience autonomic features such as increases or decreases in heart rate, abnormal breathing and cyanosis.
Many of our competitors have substantially greater financial resources, expertise and capabilities in research and development, the regulatory approval process, manufacturing and marketing than we do. Smaller or early-stage companies may also prove to be significant competitors, particularly through merger and acquisition activity and sizeable collaborative arrangements with established companies.
Smaller or early-stage companies may also prove to be significant competitors, particularly through merger and acquisition activity and sizeable collaborative arrangements with established companies.
Part 1 of the EMBRAVE study is a 21-week open label cohort, in which participants will receive PRAX-222 for up to 13 weeks, designed to determine the safety and tolerability of intrathecal delivery of PRAX-222. We expect topline results from the first dose cohort of the PRAX-222 EMBRAVE study in mid-2023.
Part 1 of the EMBRAVE study was a 21-week open label cohort, in which participants received elsunersen for up to 13 weeks, designed to determine the safety and tolerability of intrathecal delivery of elsunersen. Dosing for Part 1 of the EMBRAVE study was completed in the fourth quarter of 2023. No treatment related AEs or SAEs were observed.
Either party may terminate the agreement upon material breach or insolvency of the other party. Praxis is able to terminate the Ionis Agreement for convenience with prior written notice. Ionis may terminate if we fail to achieve certain performance milestones.
Praxis is able to terminate the Ionis Agreement for convenience with prior written notice. Ionis may terminate if we fail to achieve certain performance milestones. Upon termination by us for convenience, we will stop selling all products, subject to certain wind-down provisions and all products will revert back to Ionis.
HUMAN CAPITAL At Praxis, we are fiercely dedicated to our mission to translate genetic insights into the development of therapies for CNS disorders characterized by neuronal imbalance.
HUMAN CAPITAL At Praxis, we are passionate about our mission to translate genetic insights into the development of therapies for CNS disorders characterized by neuronal imbalance. Our culture is designed to attract, develop and retain a talent-dense team that works tirelessly to deliver treatments to positively change the lives of patients with CNS disorders.
As of February 3, 2023, we have 109 employees and plan to grow as we continue to realize the potential of our pipeline. We Trust each other’s judgement, which is why we do not implement excessive policies. We value transparency among team members that leads to direct, clear, and timely feedback so we can all improve together.
We Trust each other’s judgement, which is why we do not have excessively prescriptive policies. We value transparency among team members that leads to direct, clear, and timely feedback so we can all improve together. We commit to be one another’s checks and balances. We respect all opinions and encourage diversity. Discrimination is never tolerated.
One day a month, we commit to what we call “Curiosity Day.” We ask our employees to step away from the computer, meetings and calls for a single day to focus solely on being curious – whether that means 26 Table of Contents catching up on professional articles or journals, diving deeper into a rare disease we do not currently support, challenging ourselves by exploring an area outside our comfort zone, perfecting a new skill, or even taking some time to safely enjoy the outdoors.
This could mean catching up on professional articles or journals, diving deeper into a rare disease we do not currently support, exploring an area outside our comfort zone, perfecting a new skill, or taking some time to enjoy the outdoors.
Through trust, ownership and curiosity, our employees are positioned to leave lasting results that reach the communities we serve. At the end of the day, the magic we witness when employees put their minds together is what we are most proud of as a company.
At the end of the day, the magic we witness when employees put their minds together is what we are most proud of as a company. In identifying our employer value proposition, we have highlighted the following aspects of working at Praxis: • Building.
A second family is directed to methods of use of certain T-type calcium channel modulators, including ulixacaltamide, in treating disease such as epilepsy. This patent family is pending in the United States and expires in 2037. A third patent family is directed to certain pharmaceutical formulations of ulixacaltamide and methods of use in treating disorders such as essential tremor.
A second patent family is directed to certain pharmaceutical formulations of ulixacaltamide and methods of use in treating disorders such as essential tremor. Two U.S. patents have issued in this patent family, and expire in 2040, and this family remains pending in multiple jurisdictions of potential commercial interest.
Drugs granted accelerated approval must meet the same 20 Table of Contents statutory standards for safety and effectiveness as those granted traditional approval. In addition, all promotional materials for products approved under the accelerated approval program are subject to prior review by the FDA.
In addition, all promotional materials for products approved under the accelerated approval program are subject to prior review by the FDA. 20 Table of Contents U.S. drug product marketing exclusivity Market exclusivity provisions under the FDCA can delay the submission or the approval of certain marketing applications.
The sponsor or FDA may request a deferral of pediatric clinical trials for some or all of the pediatric subpopulations. The FDA must send a non-compliance letter 18 Table of Contents to any sponsor that fails to submit the required assessment, keep a deferral current or fails to submit a request for approval of a pediatric formulation.
The sponsor or FDA may request a deferral of pediatric clinical trials for some or all of the pediatric subpopulations.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAs use of digital technologies has increased, cyber incidents, including third parties gaining access to employee accounts using stolen or inferred credentials, computer malware, viruses, spamming, phishing attacks or other means, and deliberate attacks and attempts to gain unauthorized access to computer systems and networks, have increased in frequency and sophistication.
Biggest changeAs use of digital technologies has increased, our IT systems and those of such third parties, are increasingly vulnerable to attack, damage and interruption from natural disasters, terrorism, war, telecommunication and electrical failures, hacking, cyber incidents, including third parties gaining access to employee accounts using stolen or inferred credentials, malicious code, malware, viruses (e.g., ransomware), spamming, phishing attacks and other social engineering schemes, employee theft or misuse, human error, fraud, denial or degradation of service attacks, and sophisticated nation-state and nation-state-supported actors or other deliberate attacks and attempts to gain unauthorized access to IT systems and networks, as such attacks have increased in frequency and sophistication.
The shifting compliance environment and the need to build and maintain robust and expandable systems to comply with multiple jurisdictions with different compliance or reporting requirements increases the possibility that a healthcare company may run afoul of one or more of the requirements.
The shifting compliance environment and the need to build and maintain robust and expandable systems to comply with multiple jurisdictions with different compliance or reporting requirements increases the possibility that a healthcare company may run afoul of one or more of the requirements.
Our ability to use our U.S. federal and state net operating losses and tax credits is dependent upon our generation of future taxable income and income tax liabilities, and we cannot predict with certainty when, or whether, we will generate sufficient taxable income or income tax liabilities to use any or all of our net operating losses or tax credits.
Our ability to use our U.S. federal and state net operating losses and tax credits is dependent upon our generation of future taxable income and income tax liabilities. We cannot predict with certainty when, or whether, we will generate sufficient taxable income or income tax liabilities to use any or all of our net operating losses or tax credits.
Our ability to generate revenue and achieve profitability depends on many factors, including: • initiating and successfully completing research and preclinical and clinical development of our product candidates; • obtaining regulatory approvals and marketing authorizations for product candidates for which we successfully complete clinical development and clinical trials, if any; • developing a sustainable and scalable manufacturing process for our product candidates, as well as establishing and maintaining commercially viable supply relationships with third parties that can provide adequate products and services to support clinical activities and commercial demand of our product candidates; • identifying, assessing, acquiring and/or developing new product candidates; 30 Table of Contents • negotiating favorable terms in any collaboration, licensing or other arrangements into which we may enter; • launching and successfully commercializing product candidates for which we obtain regulatory and marketing approval, if any, either by collaborating with a partner or, if launched independently, by establishing a sales, marketing and distribution infrastructure; • obtaining and maintaining an adequate price for our product candidates in the countries where our products are commercialized, if any; • obtaining adequate reimbursement for our product candidates from payors; • obtaining market acceptance of our product candidates as viable treatment options; • addressing any competing technological and market developments; • receiving milestone and other payments under any future collaboration arrangements; • maintaining, protecting, expanding and enforcing our portfolio of intellectual property rights, including patents, trade secrets and know-how; and • attracting, hiring and retaining qualified personnel.
Our ability to generate revenue and achieve profitability depends on many factors, including: • initiating and successfully completing research and preclinical and clinical development of our product candidates; • obtaining regulatory approvals for product candidates for which we successfully complete clinical development and clinical trials, if any; • developing a sustainable and scalable manufacturing process for our product candidates, as well as establishing and maintaining commercially viable supply relationships with third parties that can provide adequate products and services to support clinical activities and commercial demand of our product candidates; • identifying, assessing, acquiring and/or developing new product candidates; • negotiating favorable terms in any collaboration, licensing or other arrangements into which we may enter; • launching and successfully commercializing product candidates for which we obtain regulatory approval, if any, either by collaborating with a partner or, if launched independently, by establishing a sales, marketing and distribution infrastructure; 30 Table of Contents • obtaining and maintaining an adequate price for our product candidates in the countries where our products are commercialized, if any; • obtaining adequate reimbursement for our product candidates from payors; • obtaining market acceptance of our product candidates as viable treatment options; • addressing any competing technological and market developments; • receiving milestone and other payments under any future collaboration arrangements; • maintaining, protecting, expanding and enforcing our portfolio of intellectual property rights, including patents, trade secrets and know-how; and • attracting, hiring and retaining qualified personnel.
Collaborations involving our research programs, or any product candidates we may develop, pose the following risks to us: • collaborators generally have significant discretion in determining the efforts and resources that they will apply to these collaborations; • collaborators may not properly obtain, maintain, enforce or defend intellectual property or proprietary rights relating to our product candidates or research programs, or may use our proprietary information in such a way as to expose us to potential litigation or other intellectual property related proceedings, including proceedings challenging the scope, ownership, validity and enforceability of our intellectual property; • collaborators may own or co-own intellectual property covering our product candidates or research programs that results from our collaboration with them, and in such cases, we may not have the exclusive right to commercialize such intellectual property or such product candidates or research programs; • we may need the cooperation of our collaborators to enforce or defend any intellectual property we contribute to or that arises out of our collaborations, which may not be provided to us; • collaborators may control certain interactions with regulatory authorities, which may impact our ability to obtain and maintain regulatory approval of our products candidates; • disputes may arise between the collaborators and us that result in the delay or termination of the research, development or commercialization of our product candidates or research programs or that result in costly litigation or arbitration that diverts management attention and resources; • collaborators may decide to not pursue development and commercialization of any product candidates we develop or may elect not to continue or renew development or commercialization programs based on clinical trial results, changes in the collaborator’s strategic focus or available funding or external factors such as an acquisition that diverts resources or creates competing priorities; • collaborators may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial or abandon a product candidate, repeat or conduct new clinical trials or require a new formulation of a product candidate for clinical testing; • collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our product candidates or research programs if the collaborators believe that competitive products are more likely to be successfully developed or can be commercialized under terms that are more economically attractive than ours; • collaborators may restrict us from researching, developing or commercializing certain products or technologies without their involvement; • collaborators with marketing and distribution rights to one or more product candidates may not commit sufficient resources to the marketing and distribution of such product candidates; 71 Table of Contents • we may lose certain valuable rights under circumstances identified in our collaborations, including if we undergo a change of control; • collaborators may grant sublicenses to our technology or product candidates or undergo a change of control and the sublicensees or new owners may decide to take the collaboration in a direction which is not in our best interest; • collaborators may become bankrupt, which may significantly delay our research or development programs, or may cause us to lose access to valuable technology, know-how or intellectual property of the collaborator relating to our products, product candidates or research programs; • key personnel at our collaborators may leave, which could negatively impact our ability to productively work with our collaborators; • collaborations may require us to incur short and long-term expenditures, issue securities that dilute our stockholders or disrupt our management and business; • if our collaborators do not satisfy their obligations under our agreements with them, or if they terminate our collaborations with them, we may not be able to develop or commercialize product candidates as planned; • collaborations may require us to share in development and commercialization costs pursuant to budgets that we do not fully control and our failure to share in such costs could have a detrimental impact on the collaboration or our ability to share in revenue generated under the collaboration; • collaborations may be terminated in their entirety or with respect to certain product candidates or technologies and, if so terminated, may result in a need for additional capital to pursue further development or commercialization of the applicable product candidates or technologies; and • collaboration agreements may not lead to development or commercialization of product candidates in the most efficient manner or at all.
Collaborations involving our research programs, or any product candidates we may develop, pose the following risks to us: • collaborators generally have significant discretion in determining the efforts and resources that they will apply to these collaborations; • collaborators may not properly obtain, maintain, enforce or defend intellectual property or proprietary rights relating to our product candidates or research programs, or may use our proprietary information in such a way as to expose us to potential litigation or other intellectual property related proceedings, including proceedings challenging the scope, ownership, validity and enforceability of our intellectual property; • collaborators may own or co-own intellectual property covering our product candidates or research programs that results from our collaboration with them, and in such cases, we may not have the exclusive right to commercialize such intellectual property or such product candidates or research programs; • we may need the cooperation of our collaborators to enforce or defend any intellectual property we contribute to or that arises out of our collaborations, which may not be provided to us; • collaborators may control certain interactions with regulatory authorities, which may impact our ability to obtain and maintain regulatory approval of our products candidates; • disputes may arise between the collaborators and us that result in the delay or termination of the research, development or commercialization of our product candidates or research programs or that result in costly litigation or arbitration that diverts management attention and resources; • collaborators may decide to not pursue development and commercialization of any product candidates we develop or may elect not to continue or renew development or commercialization programs based on clinical trial results, changes in the collaborator’s strategic focus or available funding or external factors such as an acquisition that diverts resources or creates competing priorities; • collaborators may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial or abandon a product candidate, repeat or conduct new clinical trials or require a new formulation of a product candidate for clinical testing; • collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our product candidates or research programs if the collaborators believe that competitive products are more likely to be successfully developed or can be commercialized under terms that are more economically attractive than ours; • collaborators may restrict us from researching, developing or commercializing certain products or technologies without their involvement; • collaborators with marketing and distribution rights to one or more product candidates may not commit sufficient resources to the marketing and distribution of such product candidates; 72 Table of Contents • we may lose certain valuable rights under circumstances identified in our collaborations, including if we undergo a change of control; • collaborators may grant sublicenses to our technology or product candidates or undergo a change of control and the sublicensees or new owners may decide to take the collaboration in a direction which is not in our best interest; • collaborators may become bankrupt, which may significantly delay our research or development programs, or may cause us to lose access to valuable technology, know-how or intellectual property of the collaborator relating to our products, product candidates or research programs; • key personnel at our collaborators may leave, which could negatively impact our ability to productively work with our collaborators; • collaborations may require us to incur short and long-term expenditures, issue securities that dilute our stockholders or disrupt our management and business; • if our collaborators do not satisfy their obligations under our agreements with them, or if they terminate our collaborations with them, we may not be able to develop or commercialize product candidates as planned; • collaborations may require us to share in development and commercialization costs pursuant to budgets that we do not fully control and our failure to share in such costs could have a detrimental impact on the collaboration or our ability to share in revenue generated under the collaboration; • collaborations may be terminated in their entirety or with respect to certain product candidates or technologies and, if so terminated, may result in a need for additional capital to pursue further development or commercialization of the applicable product candidates or technologies; and • collaboration agreements may not lead to development or commercialization of product candidates in the most efficient manner or at all.
For example: 57 Table of Contents • others may be able to make or use compounds that are similar to the compositions of our product candidates but that are not covered by the claims of our patents or those of our licensors; • we or our licensors, as the case may be, may fail to meet our obligations to the U.S. government in regards to any in-licensed patents and patent applications funded by U.S. government grants, leading to the loss of patent rights; • we or our licensors, as the case may be, might not have been the first to file patent applications for these 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 our pending patent applications will not result in issued patents; • it is possible that there are prior public disclosures that could invalidate our or our licensors’ patents, as the case may be, or parts of our or their patents; • it is possible that others may circumvent our owned or in-licensed patents; • it is possible that there are unpublished applications or patent applications maintained in secrecy that may later issue with claims covering our products or technology similar to ours; • the laws of foreign countries may not protect our or our licensors’, as the case may be, proprietary rights to the same extent as the laws of the United States; • the claims of our owned or in-licensed issued patents or patent applications, if and when issued, may not cover our product candidates; • our owned or in-licensed issued patents may not provide us with any competitive advantages, may be narrowed in scope, or may be held invalid or unenforceable as a result of legal challenges by third parties; • the inventors of our owned or in-licensed patents or patent applications may become involved with competitors, develop products or processes which design around our patents or become hostile to us or the patents or patent applications on which they are named as inventors; • it is possible that our owned or in-licensed patents or patent applications omit individual(s) that should be listed as inventor(s) or include individual(s) that should not be listed as inventor(s), which may cause these patents or patents issuing from these patent applications to be held invalid or unenforceable; • we have engaged in scientific collaborations in the past, and are likely to continue to do so in the future.
For example: • others may be able to make or use compounds that are similar to the compositions of our product candidates but that are not covered by the claims of our patents or those of our licensors; • we or our licensors, as the case may be, may fail to meet our obligations to the U.S. government in regards to any in-licensed patents and patent applications funded by U.S. government grants, leading to the loss of patent rights; • we or our licensors, as the case may be, might not have been the first to file patent applications for these 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 our pending patent applications will not result in issued patents; • it is possible that there are prior public disclosures that could invalidate our or our licensors’ patents, as the case may be, or parts of our or their patents; • it is possible that others may circumvent our owned or in-licensed patents; • it is possible that there are unpublished applications or patent applications maintained in secrecy that may later issue with claims covering our products or technology similar to ours; • the laws of foreign countries may not protect our or our licensors’, as the case may be, proprietary rights to the same extent as the laws of the United States; • the claims of our owned or in-licensed issued patents or patent applications, if and when issued, may not cover our product candidates; • our owned or in-licensed issued patents may not provide us with any competitive advantages, may be narrowed in scope, or may be held invalid or unenforceable as a result of legal challenges by third parties; 58 Table of Contents • the inventors of our owned or in-licensed patents or patent applications may become involved with competitors, develop products or processes which design around our patents or become hostile to us or the patents or patent applications on which they are named as inventors; • it is possible that our owned or in-licensed patents or patent applications omit individual(s) that should be listed as inventor(s) or include individual(s) that should not be listed as inventor(s), which may cause these patents or patents issuing from these patent applications to be held invalid or unenforceable; • we have engaged in scientific collaborations in the past, and are likely to continue to do so in the future.
Even if we are able to establish agreements with third-party manufacturers, reliance on third-party manufacturers entails additional risks, including: • the failure of the third party to manufacture our product candidates according to our schedule, or at all, including if our third-party contractors give greater priority to the supply of other products over our product candidates or otherwise do not satisfactorily perform according to the terms of the agreements between us and them; • the reduction or termination of production or deliveries by suppliers, or the raising of prices or renegotiation of terms; • the termination or nonrenewal of arrangements or agreements by our third-party contractors at a time that is costly or inconvenient for us; • the breach by the third-party contractors of our agreements with them; • the failure of third-party contractors to comply with applicable regulatory requirements; 69 Table of Contents • the failure of the third party to manufacture our product candidates according to our specifications; • the mislabeling of clinical supplies, potentially resulting in the wrong dose amounts being supplied or study drug or placebo not being properly identified; • clinical supplies not being delivered to clinical sites on time and at expected cost due to inflationary impacts, leading to clinical trial interruptions, or of drug supplies not being distributed to commercial vendors in a timely manner, resulting in lost sales; and • the misappropriation of our proprietary information, including our trade secrets and know-how.
Even if we are able to establish agreements with third-party manufacturers, reliance on third-party manufacturers entails additional risks, including: • the failure of the third party to manufacture our product candidates according to our schedule, or at all, including if our third-party contractors give greater priority to the supply of other products over our product candidates or otherwise do not satisfactorily perform according to the terms of the agreements between us and them; • the reduction or termination of production or deliveries by suppliers, or the raising of prices or renegotiation of terms; • the termination or nonrenewal of arrangements or agreements by our third-party contractors at a time that is costly or inconvenient for us; • the breach by the third-party contractors of our agreements with them; • the failure of third-party contractors to comply with applicable regulatory requirements; • the failure of the third party to manufacture our product candidates according to our specifications; 70 Table of Contents • the mislabeling of clinical supplies, potentially resulting in the wrong dose amounts being supplied or study drug or placebo not being properly identified; • clinical supplies not being delivered to clinical sites on time and at expected cost due to inflationary impacts, leading to clinical trial interruptions, or of drug supplies not being distributed to commercial vendors in a timely manner, resulting in lost sales; and • the misappropriation of our proprietary information, including our trade secrets and know-how.
Similar to the federal Anti-Kickback Statute, a person or entity can be found guilty of violating HIPAA fraud provisions without actual knowledge of the statute or specific intent to violate it; • the federal Physician Payments Sunshine Act and its implementing regulations, which require 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 direct or indirect payments and other transfers of value made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain non-physician providers including physician providers including physician assistants and nurse practitioners, and teaching hospitals, as well as ownership and investment interests held by the physicians and their immediate family members; • federal consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harm consumers; and • analogous U.S. state, local and foreign laws and regulations, such as state anti-kickback and false claims laws, which may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by any third-party payor, including private insurers, and may be broader in scope than their federal equivalents; state and foreign laws that require biopharmaceutical companies to comply with the biopharmaceutical industry’s voluntary compliance guidelines and other 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 and foreign laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers, marketing expenditures or drug pricing; state and local laws that require the registration of biopharmaceutical sales representatives.
Similar to the federal Anti-Kickback Statute, a person or entity can be found guilty of violating HIPAA fraud provisions without actual knowledge of the statute or specific intent to violate it; 48 Table of Contents • the federal Physician Payments Sunshine Act and its implementing regulations, which require 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 direct or indirect payments and other transfers of value made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain non-physician providers including physician providers including physician assistants and nurse practitioners, and teaching hospitals, as well as ownership and investment interests held by the physicians and their immediate family members; • federal consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harm consumers; and • analogous U.S. state, local and foreign laws and regulations, such as state anti-kickback and false claims laws, which may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by any third-party payor, including private insurers, and may be broader in scope than their federal equivalents; state and foreign laws that require biopharmaceutical companies to comply with the biopharmaceutical industry’s voluntary compliance guidelines and other 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 and foreign laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers, marketing expenditures or drug pricing; state and local laws that require the registration of biopharmaceutical sales representatives.
If a prolonged government shutdown occurs, or if global health concerns continue to hinder or prevent the FDA or other regulatory authorities from conducting their regular inspections, reviews, or other regulatory activities, it could significantly impact the ability of the FDA or other regulatory authorities to timely review and process our regulatory submissions, which could have a material adverse effect on our business.
If a prolonged government shutdown occurs, or if global health concerns hinder or prevent the FDA or other regulatory authorities from conducting their regular inspections, reviews, or other regulatory activities, it could significantly impact the ability of the FDA or other regulatory authorities to timely review and process our regulatory submissions, which could have a material adverse effect on our business.
If any such changes are enacted or implemented, we care currently unable to predict the ultimate impact on our business or holders of our common stock. Our ability to use our U.S. federal and state net operating loss carryforwards and certain other tax attributes may be limited.
If any such changes are enacted or implemented, we are currently unable to predict the ultimate impact on our business or holders of our common stock. Our ability to use our U.S. federal and state net operating loss carryforwards and certain other tax attributes may be limited.
While we do not believe that we have experienced any such system failure, accident or security breach to date, if such an event were to occur and cause interruptions in our operations, it could result in a material disruption of our drug development programs.
While we do not believe that we have experienced any such system failure, accident or security breach to date, if such an event were to occur and cause interruptions in our operations, it could result in a material disruption of our business operations and drug development programs.
The degree of market acceptance of any product candidate, if approved for commercial sale, will depend on a number of factors, including: • efficacy and potential advantages compared to alternative treatments; • the ability to offer our products, if approved, for sale at competitive prices; • relative convenience and ease of administration compared to alternative treatments; • perceptions by the medical community, physicians, and patients, regarding the safety and effectiveness of our products and the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies; • the size of the market for such product candidate, based on the size of the patient subsets that we are targeting, in the territories for which we gain regulatory approval; 44 Table of Contents • the recommendations with respect to our product candidates in guidelines published by various scientific organizations applicable to us and our product candidates; • the strength of sales, marketing and distribution support; • the timing of any such marketing approval in relation to other product approvals; • any restrictions on concomitant use of other medications; • support from patient advocacy groups; • the ability to obtain sufficient third-party coverage and adequate reimbursement; and • the prevalence and severity of any side effects.
The degree of market acceptance of any product candidate, if approved for commercial sale, will depend on a number of factors, including: • efficacy and potential advantages compared to alternative treatments; • the ability to offer our products, if approved, for sale at competitive prices; • relative convenience and ease of administration compared to alternative treatments; • perceptions by the medical community, physicians, and patients, regarding the safety and effectiveness of our products and the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies; • the size of the market for such product candidate, based on the size of the patient subsets that we are targeting, in the territories for which we gain regulatory approval; • the recommendations with respect to our product candidates in guidelines published by various scientific organizations applicable to us and our product candidates; • the strength of sales, marketing and distribution support; • the timing of any such marketing approval in relation to other product approvals; • any restrictions on concomitant use of other medications; • support from patient advocacy groups; • the ability to obtain sufficient third-party coverage and adequate reimbursement; and • the prevalence and severity of any side effects.
If a third-party claims that we infringe its intellectual property rights, we may face a number of issues, including, but not limited to: • infringement and other intellectual property claims which, regardless of merit, may be expensive and time-consuming to litigate and may divert our management’s attention from our core business; • substantial damages for infringement, which we may have to pay if a court decides that the product candidate or technology at issue infringes on or violates the third-party’s rights, and, if the court finds that the infringement was willful, we could be ordered to pay treble damages and the patent owner’s attorneys’ fees; • a court prohibiting us from developing, manufacturing, marketing or selling our product candidates, or from using our proprietary technologies, unless the third-party licenses its product rights to us, which it is not required to do; • if a license is available from a third-party, we may have to pay substantial royalties, upfront fees and other amounts, and/or grant cross- licenses to intellectual property rights for our products and any license that is available may be non-exclusive, which could result in our competitors gaining access to the same intellectual property; and • redesigning our product candidates or processes so that they do not infringe, which may not be possible or may require substantial monetary expenditures and time.
If a third-party claims that we infringe its intellectual property rights, we may face a number of issues, including, but not limited to: • infringement and other intellectual property claims, which, regardless of merit, may be expensive and time-consuming to litigate and may divert our management’s attention from our core business; • substantial damages for infringement, which we may have to pay if a court decides that the product candidate or technology at issue infringes on or violates the third-party’s rights, and, if the court finds that the infringement was willful, we could be ordered to pay treble damages and the patent owner’s attorneys’ fees; • a court prohibiting us from developing, manufacturing, marketing or selling our product candidates, or from using our proprietary technologies, unless the third-party licenses its product rights to us, which it is not required to do; • if a license is available from a third-party, we may have to pay substantial royalties, upfront fees and other amounts, and/or grant cross- licenses to intellectual property rights for our products and any license that is 61 Table of Contents available may be non-exclusive, which could result in our competitors gaining access to the same intellectual property; and • redesigning our product candidates or processes so that they do not infringe, which may not be possible or may require substantial monetary expenditures and time.
Some of these provisions include: • a board of directors divided into three classes serving staggered three-year terms, such that not all members of the board will be elected at one time; • a prohibition on stockholder action through written consent, which requires that all stockholder actions be taken at a meeting of our stockholders; • a requirement that special meetings of stockholders be called only by the board of directors acting pursuant to a resolution approved by the affirmative vote of a majority of the directors then in office; • advance notice requirements for stockholder proposals and nominations for election to our board of directors; • a requirement that no member of our board of directors may be removed from office by our stockholders except for cause and, in addition to any other vote required by law, upon the approval of not less than two-thirds of all outstanding shares of our voting stock then entitled to vote in the election of directors; • a requirement of approval of not less than two-thirds of all outstanding shares of our voting stock to amend any bylaws by stockholder action or to amend specific provisions of our certificate of incorporation; and • the authority of the board of directors to issue convertible preferred stock on terms determined by the board of directors without stockholder approval and which convertible preferred stock may include rights superior to the rights of the holders of common stock.
Some of these provisions include: • a board of directors divided into three classes serving staggered three-year terms, such that not all members of the board will be elected at one time; 82 Table of Contents • a prohibition on stockholder action through written consent, which requires that all stockholder actions be taken at a meeting of our stockholders; • a requirement that special meetings of stockholders be called only by the board of directors acting pursuant to a resolution approved by the affirmative vote of a majority of the directors then in office; • advance notice requirements for stockholder proposals and nominations for election to our board of directors; • a requirement that no member of our board of directors may be removed from office by our stockholders except for cause and, in addition to any other vote required by law, upon the approval of not less than two-thirds of all outstanding shares of our voting stock then entitled to vote in the election of directors; • a requirement of approval of not less than two-thirds of all outstanding shares of our voting stock to amend any bylaws by stockholder action or to amend specific provisions of our certificate of incorporation; and • the authority of the board of directors to issue convertible preferred stock on terms determined by the board of directors without stockholder approval and which convertible preferred stock may include rights superior to the rights of the holders of common stock.
Our amended and restated bylaws provide that, unless we consent in writing to an alternative forum, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for any state law claims for (i) any 81 Table of Contents derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of fiduciary duty owed by any of our directors, officers and employees to us or our stockholders, (iii) any action asserting a claim arising pursuant to any provision of the DGCL, our amended and restated certificate of incorporation or our bylaws (in each case, as they may be amended from time to time) or (iv) any action asserting a claim that is governed by the internal affairs doctrine, in each case subject to the Court of Chancery having personal jurisdiction over the indispensable parties named as defendants therein; provided, however, that this exclusive forum provision will not apply to any causes of action arising under the Securities Act or the Exchange Act, or any other claim for which the federal courts have exclusive jurisdiction; and provided further that, if and only if the Court of Chancery of the State of Delaware dismisses any such action for lack of subject matter jurisdiction, such action may be brought in another state or federal court sitting in the State of Delaware, or any other claim for which the federal courts have exclusive jurisdiction; and provided further that, if and only if the Court of Chancery of the State of Delaware dismisses any such action for lack of subject matter jurisdiction, such action may be brought in another state or federal court sitting in the State of Delaware.
Our amended and restated bylaws provide that, unless we consent in writing to an alternative forum, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for any state law claims for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of fiduciary duty owed by any of our directors, officers and employees to us or our stockholders, (iii) any action asserting a claim arising pursuant to any provision of the DGCL, our amended and restated certificate of incorporation or our bylaws (in each case, as they may be amended from time to time) or (iv) any action asserting a claim that is governed by the internal affairs doctrine, in each case subject to the Court of Chancery having personal jurisdiction over the indispensable parties named as defendants therein; provided, however, that this exclusive forum provision will not apply to any causes of action arising under the Securities Act or the Exchange Act, or any other claim for which the federal courts have exclusive jurisdiction; and provided further that, if and only if the Court of Chancery of the State of Delaware dismisses any such action for lack of subject matter jurisdiction, such action may be brought in another state or federal court sitting in the State of Delaware, or any other claim for which the federal courts have exclusive jurisdiction; and provided further that, if and only if the Court of Chancery of the State of Delaware dismisses any such action for lack of subject matter jurisdiction, such action may be brought in another state or federal court sitting in the State of Delaware.
From time to time, we may also disclose interim data from our preclinical studies and clinical trials. Interim data from clinical trials that we may complete 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 disclose interim data from our preclinical studies and clinical trials. Interim data from clinical trials that we complete 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.
Any failure or perceived failure by us to comply with federal, state or foreign laws or regulation, our internal policies and procedures or our contracts governing our processing of personal information could result in negative publicity, government investigations and enforcement actions, claims by third parties and damage to our reputation, any of which could have a material adverse effect on our operations, financial performance and business.
Any failure or perceived failure by us to comply with federal, state or foreign laws or regulations, our internal policies and procedures or our contracts governing our processing of personal information could result in negative publicity, government investigations and enforcement actions, claims by third parties and damage to our reputation, any of which could have a material adverse effect on our operations, financial performance and business.
If a natural disaster, power outage, health epidemic or other event occurred that prevented us from conducting our clinical trials, releasing clinical trial 73 Table of Contents results or delaying our ability to obtain regulatory approval for our product candidates , it may be difficult or, in certain cases, impossible for us to continue our business for a substantial period of time.
If a natural disaster, power outage, health epidemic or other event occurred that prevented us from conducting our clinical trials, releasing clinical trial 74 Table of Contents results or delaying our ability to obtain regulatory approval for our product candidates , it may be difficult or, in certain cases, impossible for us to continue our business for a substantial period of time.
There are a number of statutory exceptions and regulatory safe harbors protecting some common activities from prosecution; • the federal civil and criminal false claims laws, including the FCA, and civil monetary penalty laws which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, false, fictitious or fraudulent claims for payment to, or approval by Medicare, Medicaid, or other federal healthcare programs; knowingly making, using or causing to be made or used, a false record or statement 47 Table of Contents material to a false, fictitious or fraudulent claim or an obligation to pay or transmit money or property to the federal government; or knowingly concealing or knowingly and improperly avoiding, decreasing or concealing an obligation to pay money to the federal government.
There are a number of statutory exceptions and regulatory safe harbors protecting some common activities from prosecution; • the federal civil and criminal false claims laws, including the FCA, and civil monetary penalty laws which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, false, fictitious or fraudulent claims for payment to, or approval by Medicare, Medicaid, or other federal healthcare programs; knowingly making, using or causing to be made or used, a false record or statement material to a false, fictitious or fraudulent claim or an obligation to pay or transmit money or property to the federal government; or knowingly concealing or knowingly and improperly avoiding, decreasing or concealing an obligation to pay money to the federal government.
If our operations are found to be in violation of any of the laws described above or any other government regulations that apply to us, we may be subject to significant sanctions, including civil, criminal and administrative penalties, damages, fines, disgorgement, imprisonment, reputational harm, exclusion from participation in federal and state funded healthcare programs, 48 Table of Contents contractual damages and the curtailment or restricting of our operations, as well as additional reporting obligations and oversight if we become subject to a corporate integrity agreement or other agreement to resolve allegations of non-compliance with these laws.
If our operations are found to be in violation of any of the laws described above or any other government regulations that apply to us, we may be subject to significant sanctions, including civil, criminal and administrative penalties, damages, fines, disgorgement, imprisonment, reputational harm, exclusion from participation in federal and state funded healthcare programs, contractual damages and the curtailment or restricting of our operations, as well as additional reporting obligations and oversight if we become subject to a corporate integrity agreement or other agreement to resolve allegations of non-compliance with these laws.
As a result, we may fail to capitalize on viable commercial products or profitable market opportunities, be required to forego or delay pursuit of opportunities with other product candidates or other diseases 31 Table of Contents and disease pathways that may later prove to have greater commercial potential than those we choose to pursue or relinquish valuable rights to such product candidates through collaboration, licensing or other royalty arrangements in cases in which it would have been advantageous for us to invest additional resources to retain sole development and commercialization rights.
As a result, we may fail to capitalize on viable commercial products or profitable market opportunities, be required to forego or delay pursuit of opportunities with other product candidates or other diseases and disease pathways that may later prove to have greater commercial potential than those we choose to pursue or relinquish valuable rights to such product candidates through collaboration, licensing or other royalty arrangements in cases in which it would have been advantageous for us to invest additional resources to retain sole development and commercialization rights.
Concerns over our privacy practices, whether actual or unfounded, could damage our reputation and brand and deter users, advertisers and partners from using our products and services. Any of these occurrences could seriously harm our business. Risks Related to Tax Laws Legislation or other changes in U.S. tax law could adversely affect our business and financial condition.
Concerns over our privacy practices, whether actual or unfounded, could damage our reputation and brand and deter users, advertisers and partners from using our products and services. Any of these occurrences could seriously harm our business. Risks Related to Tax Laws Legislation or other changes in tax law could adversely affect our business and financial condition.
Such a loss of patent protection could have a material adverse impact on our business and our ability to commercialize or license our technology and product candidates. Likewise, our current licensed or owned patents are expected to expire between 2029 and 2041, without taking into account any possible patent term adjustments or extensions.
Such a loss of patent protection could have a material adverse impact on our business and our ability to commercialize or license our technology and product candidates. Likewise, our current licensed or owned patents are expected to expire between 2029 and 2043, without taking into account any possible patent term adjustments or extensions.
The FDA may also revoke any priority review voucher if the rare pediatric disease drug for which the voucher was awarded is not marketed in the United States within one year following the date of approval. We received rare pediatric disease designation for PRAX-562 for the treatment of SCN2A-DEE and SCN8A-DEE, and for PRAX-222 for the treatment of SCN2A-DEE.
The FDA may also revoke any priority review voucher if the rare pediatric disease drug for which the voucher was awarded is not marketed in the United States within one year following the date of approval. We received rare pediatric disease designation for PRAX-562 for the treatment of SCN2A-DEE and SCN8A-DEE, and for elsunersen for the treatment of SCN2A-DEE.
These reductions went into effect on April 1, 2013 and, due to subsequent legislative amendments to the statute, will remain in effect through 2030, with the exception of a temporary suspension from May 1, 2020 through March 31, 2022, unless additional Congressional action is taken.
These reductions went into effect on April 1, 2013 and, due to subsequent legislative amendments to the statute, will remain in effect through 2032, with the exception of a temporary suspension from May 1, 2020 through March 31, 2022, unless additional Congressional action is taken.
In addition, even if we were to obtain approval, regulatory authorities may approve any of our product candidates for fewer or more limited indications than we request, may not approve the price we intend to charge for our products, may grant approval contingent on the performance of costly post-marketing clinical trials, or may approve a product candidate with a label that does not include the labeling claims necessary or desirable for the successful commercialization of that product candidate.
In addition, even if we were to obtain approval, regulatory authorities may approve any of our product candidates for fewer or more limited indications than we request, may not approve the price we intend to charge for our products, may grant approval contingent on the performance of costly post-marketing clinical trials, or may 32 Table of Contents approve a product candidate with a label that does not include the labeling claims necessary or desirable for the successful commercialization of that product candidate.
Although we enter into non-disclosure and confidentiality agreements with parties who have access to patentable aspects of our research and development output, such as our employees, corporate collaborators, outside scientific collaborators, contract research organizations, contract manufacturers, consultants, advisors and other third parties, any of these parties may breach these agreements and disclose such results before a patent application is filed, thereby jeopardizing our 56 Table of Contents ability to obtain patent protection.
Although we enter into non-disclosure and confidentiality agreements with parties who have access to patentable aspects of our research and development output, such as our employees, corporate collaborators, outside scientific collaborators, contract research organizations, contract manufacturers, consultants, advisors and other third parties, any of these parties may breach these agreements and disclose such results before a patent application is filed, thereby jeopardizing our ability to obtain patent protection.
We collaborate with several institutions, universities, medical centers, physicians and researchers in scientific matters and expect to continue to enter into additional collaboration agreements. In certain cases, we do not have written agreements with these collaborators, or the written agreements we have do not cover intellectual property rights.
We collaborate with various institutions, universities, medical centers, physicians and researchers in scientific matters and expect to continue to enter into additional collaboration agreements. In certain cases, we do not have written agreements with these collaborators, or the written agreements we have do not cover intellectual property rights.
For example, in cases where data from foreign clinical trials are intended to serve as the basis for marketing approval in the United States, the FDA will generally not approve the application on the basis of foreign data alone unless (i) the data are applicable to the U.S. population and U.S. medical practice; (ii) the trials were performed by clinical investigators of recognized competence and pursuant to GCP regulations; and the trials were performed by clinical investigators of recognized competence; and the data are considered valid without the need for an on-site inspection by the FDA or, if the FDA considers such an inspection to be necessary, the FDA is able to validate the data through an on-site inspection or other appropriate means.
For example, in cases where data from foreign clinical trials are intended to serve as the basis for marketing approval in the United States, regardless of whether the trials were subject to an IND, the FDA will generally not approve the application on the basis of foreign data alone unless (i) the data are applicable to the U.S. population and U.S. medical practice; (ii) the trials were performed by clinical investigators of recognized competence and pursuant to GCP regulations; and the trials were performed by clinical investigators of recognized competence; and the data are considered valid without the need for an on-site inspection by the FDA or, if the FDA considers such an inspection to be necessary, the FDA is able to validate the data through an on-site inspection or other appropriate means.
The FCA also permits a private individual acting as a “whistleblower” to bring qui tam actions on behalf of the federal government alleging violations of the FCA and to share in any monetary recovery or settlement; • the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which created additional federal criminal statutes that prohibit knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, including private third-party payors, or obtain, by means of false or fraudulent pretenses, representations, or promises, any of the money or property owned by, or under the custody or control of, any healthcare benefit program, regardless of the payor (e.g., public or private), and knowingly and willfully falsifying, concealing or covering up by any trick or device a material fact or making any materially false, fictitious or fraudulent statement or representation, or making or using any false writing or document knowing the same to contain any materially false fictitious or fraudulent statement or entry in connection with the delivery of, or payment for, healthcare benefits, items or services relating to healthcare matters.
The FCA also permits a private individual acting as a “whistleblower” to bring qui tam actions on behalf of the federal government alleging violations of the FCA and to share in any monetary recovery or settlement; • HIPAA, which created additional federal criminal statutes that prohibit knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, including private third-party payors, or obtain, by means of false or fraudulent pretenses, representations, or promises, any of the money or property owned by, or under the custody or control of, any healthcare benefit program, regardless of the payor (e.g., public or private), and knowingly and willfully falsifying, concealing or covering up by any trick or device a material fact or making any materially false, fictitious or fraudulent statement or representation, or making or using any false writing or document knowing the same to contain any materially false fictitious or fraudulent statement or entry in connection with the delivery of, or payment for, healthcare benefits, items or services relating to healthcare matters.
In the United States, under the Orphan Drug Act, the FDA may grant orphan designation to a drug intended to treat a rare disease or condition, defined as a disease or condition with a patient population of fewer than 200,000 in the United States, or a patient population greater than 200,000 in the United States when there is no reasonable expectation that the cost of developing and making available the drug or biologic in the United States will be 38 Table of Contents recovered from sales in the United States for that drug.
In the United States, under the Orphan Drug Act, the FDA may grant orphan designation to a drug intended to treat a rare disease or condition, defined as a disease or condition with a patient population of fewer than 200,000 in the United States, or a patient population greater than 200,000 in the United States when there is no reasonable expectation that the cost of developing and making available the drug or biologic in the United States will be recovered from sales in the United States for that drug.
Misconduct by those parties could include intentional, reckless and/or negligent conduct or disclosure of unauthorized activities to us that violates: • regulatory authorities, including those laws requiring the reporting of true, complete and accurate information to such authorities; • manufacturing standards; • federal and state healthcare fraud and abuse laws and regulations and similar laws and regulations established and enforced by comparable non-U.S. regulatory authorities; and • laws that require the accurate reporting of financial information or data.
Misconduct by those 75 Table of Contents parties could include intentional, reckless and/or negligent conduct or disclosure of unauthorized activities to us that violates: • regulatory authorities, including those laws requiring the reporting of true, complete and accurate information to such authorities; • manufacturing standards; • federal and state healthcare fraud and abuse laws and regulations and similar laws and regulations established and enforced by comparable non-U.S. regulatory authorities; and • laws that require the accurate reporting of financial information or data.
If we acquire businesses with promising 72 Table of Contents markets or technologies, we may not be able to realize the benefit of acquiring such businesses if we are unable to successfully integrate them with our existing operations and company culture.
If we acquire businesses with promising 73 Table of Contents markets or technologies, we may not be able to realize the benefit of acquiring such businesses if we are unable to successfully integrate them with our existing operations and company culture.
If the interim, preliminary or topline data that we report differ from later, final or actual results, or if others, including the FDA and comparable foreign regulatory authorities, disagree with the conclusions reached, our ability to obtain approval for, 37 Table of Contents and commercialize our product candidates may be harmed, which could harm our business, financial condition, results of operations and prospects.
If the interim, preliminary or topline data that we report differ from later, final or actual results, or if others, including the FDA and comparable foreign regulatory authorities, disagree with the conclusions reached, our ability to obtain approval for, and commercialize our product candidates may be harmed, which could harm our business, financial condition, results of operations and prospects.
Any failure or perceived failure by us or our employees, representatives, contractors, consultants, collaborators, or other third parties to comply with current and future laws and regulations could result in government enforcement actions (including the imposition of significant penalties), criminal and/or civil liability for us and our officers and directors, private litigation and/or adverse publicity that negatively affects our business.
Any 51 Table of Contents failure or perceived failure by us or our employees, representatives, contractors, consultants, collaborators, or other third parties to comply with current and future laws and regulations could result in government enforcement actions (including the imposition of significant penalties), criminal and/or civil liability for us and our officers and directors, private litigation and/or adverse publicity that negatively affects our business.
Any disclosure, either intentional or unintentional, by our employees, the employees of third parties with whom we share our facilities or third-party consultants and vendors that we engage to perform research, clinical trials or manufacturing activities, or misappropriation by third parties (such as through a cybersecurity breach) of our trade secrets or proprietary information could enable competitors to duplicate or surpass our technological achievements.
Any disclosure, either intentional or unintentional, by our employees, the employees of third parties with whom we share our facilities or third-party consultants and vendors that we engage to perform research, clinical trials or manufacturing activities, or misappropriation by third parties (such as through a 60 Table of Contents cybersecurity breach) of our trade secrets or proprietary information could enable competitors to duplicate or surpass our technological achievements.
It also creates a new California data protection agency authorized to issue substantive regulations and could result in increased privacy and information security enforcement. Additional compliance investment and potential business process changes may be required.
It also created a new California data protection agency authorized to issue substantive regulations and could result in increased privacy and information security enforcement. Additional compliance investment and potential business process changes may be required.
Risks Related to the Commercialization of our Product Candidates Risks Related to Post-Marketin g Regulatory Requirements 42 Table of Contents Any product candidate for which we obtain marketing approval will be subject to extensive post-marketing regulatory requirements and could be subject to post-marketing restrictions or withdrawal from the market, and we may be subject to penalties if we fail to comply with regulatory requirements or if we experience unanticipated problems with our products, when and if any of them are approved.
Risks Related to the Commercialization of our Product Candidates Risks Related to Post-Marketin g Regulatory Requirements Any product candidate for which we obtain marketing approval will be subject to extensive post-marketing regulatory requirements and could be subject to post-marketing restrictions or withdrawal from the market, and we may be subject to penalties if we fail to comply with regulatory requirements or if we experience unanticipated problems with our products, when and if any of them are approved.
If a court were to find the choice of forum provision contained in our bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could adversely affect our business, financial condition, or results of operations. Item 1B. Unresolved Staff Comments None.
If a court were to find the choice of forum provision contained in our bylaws to be inapplicable or unenforceable in an action, we may incur 83 Table of Contents additional costs associated with resolving such action in other jurisdictions, which could adversely affect our business, financial condition, or results of operations. Item 1B. Unresolved Staff Comments None.
Implementation standards and enforcement practices are likely to remain uncertain for the foreseeable future, and we cannot yet determine the impact future laws, regulations, standards, or perception of their requirements may have on our business.
Implementation standards and enforcement practices are likely to remain uncertain for the foreseeable future, and we cannot yet determine the impact future laws, regulations, standards, or perceptions of their requirements may have on our business.
The resolution of any contract interpretation disagreement that may arise could narrow what we believe to be the scope of our rights to the relevant intellectual property or technology, or could increase what we believe to be our financial or other obligations under the relevant agreement, either of which could have a material adverse effect on our business, financial condition, results of operations and prospects.
The resolution of any contract interpretation disagreement that may arise could narrow what we believe to be the scope of our rights to the relevant intellectual property or technology, or could increase what we believe to be our financial or other obligations under the relevant agreement, either of which could have a material adverse effect on our 59 Table of Contents business, financial condition, results of operations and prospects.
Any regulatory approvals that we receive for our product candidates may be subject to limitations on the approved indicated uses for which the product may be marketed or to the conditions of approval, or contain requirements for potentially costly post-marketing testing, including Phase 4 clinical trials and surveillance to monitor the safety and efficacy of the product candidate.
Any regulatory approvals that we receive for our product candidates may be subject to limitations on the approved indicated uses for which the product may be marketed or to the conditions of approval, or contain requirements for potentially costly post-marketing testing, including Phase 4 clinical trials and surveillance to 43 Table of Contents monitor the safety and efficacy of the product candidate.
The European Commission has adopted an adequacy decision in favor of the United Kingdom, enabling data transfers from EU member states to the United Kingdom without additional safeguards. However, the U.K. adequacy decision will automatically expire in June 2025 unless the European Commission re-assesses and renews/ extends that decision and remains under review by the Commission during this period.
The European Commission has adopted an adequacy decision in favor of the United Kingdom, enabling data transfers from EU member states to the United Kingdom without additional safeguards. However, the UK adequacy decision will automatically expire in June 2025 unless the European Commission re-assesses and renews/ extends that decision and remains under review by the Commission during this period.
Orphan drug designation neither shortens the development time or regulatory review time of a drug nor gives the drug any advantage in the regulatory review or approval process. We received rare pediatric disease designation for PRAX-562 and PRAX-222.
Orphan drug designation neither shortens the development time or regulatory review time of a drug nor gives the drug any advantage in the regulatory review or approval process. We received rare pediatric disease designation for PRAX-562 and elsunersen.
The legislation, regulations and rules regarding U.S. federal, state and local income taxation are constantly under review by persons involved in the legislative process and by the Internal Revenue Service and the U.S. Treasury Department and by state and local tax agencies.
The legislation, regulations and rules regarding U.S. federal, state and local and non-U.S.taxation are constantly under review by persons involved in the legislative process and by the Internal Revenue Service and the U.S. Treasury Department and by state and local and non-U.S. tax agencies.
There can be no assurance that any country that has price controls or reimbursement limitations for biopharmaceutical products will allow favorable reimbursement and pricing arrangements for any of our product candidates. Historically, products launched in the European Union do not follow price structures of the United States and generally prices tend to be significantly lower.
There can be no assurance that any country that has price controls or reimbursement limitations for biopharmaceutical products will allow favorable reimbursement and pricing arrangements for any of our product candidates. Historically, products launched in the EU do not follow price structures of the United States and generally prices tend to be significantly lower.
In connection with our efforts to expand our pipeline of product candidates, we have entered into and may further enter into certain licenses or other collaboration agreements in the future pertaining to the in-license of rights to additional candidates. Such agreements may impose various reporting, diligence, milestone payment, royalty, 58 Table of Contents insurance or other obligations on us.
In connection with our efforts to expand our pipeline of product candidates, we have entered into and may further enter into certain licenses or other collaboration agreements in the future pertaining to the in-license of rights to additional candidates. Such agreements may impose various reporting, diligence, milestone payment, royalty, insurance or other obligations on us.
Because of a lower evidentiary standard in USPTO proceedings compared to the evidentiary standard in United 66 Table of Contents States federal courts necessary to invalidate a patent claim, a third party could potentially provide evidence in a USPTO proceeding sufficient for the USPTO to hold a claim invalid even though the same evidence would be insufficient to invalidate the claim if first presented in a district court action.
Because of a lower evidentiary standard in USPTO proceedings compared to the evidentiary standard in United States federal courts necessary to invalidate a patent claim, a third party could potentially provide evidence in a USPTO proceeding sufficient for the USPTO to hold a claim invalid even though the same evidence would be insufficient to invalidate the claim if first presented in a district court action.
In addition, both our current and future net operating losses and tax credits may be subject to limitation under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, or the Code, if we undergo an “ownership change,” generally defined as a greater than 50 percentage point change (by value) in its equity ownership by certain stockholders or groups of stockholders over a rolling three-year period.
In addition, both our current and future U.S. federal net operating losses and U.S. federal tax credits may be subject to limitation under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, or the Code, if we undergo an “ownership change,” generally defined as a greater than 50 percentage point change (by value) in our equity ownership by certain stockholders or groups of stockholders over a rolling three-year period.
Results of our clinical trials could reveal a high and unacceptable severity and prevalence of side effects or unexpected characteristics. In addition, many compounds that have initially showed promise in clinical or earlier stage testing are later found to cause undesirable or unexpected side effects that prevented further development of the compound.
Results of our clinical trials could reveal a high and unacceptable severity and prevalence of side effects or unexpected characteristics. In addition, many compounds that have initially showed promise in clinical or earlier stage testing are later found to cause 35 Table of Contents undesirable or unexpected side effects that prevented further development of the compound.
There can be no assurance that any country that has price controls or reimbursement limitations for biopharmaceutical products will allow favorable reimbursement and pricing arrangements for any of our products. Historically, products launched in the European Union do not follow price structures of the United States and generally prices tend to be significantly lower.
There can be no assurance that any country that has price controls or reimbursement limitations for biopharmaceutical products will allow favorable reimbursement and pricing arrangements for any of our products. Historically, products launched in the EU do not follow price structures of the United States and generally prices tend to be significantly lower.
If we or one of our licensors is a party to an interference or derivation proceeding involving a U.S. patent application on inventions 64 Table of Contents owned by or in-licensed to us, we may incur substantial costs, divert management’s time and expend other resources, even if we are successful.
If we or one of our licensors is a party to an interference or derivation proceeding involving a U.S. patent application on inventions owned by or in-licensed to us, we may incur substantial costs, divert management’s time and expend other resources, even if we are successful.
Food and Drug Administration, or the FDA; • approval by an independent Institutional Review Board, or IRB, or ethics committee at each clinical site before each trial may be initiated; • delays in reaching a consensus with regulatory agencies on study design and obtaining regulatory authorization to commence clinical trials; delays in reaching agreement on acceptable terms with prospective 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 clinical trial sites; • delays in identifying, recruiting and training suitable clinical investigators; • delays in recruiting suitable patients to participate in our clinical trials; • delays in manufacturing, testing, releasing, validating or importing/exporting sufficient stable quantities of our product candidates for use in clinical trials or the inability to do any of the foregoing; • insufficient or inadequate supply or quality of product candidates or other materials necessary for use in clinical trials, or delays in sufficiently developing, characterizing or controlling a manufacturing process suitable for clinical trials; • imposition of a temporary or permanent clinical hold by regulatory authorities; • developments on trials conducted by competitors for related technology that raises FDA or foreign regulatory authority concerns about risk to patients of the technology broadly, or if the FDA or a foreign 33 Table of Contents regulatory authority finds that the investigational protocol or plan is clearly deficient to meet its stated objectives; • delays in recruiting, screening and enrolling patients and delays caused by patients withdrawing from clinical trials or failing to return for post-treatment follow-up; • delays caused by operational issues at clinical sites; • difficulty collaborating with patient groups and investigators; • failure by our CROs, other third parties or us to adhere to clinical trial protocols; failure to perform in accordance with the FDA’s or any other regulatory authority’s Good Clinical Practice requirements, or applicable regulatory guidelines in other countries; • occurrence of adverse events associated with the product candidate that are viewed to outweigh its potential benefits, or occurrence of adverse events in trials of the same class of agents conducted by other companies; • changes to the clinical trial protocols; • clinical sites deviating from trial protocol or dropping out of a trial; • changes in regulatory requirements and guidance that require amending or submitting new clinical protocols; • changes in the standard of care on which a clinical development plan was based, which may require new or additional trials; • selection of clinical endpoints that require prolonged periods of observation or analyses of resulting data; • the cost of clinical trials of our product candidates being greater than we anticipated; • clinical trials of our product candidates producing negative or inconclusive results, which may result in our deciding, or regulators requiring us, to conduct additional clinical trials or abandon development of such product candidates; • transfer of manufacturing processes to larger-scale facilities operated by a contract development and manufacturing organization, or CDMO, and delays or failure by our CDMOs or us to make any necessary changes to such manufacturing process; and • third parties being unwilling or unable to satisfy their contractual obligations to us.
Food and Drug Administration, or the FDA, and comparable foreign regulatory authorities; • delays in obtaining approval from independent Institutional Review Boards, or IRBs, or ethics committees at the clinical sites we intend to utilize in our clinical trials; • delays in reaching a consensus with regulatory agencies on study design and obtaining regulatory authorization to commence clinical trials; delays in reaching agreement on acceptable terms with prospective 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 clinical trial sites; • delays in identifying, recruiting and training suitable clinical investigators; • delays in recruiting suitable patients to participate in our clinical trials; • delays in manufacturing, testing, releasing, validating or importing/exporting sufficient stable quantities of our product candidates for use in clinical trials or the inability to do any of the foregoing; • insufficient or inadequate supply or quality of product candidates or other materials necessary for use in clinical trials, or delays in sufficiently developing, characterizing or controlling a manufacturing process suitable for clinical trials; • imposition of a temporary or permanent clinical hold by regulatory authorities; • developments on trials conducted by competitors for related technology that raises FDA or foreign regulatory authority concerns about risk to patients of the technology broadly, or if the FDA or a foreign regulatory authority finds that the investigational protocol or plan is clearly deficient to meet its stated objectives; • delays in recruiting, screening and enrolling patients and delays caused by patients withdrawing from clinical trials or failing to return for post-treatment follow-up; • delays caused by operational issues at clinical sites or the use of a decentralized clinical trial model; • difficulty collaborating with patient groups and investigators; • failure by our CROs, other third parties or us to adhere to clinical trial protocols; 33 Table of Contents • failure to perform in accordance with the FDA’s or any other regulatory authority’s Good Clinical Practice, or GCP, requirements, or applicable regulatory guidelines in other countries; • occurrence of adverse events associated with the product candidate that are viewed to outweigh its potential benefits, or occurrence of adverse events in trials of the same class of agents conducted by other companies; • changes to the clinical trial protocols; • clinical sites deviating from trial protocol or dropping out of a trial; • changes in regulatory requirements and guidance that require amending or submitting new clinical protocols; • changes in the standard of care on which a clinical development plan was based, which may require new or additional trials; • selection of clinical endpoints that require prolonged periods of observation or analyses of resulting data; • the cost of clinical trials of our product candidates being greater than we anticipated; • clinical trials of our product candidates producing negative or inconclusive results, which may result in our deciding, or regulators requiring us, to conduct additional clinical trials or abandon development of such product candidates; • transfer of manufacturing processes to larger-scale facilities operated by a contract development and manufacturing organization, or CDMO, and delays or failure by our CDMOs or us to make any necessary changes to such manufacturing process; and • third parties being unwilling or unable to satisfy their contractual obligations to us.
Any 43 Table of Contents government investigation of alleged violations of law could require us to expend significant time and resources in response and could generate negative publicity. Any failure to comply with ongoing regulatory requirements may significantly and adversely affect our ability to commercialize and generate revenue from our products, if approved.
Any government investigation of alleged violations of law could require us to expend significant time and resources in response and could generate negative publicity. Any failure to comply with ongoing regulatory requirements may significantly and adversely affect our ability to commercialize and generate revenue from our products, if approved.
In addition to the factors discussed in this “Risk Factors” section, factors that may affect the trading price of our common stock include: • the commencement, enrollment, completion or results of our current clinical trials of our product candidates; • any delay in identifying and advancing a clinical candidate for our other programs; • any delay in our regulatory filings for our product candidates and any adverse development or perceived adverse development with respect to the applicable regulatory authority’s review of such filings, including without limitation the FDA’s issuance of a “refusal to file” letter or a request for additional information; • adverse results or delays, suspensions or terminations in future preclinical studies or clinical trials; • our decision to initiate a clinical trial, not to initiate a clinical trial or to terminate an existing clinical trial; • adverse regulatory decisions, including failure to receive regulatory approval of any of our product candidates or the failure of a regulatory authority to accept data from preclinical studies or clinical trials conducted in other countries; • changes in laws or regulations applicable to our product candidates, including but not limited to clinical trial requirements for approvals; • adverse developments concerning our manufacturers; • our inability to obtain adequate product supply for any approved product or inability to do so at acceptable prices; • our inability to establish collaborations, if needed; • our failure to commercialize our product candidates, if approved; • additions or departures of key scientific or management personnel; • unanticipated serious safety concerns related to the use of our product candidates; • introduction of new products or services offered by us or our competitors; • announcements of significant acquisitions, strategic partnerships, joint ventures or capital commitments by us or our competitors; • our ability to effectively manage our growth; • actual or anticipated variations in quarterly operating results; • our cash position; • our failure to meet the estimates and projections of the investment community or that we may otherwise provide to the public; • publication of research reports about us or our industry, or product candidates in particular, or positive or negative recommendations or withdrawal of research coverage by securities analysts; • changes in the market valuations of similar companies; • changes in the structure of the healthcare payment systems; • overall performance of the equity markets; • sales of our common stock by us or our stockholders in the future; • trading volume of our common stock; • changes in accounting practices; • ineffectiveness of our internal controls; • disputes or other developments relating to proprietary rights, including patents, litigation matters and our ability to obtain patent protection for our technologies; • significant lawsuits, including patent or stockholder litigation; • general political and economic conditions; and • other events or factors, many of which are beyond our control. 78 Table of Contents In addition, the stock market in general, and the market for biopharmaceutical companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of these companies, including as a result of the COVID-19 pandemic and general economic conditions.
In addition to the factors discussed in this “Risk Factors” section, factors that may affect the trading price of our common stock include: • the commencement, enrollment, completion or results of our current clinical trials of our product candidates; • any delay in identifying and advancing a clinical candidate for our other programs; • any delay in our regulatory filings for our product candidates and any adverse development or perceived adverse development with respect to the applicable regulatory authority’s review of such filings, including without limitation the FDA’s issuance of a “refusal to file” letter or a request for additional information; • adverse results or delays, suspensions or terminations in future preclinical studies or clinical trials; • our decision to initiate a clinical trial, not to initiate a clinical trial or to terminate an existing clinical trial; • adverse regulatory decisions, including failure to receive regulatory approval of any of our product candidates or the failure of a regulatory authority to accept data from preclinical studies or clinical trials conducted in other countries; • changes in laws or regulations applicable to our product candidates, including but not limited to clinical trial requirements for approvals; • adverse developments concerning our manufacturers; • our inability to obtain adequate product supply for any approved product or inability to do so at acceptable prices; • our inability to establish collaborations, if needed; • our failure to commercialize our product candidates, if approved; • additions or departures of key scientific or management personnel; • unanticipated serious safety concerns related to the use of our product candidates; • introduction of new products or services offered by us or our competitors; • announcements of significant acquisitions, strategic partnerships, joint ventures or capital commitments by us or our competitors; • our ability to effectively manage our growth; • actual or anticipated variations in quarterly operating results; • our cash position; • our failure to meet the estimates and projections of the investment community or that we may otherwise provide to the public; • publication of research reports about us or our industry, or product candidates in particular, or positive or negative recommendations or withdrawal of research coverage by securities analysts; • changes in the market valuations of similar companies; • changes in the structure of the healthcare payment systems; • overall performance of the equity markets; • sales of our common stock by us or our stockholders in the future; 79 Table of Contents • trading volume of our common stock; • changes in accounting practices; • ineffectiveness of our internal controls; • disputes or other developments relating to proprietary rights, including patents, litigation matters and our ability to obtain patent protection for our technologies; • significant lawsuits, including patent or stockholder litigation; • general political and economic conditions; and • other events or factors, many of which are beyond our control.
Unless and until we can generate a substantial amount of revenue from our product candidates, we expect to finance our future cash needs through public or private equity offerings, debt financings, collaborations, licensing arrangements or other sources, or any combination of the foregoing.
Unless and until we can generate a substantial amount of revenue from our product candidates, we expect to finance our future cash needs 29 Table of Contents through public or private equity offerings, debt financings, collaborations, licensing arrangements or other sources, or any combination of the foregoing.
In addition, open-label clinical trials may be subject to an “investigator bias” where those assessing and reviewing the physiological outcomes of the clinical trials are aware of which patients have received treatment and 34 Table of Contents may interpret the information of the treated group more favorably given this knowledge.
In addition, open-label clinical trials may be subject to an “investigator bias” where those assessing and reviewing the physiological outcomes of the clinical trials are aware of which patients have received treatment and may interpret the information of the treated group more favorably given this knowledge.
Claims that we have misappropriated the confidential information or trade secrets of third parties could have a similar negative impact on our business. 61 Table of Contents Our collaborators may assert ownership or commercial rights to inventions they develop from research we support or that we develop or otherwise arising from the collaboration.
Claims that we have misappropriated the confidential information or trade secrets of third parties could have a similar negative impact on our business. Our collaborators may assert ownership or commercial rights to inventions they develop from research we support or that we develop or otherwise arising from the collaboration.
If we fail in defending any such claims, or portion of such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights, such as exclusive ownership of, or right to use, valuable intellectual property. Such an outcome could have a material adverse effect on our business.
If we fail in defending any such claims, or portion of 62 Table of Contents such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights, such as exclusive ownership of, or right to use, valuable intellectual property. Such an outcome could have a material adverse effect on our business.
Any of these occurrences may harm our business, financial condition and prospects significantly. In addition to side effects caused by our product candidates, the administration process or related procedures of our product candidates could cause adverse side effects, such as the intrathecal or intravitreal administration process or related procedures for ASOs.
Any of these occurrences may harm our business, financial condition and prospects significantly. In addition to side effects caused by our product candidates, the administration process or related procedures of our product candidates could cause adverse side effects, such as the intrathecal or intravitreal administration process or related procedures for antisense oligonucleotide drugs, or ASOs.
Failure to obtain or maintain coverage and adequate reimbursement for our product candidates, if approved, could limit our ability to market those products and decrease our ability to generate revenue. Significant uncertainty exists as to the coverage and reimbursement status of any products for which we may obtain regulatory approval.
Failure to obtain or maintain coverage and adequate reimbursement for our product candidates, if approved, could limit our ability to market those products and decrease our ability to generate revenue. 45 Table of Contents Significant uncertainty exists as to the coverage and reimbursement status of any products for which we may obtain regulatory approval.
In addition to imposing fines and penalties, some of these state laws afford private rights of action to individuals who 50 Table of Contents believe their personal information has been misused. California’s patient privacy laws, for example, provide for significant penalties and permit injured parties to sue for damages.
In addition to imposing fines and penalties, some of these state laws afford private rights of action to individuals who believe their personal information has been misused. California’s patient privacy laws, for example, provide for significant penalties and permit injured parties to sue for damages.
As a result, we may be required to conduct additional preclinical studies, alter our proposed clinical 32 Table of Contents trial designs, or conduct additional clinical trials to satisfy the regulatory authorities in each of the jurisdictions in which we hope to conduct clinical trials and develop and market our products, if approved.
As a result, we may be required to conduct additional preclinical studies, alter our proposed clinical trial designs, or conduct additional clinical trials to satisfy the regulatory authorities in each of the jurisdictions in which we hope to conduct clinical trials and develop and market our products, if approved.
Further, conducting clinical trials in foreign countries, such as the European Union, for our product candidates presents additional risks that may delay completion of our clinical trials.
Further, conducting clinical trials in foreign countries, such as the European Union, or EU, for our product candidates presents additional risks that may delay completion of our clinical trials.
Any delay in obtaining, or an inability to obtain, any marketing approvals, as a result of Brexit or otherwise, could prevent us and our collaborators or delay us and our collaborators from commercializing our drug candidates in the United Kingdom and/or the EEA and restrict our ability to generate revenue and achieve and sustain profitability.
Any delay in obtaining, or an inability to obtain, any marketing approvals, as a result of Brexit or otherwise, could prevent us and our collaborators or delay us and our collaborators from commercializing our drug candidates in the UK and/or the EEA and restrict our ability to generate revenue and achieve and sustain profitability.
In any 65 Table of Contents patent infringement proceeding, there is a risk that a court will decide that a patent of ours is invalid or unenforceable, in whole or in part, and that we do not have the right to stop the other party from using the invention at issue.
In any patent infringement proceeding, there is a risk that a court will decide that a patent of ours is invalid or unenforceable, in whole or in part, and that we do not have the right to stop the other party from using the invention at issue.
Our cloud computing services have broad discretion to change and interpret its terms of service and other policies with respect to us, and those actions may be unfavorable to us. Our cloud computing services may also alter how we are able to process data on the platform.
Our cloud computing services have broad discretion to change and interpret its terms of service and other policies with respect to us, and those actions may be unfavorable to us. Our cloud computing services may also 77 Table of Contents alter how we are able to process data on the platform.
Among other requirements, the GDPR regulates transfers of personal data subject to the GDPR to third countries that have not been found to provide adequate protection to such personal data, including the United States, and the efficacy and longevity of current transfer mechanisms between the European Union and the United States remains uncertain.
Among other requirements, the GDPR regulates transfers of personal data subject to the GDPR to third countries that have not been found to provide adequate protection to such personal data, including the United States, and the efficacy and longevity of current transfer mechanisms between the EEA and the United States remains uncertain.
As of January 1, 2021, the Medicines and Healthcare Products regulatory Agency, or MHRA, is the United Kingdom's standalone medicines and medical devices regulator. It is currently unclear whether the MHRA is sufficiently prepared to handle the increased volume of marketing authorization applications that it is likely to receive.
As of January 1, 2021, the Medicines and Healthcare Products regulatory Agency, or MHRA, is the UK's standalone medicines and medical devices regulator. It is currently unclear whether the MHRA is sufficiently prepared to handle the increased volume of marketing authorization applications that it is likely to receive.
Furthermore, for those third-party suppliers who may be our sole source of supply of certain materials, we may not have arrangements in place for a redundant or second-source supply of any such materials in the event any of 70 Table of Contents our current suppliers cease their operations for any reason.
Furthermore, for those third-party suppliers who may be our sole source of supply of certain materials, we may not have arrangements in place for a redundant or second-source supply of any such materials in the event any of our current suppliers cease their operations for any reason.
Risks Related to Ongoing Regulatory and Legal Compliance Risks Related to Healthcare and Related Laws Our relationships with healthcare providers and physicians and third-party payors will be subject to applicable anti-kickback, fraud and abuse and other healthcare laws and regulations, which could expose us to criminal sanctions, civil penalties, contractual damages, reputational harm and diminished profits and future earnings.
Risks Related to Ongoing Regulatory and Legal Compliance 47 Table of Contents Risks Related to Healthcare and Related Laws Our relationships with healthcare providers and physicians and third-party payors will be subject to applicable anti-kickback, fraud and abuse and other healthcare laws and regulations, which could expose us to criminal sanctions, civil penalties, contractual damages, reputational harm and diminished profits and future earnings.
Risks Related to Research and Development and the Biopharmaceutical Industry Risks Related to Preclinical and Clinical Development The development and commercialization of drug products is subject to extensive regulation, and the regulatory approval processes of the FDA and comparable foreign authorities are lengthy, time-consuming, and inherently unpredictable.
Risks Related to Research and Development and the Biopharmaceutical Industry Risks Related to Preclinical and Clinical Development 31 Table of Contents The development and commercialization of drug products is subject to extensive regulation, and the regulatory approval processes of the FDA and comparable foreign regulatory authorities are lengthy, time-consuming, and inherently unpredictable.
If we encounter difficulties enrolling patients in our future clinical trials, our clinical development activities could be delayed or otherwise adversely affected. We have, and may in the future, experience difficulties in patient enrollment in our clinical trials for a variety of reasons.
If we encounter difficulties enrolling patients in our future clinical trials, our clinical development activities could be delayed or otherwise adversely affected. 36 Table of Contents We have, and may in the future, experience difficulties in patient enrollment in our clinical trials for a variety of reasons.
Much like the federal Anti-Kickback Statute prohibition in the United States, the provision of benefits or advantages to physicians to induce or encourage the prescription, recommendation, endorsement, purchase, supply, order or use of medicinal products is also prohibited in the European Union.
Much like the federal Anti-Kickback Statute prohibition in the United States, the provision of benefits or advantages to physicians to induce or encourage the prescription, recommendation, endorsement, purchase, supply, order or use of medicinal products is also prohibited in the EU.
Failure to obtain and maintain required registrations or comply with any applicable regulations could delay or preclude us from developing and 40 Table of Contents commercializing our product candidates containing controlled substances and subject us to enforcement action. The DEA may seek civil penalties, refuse to renew necessary registrations or initiate proceedings to revoke those registrations.
Failure to obtain and maintain required registrations or comply with any applicable regulations could delay or preclude us from developing and commercializing our product candidates containing controlled substances and subject us to enforcement action. The DEA may seek civil penalties, refuse to renew necessary registrations or initiate proceedings to revoke those registrations.
We may be subject to, or may in the future become subject to, U.S. federal and state, and foreign laws and regulations imposing obligations on how we collect, use, disclose, store and process personal information. Our actual or perceived failure to comply with such obligations could result in liability or reputational harm and could harm our business.
We may be subject to, or may in the future become subject to, U.S. federal and state, and foreign laws and regulations imposing obligations on how we collect, use, disclose, store and process personal information. 49 Table of Contents Our actual or perceived failure to comply with such obligations could result in liability or reputational harm and could harm our business.
Establishing additional or replacement suppliers for the raw materials used in our product candidates, if required, may not be accomplished quickly. If we are able to find a replacement supplier, such replacement supplier would need to be qualified and may require additional regulatory inspection or approval, which could result in further delay.
Establishing additional or replacement suppliers for the raw materials used in our product candidates, if required, may not be accomplished quickly. If we are able to find a 71 Table of Contents replacement supplier, such replacement supplier would need to be qualified and may require additional regulatory inspection or approval, which could result in further delay.
Based on shares outstanding as of December 31, 2022, our executive officers, directors and their affiliates and our principal stockholders beneficially hold, in the aggregate, approximately 49.2% of our outstanding voting stock. These stockholders, acting together, would be able to exert significant influence over all matters requiring stockholder approval.
Based on shares outstanding as of December 31, 2023, our executive officers, directors and their affiliates and our principal stockholders beneficially hold, in the aggregate, approximately 38.2% of our outstanding voting stock. These stockholders, acting together, would be able to exert significant influence over all matters requiring stockholder approval.
Patient enrollment is affected by many factors, including: • the patient eligibility criteria defined in the protocol; • the size and nature of the patient population required for analysis of the trial’s primary endpoints; • in the case clinical trials focused on rare disease, the small size of the patient population and the potential of a patient being undiagnosed or misdiagnosed; 36 Table of Contents • the proximity of patients to trial sites; • the design of the trial; • our ability to recruit clinical trial investigators with the appropriate competencies and experience; • competing clinical trials and clinicians’ and patients’ perceptions as to the potential advantages and risks of the product candidate being studied in relation to other available therapies, including any new drugs that may be approved for the indications that we are investigating; • our ability to obtain and maintain patient consents; and • the risk that patients enrolled in clinical trials will drop out of the trials before completion.
Patient enrollment is affected by many factors, including: • the patient eligibility criteria defined in the protocol; • the size and nature of the patient population; • in the case clinical trials focused on rare disease, the small size of the patient population and the potential of a patient being undiagnosed or misdiagnosed; • the proximity of patients to trial sites; • the design of the trial; • our ability to recruit clinical trial investigators with the appropriate competencies and experience; • competing clinical trials and clinicians’ and patients’ perceptions as to the potential advantages and risks of the product candidate being studied in relation to other available therapies, including any new drugs that may be approved for the indications that we are investigating; • our ability to obtain and maintain patient consents; and • the risk that patients enrolled in clinical trials will drop out of the trials before completion.
In addition, government funding of the SEC and other government agencies on which our operations may rely, including those that fund research and development activities, is subject to the political process, which is 52 Table of Contents inherently fluid and unpredictable.
In addition, government funding of the SEC and other government agencies on which our operations may rely, including those that fund research and development activities, is subject to the political process, which is inherently fluid and unpredictable.

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changePurchases of Equity Securities by the Issuer and Affiliated Purchasers There were no repurchases of shares of common stock made during the three months ended December 31, 2022.
Biggest changeRecent Sales of Unregistered Securities We did not make any sales of unregistered securities during the three months ended December 31, 2023. Purchases of Equity Securities by the Issuer and Affiliated Purchasers There were no repurchases of shares of common stock made during the three months ended December 31, 2023.
Holders of Our Common Stock As of February 3, 2023, there were approximately three holders of record of shares of our common stock. The actual number of stockholders is greater than this number of record holders, and includes stockholders who are beneficial owners, but whose shares are held in street name by brokers and other nominees.
Holders of Our Common Stock As of March 1, 2024, there were approximately four holders of record of shares of our common stock. The actual number of stockholders is greater than this number of record holders, and includes stockholders who are beneficial owners, but whose shares are held in street name by brokers and other nominees.
Removed
Recent Sales of Unregistered Securities We did not make any sales of unregistered securities during the three months ended December 31, 2022.
Removed
Use of Proceeds from Initial Public Offering In October 2020, we completed the initial public offering of our common stock, or IPO, pursuant to which we issued and sold 11,500,000 shares of our common stock at a price to the public of $19.00 per share.
Removed
All of the shares issued and sold in the IPO were registered under the Securities Act pursuant to a Registration Statement on Form S-1 (File No. 333-249074), which was declared effective by the Securities and Exchange Commission on October 15, 2020. As of December 31, 2022, we had used all of the net proceeds from the IPO.

Item 7. Management's Discussion & Analysis

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

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Biggest changeResults of Operations Comparison of the Years Ended December 31, 2022 and 2021 The following table summarizes our consolidated statements of operations for each period presented (in thousands): 88 Table of Contents Year Ended December 31, Change 2022 2021 Operating expenses: Research and development $ 155,040 $ 120,257 $ 34,783 General and administrative 59,946 47,075 12,871 Total operating expenses 214,986 167,332 47,654 Loss from operations (214,986) (167,332) (47,654) Other income: Other income, net 957 271 686 Total other income 957 271 686 Net loss $ (214,029) $ (167,061) $ (46,968) Research and Development Expense The following table summarizes our research and development expenses for each period presented, along with the changes in those items (in thousands): Year Ended December 31, Change 2022 2021 Cerebrum™ $ 92,708 $ 72,663 $ 20,045 Solidus™ 17,500 7,646 9,854 Personnel-related (including stock-based compensation) 37,392 31,090 6,302 Other indirect research and development expenses 7,440 8,858 (1,418) Total research and development expenses $ 155,040 $ 120,257 $ 34,783 The $34.8 million increase in research and development expenses was primarily attributable to the following: • $20.0 million increase in expense related to our Cerebrum™ platform, driven primarily by: ◦ an increase in clinical, manufacturing and toxicology-related spend for our ulixacaltamide program, including our Phase 2b Essential1 clinical trial; ◦ an increase in clinical-related spend for our PRAX-114 Phase 2 clinical trials, all of which were wound down during the second and third quarters of 2022 due to our strategic realignment; ◦ an increase in clinical-related spend for our PRAX-628 Phase 1 clinical trial; and ◦ an increase in costs associated with our Phase 1 PRAX-562 clinical trial in healthy volunteers and startup costs related to the EMBOLD Phase 2 clinical trial, partially offset by a decrease related to prior year toxicology-related spend for PRAX-562. • $9.9 million increase in expense related to our Solidus™ platform, driven primarily by an increase in clinical-related spend to support the initiation of the PRAX-222 EMBRAVE clinical trial, an increase in preclinical activities for our earlier stage assets and the payment of a $2.0 million license fee to Ionis Pharmaceuticals, Inc. in January of 2022 upon exercise of our exclusive option to obtain the rights and license to further develop and commercialize PRAX-222; and • $6.3 million increase in personnel-related costs due to changes in headcount.
Biggest changeResearch and Development Expense The following table summarizes our research and development expenses for each period presented, along with the changes in those items (in thousands): Year Ended December 31, Change 2023 2022 Cerebrum™ $ 31,290 $ 92,708 $ (61,418) Solidus™ 18,449 17,500 949 Personnel-related (including stock-based compensation) 29,103 37,392 (8,289) Other indirect research and development expenses 7,924 7,440 484 Total research and development expenses $ 86,766 $ 155,040 $ (68,274) The $68.3 million decrease in research and development expenses was primarily attributable to the following: • $61.4 million decrease in expense related to our Cerebrum™ platform, driven primarily by: ◦ $29.9 million decrease in clinical-related spend for our PRAX-114 program due to our strategic realignment in the second quarter of 2022; ◦ $15.5 million decrease in spend for our PRAX-562 program primarily related to the prior year manufacturing spend and Phase 1 trial spending, partially offset by costs related to our EMBOLD Phase 2 clinical trial in 2023; ◦ $11.3 million decrease in spend for our ulixacaltamide program, primarily due to prior year Phase 2a and Phase 1 trial spend, prior year manufacturing costs, and decreased spend in the current year related to our Essential1 study, partially offset by costs related to our Essential3 study, which we initiated in the fourth quarter of 2023; ◦ $6.7 million decrease in activities for our earlier stage assets due to prioritization of our clinical-stage programs; and ◦ $2.0 million increase in clinical-related spend for our PRAX-628 program driven by our Phase 1 clinical trial and our Phase 2 PPR clinical trial. • $8.3 million decrease in personnel-related costs due to decreased headcount; • $0.9 million increase in expense related to our Solidus™ platform for our PRAX-222 EMBRAVE study; and 93 Table of Contents • $0.5 million increase in indirect expenses, none of which were individually significant.
Our funding requirements and timing and amount of our operating expenditures will depend on many factors, including, but not limited to: • the scope, progress, results and costs of preclinical studies and clinical trials for our platforms and product candidates; • the number and characteristics of product candidates and technologies that we develop or may in-license; • the costs and timing of future commercialization activities, including manufacturing, marketing, sales and distribution, for any of our product candidates for which we receive marketing approval; • the costs necessary to obtain regulatory approvals, if any, for products in the United States and other jurisdictions, and the costs of post-marketing studies that could be required by regulatory authorities in jurisdictions where approval is obtained; • the costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our IP rights and defending any IP-related claims; • the continuation of our existing licensing arrangements and entry into new collaborations and licensing arrangements; • the costs we incur in maintaining business operations; • the costs associated with being a public company; • the revenue, if any, received from commercial sales of any product candidates for which we receive marketing approval; • the effect of competing technological and market developments; • the extent to which we acquire or invest in businesses, products and technologies, including entering into licensing or collaboration arrangements for product candidates, although we currently have no commitments or agreements to complete any such acquisitions or investments in businesses.
Our funding requirements and timing and amount of our operating expenditures will depend on many factors, including, but not limited to: • the scope, progress, results and costs of preclinical studies and clinical trials for our platforms and product candidates; • the number and characteristics of product candidates and technologies that we develop or may in-license; • the costs and timing of future commercialization activities, including manufacturing, marketing, sales and distribution, for any of our product candidates for which we receive marketing approval; • the costs necessary to obtain regulatory approvals, if any, for products in the United States and other jurisdictions, and the costs of post-marketing studies that could be required by regulatory authorities in jurisdictions where approval is obtained; • the costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our IP rights and defending any IP-related claims; • the continuation of our existing licensing arrangements and entry into new collaborations and licensing arrangements; • the costs we incur in maintaining business operations; • the costs associated with being a public company; • the revenue, if any, received from commercial sales of any product candidates for which we receive marketing approval; • the effect of competing technological and market developments; and • the extent to which we acquire or invest in businesses, products and technologies, including entering into licensing or collaboration arrangements for product candidates, although we currently have no commitments or agreements to complete any such acquisitions or investments in businesses.
To date, we have financed our operations primarily with proceeds from the issuance of redeemable convertible preferred stock and from the sale of common stock through an initial public offering, a follow-on public offering and at-the-market offerings under our shelf registration statement.
To date, we have financed our operations primarily with proceeds from the issuance of redeemable convertible preferred stock and from the sale of common stock through an initial public offering, follow-on public offerings and at-the-market offerings under our shelf registration statement.
We anticipate that our expenses will increase substantially if and as we: • advance the clinical development of our clinical-stage product candidates within our Cerebrum™ and Solidus™ platforms; • advance the development of any additional product candidates; • conduct research and continue preclinical development of potential product candidates; • make strategic investments in manufacturing capabilities; • maintain our IP portfolio and opportunistically acquire complementary IP; • seek to obtain regulatory approvals for our product candidates; • potentially establish a sales, marketing and distribution infrastructure and scale-up manufacturing capabilities to commercialize any products for which we may obtain regulatory approval; • when needed, add clinical, scientific, operational, financial and management information systems and personnel, including personnel to support our product development and potential future commercialization efforts and to support our operations as a public company; and • experience any delays or encounter any issues with any of the above, including but not limited to failed studies, complex results, safety issues or other regulatory challenges.
We anticipate that our expenses will increase substantially if and as we: • advance the clinical development of our clinical-stage product candidates within our Cerebrum™ and Solidus™ platforms; • advance the development of any additional product candidates; • conduct research and continue preclinical development of potential product candidates; • make strategic investments in manufacturing capabilities; 95 Table of Contents • maintain our IP portfolio and opportunistically acquire complementary IP; • seek to obtain regulatory approvals for our product candidates; • potentially establish a sales, marketing and distribution infrastructure and scale-up manufacturing capabilities to commercialize any products for which we may obtain regulatory approval; • when needed, add clinical, scientific, operational, financial and management information systems and personnel, including personnel to support our product development and potential future commercialization efforts and to support our operations as a public company; and • experience any delays or encounter any issues with any of the above, including but not limited to failed studies, complex results, safety issues or other regulatory challenges.
As of December 31, 2022 and 2021, we also had federal and state research and development tax credit carryforwards which may be available to offset future income tax liabilities and which begin to expire in 2031. Income taxes are determined at the applicable tax rates adjusted for non-deductible expenses, research and development tax credits and other permanent differences.
As of December 31, 2023 and 2022, we also had federal and state research and development tax credit carryforwards which may be available to offset future income tax liabilities and which begin to expire in 2031. Income taxes are determined at the applicable tax rates adjusted for non-deductible expenses, research and development tax credits and other permanent differences.
For example, if the FDA or another regulatory authority were to delay our planned start of clinical trials or require us to conduct clinical trials or other testing beyond those that we currently expect, or if we experience significant delays in enrollment in any of our planned clinical trials, we could be required to expend significant additional financial resources and time to complete our clinical development activities.
For example, if the FDA or another regulatory authority were to delay our planned start of clinical trials or require us to conduct clinical trials or other testing beyond those that we currently expect, or if we experience significant delays in enrollment in any of our planned clinical trials, we could be required to expend significant additional financial 91 Table of Contents resources and time to complete our clinical development activities.
When the achievement of these milestones or sales have not occurred, such contingencies are not recorded in our financial statements. We have agreements with certain vendors for various services, including services related to clinical operations and support, for which we are not contractually able to terminate for convenience and avoid any and all future obligations to the vendors.
When the achievement of these milestones or sales have not occurred, such contingencies are not recorded in our financial statements. 97 Table of Contents We have agreements with certain vendors for various services, including services related to clinical operations and support, for which we are not contractually able to terminate for convenience and avoid any and all future obligations to the vendors.
As of December 31, 2022 and 2021, we had U.S. federal and state net operating loss carryforwards which may be available to offset future taxable income and which begin to expire in 2035.
As of December 31, 2023 and 2022, we had U.S. federal and state net operating loss carryforwards which may be available to offset future taxable income and which begin to expire in 2035.
Our commercial revenues, if any, will be derived from sales of products that we do not expect to be commercially available for many years, if ever. Accordingly, we will need to obtain substantial additional funds to achieve our business objectives. Adequate additional funds may not be available to us on acceptable terms, or at all.
Our commercial revenues, if any, will be derived from sales of products that we do not expect to be commercially available for many years, if ever. Accordingly, we will need to obtain substantial additional funds to achieve our business objectives. 96 Table of Contents Adequate additional funds may not be available to us on acceptable terms, or at all.
Our income tax provision may be significantly affected by changes to our estimates. There was no income tax provision recognized for the years ended December 31, 2022 and 2021.
Our income tax provision may be significantly affected by changes to our estimates. There was no income tax provision recognized for the years ended December 31, 2023 and 2022.
Examples of estimated accrued and prepaid research and development expenses include fees paid to: • CROs in connection with performing research services and preclinical and clinical studies; • investigative sites or other providers in connection with preclinical and clinical studies; • vendors in connection with preclinical and clinical development activities; and • vendors related to product manufacturing, development and distribution of preclinical and clinical supplies.
Examples of estimated accrued and prepaid research and development expenses include fees paid to: • CROs in connection with performing research services and preclinical and clinical studies; • investigative sites or other providers in connection with preclinical and clinical studies; • vendors in connection with preclinical and clinical development activities; and 98 Table of Contents • vendors related to product manufacturing, development and distribution of preclinical and clinical supplies.
On November 3, 2021, we entered into an Open Market Sale Agreement, or the Sales Agreement, with Jefferies LLC, or Jefferies, to provide for the offering, issuance and sale of up to an aggregate amount of $125.0 million of common stock from time to time in at-the-market offerings for which Jefferies acts as sales agent.
In November 2021, we entered into an Open Market Sale Agreement, or the 2021 Sales Agreement, with Jefferies LLC, or Jefferies, to provide for the offering, issuance and sale of up to an aggregate amount of $125.0 million of common stock from time to time in at-the-market offerings for which Jefferies acted as sales agent.
We incurred $1.0 million of costs related to the realignment, of which $0.6 million has been recognized in research and development expenses and $0.4 million has been recognized in general and administrative expenses in the consolidated statement of operations during the year ended December 31, 2022. These costs relate to employee severance, benefits and related costs.
We incurred $1.0 million of costs related to the realignment, of which $0.6 million was recognized in research and development expenses and $0.4 million was recognized in general and administrative expenses in the consolidated statement of operations during the year ended December 31, 2022. These costs related to employee severance, benefits and related costs.
Non-refundable advance payments for goods or services to be received in the future for use in research and development activities are deferred and capitalized, even when there is no alternative 86 Table of Contents future use for the research and development. The capitalized amounts are expensed as the related goods are delivered or the services are performed.
Non-refundable advance payments for goods or services to be received in the future for use in research and development activities are deferred and capitalized, even when there is no alternative future use for the research and development. The capitalized amounts are expensed as the related goods are delivered or the services are performed.
Our ability to generate product revenue sufficient to achieve profitability will depend heavily on the successful development and eventual commercialization of one or more of our product candidates, if approved. We have incurred recurring operating losses since inception, including net losses of $214.0 million and $167.1 million for the years ended December 31, 2022 and 2021, respectively.
Our ability to generate product revenue sufficient to achieve profitability will depend heavily on the successful development and eventual commercialization of one or more of our product candidates, if approved. We have incurred recurring operating losses since inception, including net losses of $123.3 million and $214.0 million for the years ended December 31, 2023 and 2022, respectively.
As of December 31, 2022, our operating lease commitments for the remainder of the lease term were $4.0 million. In addition, we have entered into collaboration and license agreements with RogCon Inc., or RogCon, and Ionis Pharmaceuticals, Inc., or Ionis, under which we could be obligated to pay certain fees, milestone payments and cost reimbursements.
As of December 31, 2023, our operating lease commitments for the remainder of the lease term were $2.7 million. In addition, we have entered into collaboration and license agreements with RogCon Inc., or RogCon, and Ionis Pharmaceuticals, Inc., or Ionis, under which we could be obligated to pay certain fees, milestone payments and cost reimbursements.
As of December 31, 2022, all costs related to the strategic realignment were paid. Financial Operations Overview Revenue We have not generated any revenue since inception and do not expect to generate any revenue from the sale of products for several years, if at all.
As of December 31, 2022, all costs related to the strategic realignment had been paid. Financial Operations Overview 89 Table of Contents Revenue We have not generated any revenue since inception and do not expect to generate any revenue from the sale of products for several years, if at all.
Through this approach, we have established a diversified, multimodal CNS portfolio with four clinical-stage product candidates across movement disorders and epilepsy. For our most advanced product candidate under the Cerebrum™ platform, ulixacaltamide (formerly known as PRAX-944), we expect to announce topline results from the Phase 2b Essential1 clinical trial in essential tremor, or ET, in the first quarter of 2023.
Through this approach, we have established a diversified, multimodal CNS portfolio with four clinical-stage product candidates across movement disorders and epilepsy. For our most advanced product candidate under the Cerebrum™ platform, ulixacaltamide (formerly known as PRAX-944), we expect to announce topline results from the Phase 3 Essential3 clinical trial in essential tremor, or ET, in the second half of 2024.
We anticipate that our expenses will increase significantly in connection with our ongoing activities, as we: • advance our lead product candidate, ulixacaltamide, to a late stage clinical trial for the treatment of ET; • advance ulixacaltamide in our Phase 2 clinical trial for the treatment of PD; • advance our PRAX-562 product candidate in the EMBOLD clinical trial; • advance our PRAX-222 product candidate in the EMBRAVE clinical trial; • advance our PRAX-628 product candidate in the Phase 1 clinical trial; • advance our preclinical candidates to clinical trials; • further invest in our pipeline; • further invest in our manufacturing capabilities; • seek regulatory approval for our product candidates; • maintain, expand, protect and defend our IP portfolio; • acquire or in-license technology; • establish a sales, marketing and distribution infrastructure to commercialize any products for which we may obtain marketing approval; and • when needed, increase our headcount to support our development efforts and any future commercialization efforts.
We anticipate that our expenses will increase significantly in connection with our ongoing activities, as we: • advance our lead product candidate, ulixacaltamide, through the Phase 3 Essential3 clinical trial program for ET; • advance our PRAX-562 product candidate in the EMBOLD clinical trial; • advance our PRAX-222 product candidate in the EMBRAVE clinical trial; • advance our PRAX-628 product candidate in the Phase 2a PPR clinical trial and begin the Phase 2 focal epilepsy clinical trial; • advance our preclinical candidates to clinical trials; • further invest in our pipeline; • further invest in our manufacturing capabilities; • seek regulatory approval for our product candidates; • maintain, expand, protect and defend our IP portfolio; • acquire or in-license technology; • establish a sales, marketing and distribution infrastructure to commercialize any products for which we may obtain marketing approval; and • when needed, increase our headcount to support our development efforts and any future commercialization efforts.
During the year ended December 31, 2022, we issued and sold 3,595,273 shares under the Sales Agreement for aggregate net proceeds of $9.6 million after deducting commissions and offering expenses payable by us.
During the year ended December 31, 2022, we issued and sold an aggregate of 239,684 shares under the 2021 Sales Agreement for aggregate net proceeds of $9.6 million, after deducting commissions and offering expenses payable by us.
We have historically experienced negative cash flows from operating activities as we have invested in developing our portfolio, drug discovery efforts and related infrastructure. The cash used in operating activities resulted primarily from our net losses adjusted for non-cash charges and changes in operating assets and liabilities, which are primarily the result of increased expenses and timing of vendor payments.
We have historically experienced negative cash flows from operating activities as we have invested in developing our portfolio, drug discovery efforts and related infrastructure. The cash used in operating activities resulted primarily from our net losses adjusted for non-cash charges and changes in operating assets and liabilities.
As of December 31, 2022, we had an accumulated 84 Table of Contents deficit of $530.6 million. We expect to incur significant expenses and operating losses for the foreseeable future as we expand our research and development activities.
As of December 31, 2023, we had an accumulated deficit of $653.9 million. We expect to incur significant expenses and operating losses for the foreseeable future as 87 Table of Contents we expand our research and development activities.
We plan to initiate our PRAX-562 Phase 2 EMBOLD study in the first quarter of 2023, with initial cohorts in SCN2A-DEE and SCN8A-DEE, and expect to announce topline results for both cohorts in the second half of 2023.
Our PRAX-562 Phase 2 EMBOLD study was initiated in the first quarter of 2023, with initial cohorts in SCN2A-DEE and SCN8A-DEE, and we expect to announce topline results for both cohorts in mid-2024.
Food and Drug Administration, or the FDA, or any comparable foreign regulatory authority; • our ability to successfully develop, obtain regulatory approval for, and then successfully commercialize, our product candidates; • our successful enrollment in and completion of clinical trials; • the costs associated with the development of any additional product candidates we identify in-house or acquire through collaborations; • our ability to discover, develop and utilize biomarkers to demonstrate target engagement, pathway engagement and the impact on disease progression of our product candidates; • our ability to establish and maintain agreements with third-party manufacturers for clinical supply for our clinical trials and commercial manufacturing, if our product candidates are approved; • the terms and timing of any collaboration, license or other arrangement, including the terms and timing of any milestone payments thereunder; 87 Table of Contents • our ability to obtain and maintain patent, trade secret and other IP protection and regulatory exclusivity for our product candidates, if approved; • our receipt of marketing approvals from applicable regulatory authorities; • our ability to commercialize products, if approved, whether alone or in collaboration with others; and • the continued acceptable safety profiles of our product candidates.
This is due to the numerous risks and uncertainties associated with drug development, including the uncertainty of: • our ability to add and retain key research and development personnel; • the timing and progress of preclinical and clinical development activities; • the number and scope of preclinical and clinical programs we decide to pursue; • our ability to successfully complete clinical trials with safety, tolerability and efficacy profiles that are satisfactory to the FDA or any comparable foreign regulatory authority; • our ability to successfully develop, obtain regulatory approval for, and then successfully commercialize, our product candidates; • our successful enrollment in and completion of clinical trials; • the costs associated with the development of any additional product candidates we identify in-house or acquire through collaborations; • our ability to discover, develop and utilize biomarkers to demonstrate target engagement, pathway engagement and the impact on disease progression of our product candidates; • our ability to establish and maintain agreements with third-party manufacturers for clinical supply for our clinical trials and commercial manufacturing, if our product candidates are approved; • the terms and timing of any collaboration, license or other arrangement, including the terms and timing of any milestone payments thereunder; • our ability to obtain and maintain patent, trade secret and other IP protection and regulatory exclusivity for our product candidates, if approved; • our receipt of marketing approvals from applicable regulatory authorities; • our ability to commercialize products, if approved, whether alone or in collaboration with others; and • the continued acceptable safety profiles of our product candidates.
We have based our assessment on assumptions that may prove to be wrong, and we could use our capital resources sooner than we currently expect.
However, we have based this estimate on assumptions that may prove to be wrong and we could exhaust our capital resources sooner than we expect.
The following table reflects our research and development expenses, including direct expenses summarized by platform and indirect or shared operating costs recognized as research and development expenses during each period presented (in thousands): Year Ended December 31, 2022 2021 Cerebrum™ $ 92,708 $ 72,663 Solidus™ 17,500 7,646 Personnel-related (including stock-based compensation) 37,392 31,090 Other indirect research and development expenses 7,440 8,858 Total research and development expenses $ 155,040 $ 120,257 Research and development activities are central to our business model.
The following table reflects our research and development expenses, including direct expenses summarized by platform and indirect or shared operating costs recognized as research and development expenses during each period presented (in thousands): 90 Table of Contents Year Ended December 31, 2023 2022 Cerebrum™ $ 31,290 $ 92,708 Solidus™ 18,449 17,500 Personnel-related (including stock-based compensation) 29,103 37,392 Other indirect research and development expenses 7,924 7,440 Total research and development expenses $ 86,766 $ 155,040 Research and development activities are central to our business model.
Financing Activities During the year ended December 31, 2022, net cash provided by financing activities of $10.5 million consisted of net proceeds from at-the-market offerings of $9.6 million and proceeds from purchases of common stock under our employee stock purchase plan and from the exercise of stock options of $1.4 million, partially offset by the payment of issuance costs for our at-the-market offerings and the payment of taxes related to the vesting of restricted stock units.
During the year ended December 31, 2022, net cash provided by financing activities of $10.5 million consisted primarily of net proceeds from at-the-market offerings of $9.6 million and $1.4 million in proceeds from purchases of common stock under our employee stock purchase plan and from the exercise of stock options.
Cash Flows The following table provides information regarding our cash flows for each period presented (in thousands): Year Ended December 31, 2022 2021 Net cash (used in) provided by: Operating activities $ (185,043) $ (124,554) Investing activities 96,889 (140,520) Financing activities 10,465 107,586 Net decrease in cash, cash equivalents and restricted cash $ (77,689) $ (157,488) Operating Activities Our cash flows from operating activities are greatly influenced by our use of cash for operating expenses and working capital requirements to support the business.
Cash Flows 94 Table of Contents The following table provides information regarding our cash flows for each period presented (in thousands): Year Ended December 31, 2023 2022 Net cash (used in) provided by: Operating activities $ (111,136) $ (185,043) Investing activities 38,950 96,889 Financing activities 91,871 10,465 Net increase (decrease) in cash, cash equivalents and restricted cash $ 19,685 $ (77,689) Operating Activities Our cash flows from operating activities are greatly influenced by our use of cash for operating expenses and working capital requirements to support the business.
From inception through December 31, 2022, we have raised $526.0 million in aggregate cash proceeds from such transactions, net of issuance costs. As of December 31, 2022, we had cash, cash equivalents and marketable securities of $100.5 million.
From inception through December 31, 2023, we have raised $617.5 million in aggregate cash proceeds from such transactions, net of issuance costs. As of December 31, 2023, we had cash and cash equivalents of $81.3 million.
As of December 31, 2022, we have issued and sold a total of 3,987,270 shares under the Sales Agreement for aggregate net proceeds of $16.6 million after deducting commissions and offering expenses payable by us.
During the year ended December 31, 2022, we issued and sold an aggregate of 239,684 shares under the 2021 Sales Agreement for aggregate net proceeds of $9.6 million, after deducting commissions and offering expenses payable by us.
The maximum potential amount of future payments we could be required to make under these indemnification agreements cannot be reasonably estimated. 93 Table of Contents 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 consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States.
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 consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States.
During the year ended December 31, 2021, net cash used in investing activities of $140.5 million primarily related to the purchase of marketable securities, partially offset by the maturities of marketable securities.
Investing Activities During the year ended December 31, 2023, net cash provided by investing activities of $39.0 million primarily related to maturities of marketable securities. During the year ended December 31, 2022, net cash provided by investing activities of $96.9 million primarily related to maturities of marketable securities, partially offset by purchases of marketable securities.
During the year ended December 31, 2021, net cash used in operating activities of $124.6 million was primarily due to our $167.1 million net loss, partially offset by $26.4 million of non-cash charges primarily related to stock-based compensation and $16.1 million in changes in operating assets and liabilities primarily related to increases in accounts payable and accrued expenses. 90 Table of Contents Investing Activities During the year ended December 31, 2022, net cash provided by investing activities of $96.9 million primarily related to the maturities of marketable securities, partially offset by purchases of marketable securities.
During the year ended December 31, 2023, net cash used in operating activities of $111.1 million was primarily due to our $123.3 million net loss and $14.0 million in changes in operating assets and liabilities primarily related to a decrease in accrued expenses and accounts payable, partially offset by $26.2 million of non-cash charges primarily related to stock-based compensation.
Subsequent to December 31, 2022, we issued and sold a total of 2,942,083 shares under the Sales Agreement for aggregate net proceeds of $11.2 million after deducting commissions and offering expenses payable by us.
During the year ended December 31, 2023, we issued and sold an aggregate of 212,453 shares under the 2023 Sales Agreement for aggregate net proceeds of $4.0 million, after deducting commissions and offering expenses payable by us.
Although we do not expect our estimates to be materially different from amounts actually incurred, our understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and may result in us reporting amounts that are too high or too low in any particular period. 94 Table of Contents Recently Issued Accounting Pronouncements We have reviewed all recently issued standards and have determined that, other than as disclosed in Note 2 to our consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K, such standards will not have a material impact on our consolidated financial statements or do not otherwise apply to our current operations.
Recently Issued Accounting Pronouncements We have reviewed all recently issued standards and have determined that, other than as disclosed in Note 2 to our consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K, such standards will not have a material impact on our consolidated financial statements or do not otherwise apply to our current operations.
Additional debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends and may require the issuance of warrants, which could potentially result in dilution to the holders of our common stock. 92 Table of Contents If we raise additional funds through collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to us.
Additional debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends and may require the issuance of warrants, which could potentially result in dilution to the holders of our common stock.
For further details on our business, refer to the Business section of Part I of this report. We were incorporated in 2015 and commenced operations in 2016.
For our most advanced product candidate under the Solidus™ platform, PRAX-222, we initiated the EMBRAVE study in the second quarter of 2023, which was completed in the fourth quarter of 2023. For further details on our business, refer to the Business section of Part I of this report. We were incorporated in 2015 and commenced operations in 2016.
During the year ended December 31, 2021, net cash provided by financing activities of $107.6 million consisted of net proceeds from our follow-on public offering of $98.4 million and at-the-market offerings of $7.3 million and net proceeds from the exercise of stock options of $2.4 million, partially offset by the payment of issuance costs for our initial public offering.
Financing Activities During the year ended December 31, 2023, net cash provided by financing activities of $91.9 million consisted primarily of net proceeds from our June 2023 follow-on public offering of $63.4 million and from at-the-market offerings of $28.2 million.
As of December 31, 2022 we had cash, cash equivalents and marketable securities of $100.5 million. Subsequent to December 31, 2022, we issued and sold a total of 2,942,083 shares under the Sales Agreement for aggregate net proceeds of $11.2 million after deducting commissions and offering expenses payable by us.
During the year ended December 31, 2023, we issued and sold an aggregate of 212,453 shares under the 2023 Sales Agreement for aggregate net proceeds of $4.0 million, after deducting commissions and offering expenses payable by us.
See “—Liquidity and Capital Resources.” 85 Table of Contents Restructuring In June 2022, we began a strategic realignment to focus resources on our ulixacaltamide, PRAX-562, PRAX-222 and PRAX-628 product candidates, as well as our preclinical programs across our Cerebrum™ and Solidus™ platforms, which resulted in a reduction of our workforce.
Restructuring In June 2022, we began a strategic realignment across our Cerebrum™ and Solidus™ platforms, which resulted in a reduction of our workforce.
We have based our assessment on assumptions that may prove to be wrong, and we could use our capital resources sooner than we currently expect.
The analysis included consideration of our current financial needs and ongoing research and development plans. We have based this estimate on assumptions that may provide to be wrong, and we could exhaust our available capital resources sooner than we expect.
The term of these indemnification agreements is generally perpetual upon execution of the agreement.
The term of these indemnification agreements is generally perpetual upon execution of the agreement. The maximum potential amount of future payments we could be required to make under these indemnification agreements cannot be reasonably estimated.
We are unable to estimate the exact amount of our working capital requirements, but based on our current operating plan, we believe that our cash, cash equivalents and marketable securities as of December 31, 2022, together with net proceeds raised under the Sales Agreement subsequent to December 31, 2022, will enable us to fund our operating expenses and capital expenditures into the first quarter of 2024.
We are unable to estimate the exact amount of our working capital requirements, but based on our current operating plan, we believe that our current cash and cash equivalents, which includes proceeds from our January 2024 public offering and at-the-market offerings, will be sufficient to fund our operating expenditures and capital expenditure requirements necessary to advance our research efforts and clinical trials into 2026.
As discussed in Note 9 to our audited consolidated financial statements, we have entered into a collaboration agreement that will result in the recognition of $5.0 million of revenue upon the satisfaction of the performance obligation identified within the agreement.
As discussed in Note 9 to our audited consolidated financial statements, we entered into an Option and License Agreement, or the Collaboration Agreement, with UCB Biopharma SRL, or UCB, in December 2022.
We also plan to initiate an ulixacaltamide Phase 2 clinical trial in Parkinson's disease, or PD, in the first quarter of 2023 and expect topline results in the fourth quarter of 2023.
Within our PRAX-628 program, we initiated a Phase 2a Photo-Paroxysmal Response, or PPR, study of PRAX-628 in the second quarter of 2023 and expect to report topline results in the first quarter of 2024. We also plan to initiate a Phase 2b study of PRAX-628 in focal epilepsy in the second half of 2024.
As of December 31, 2022, we had cash, cash equivalents and marketable securities of $100.5 million, which will enable us to fund our operating expenses and capital expenditures into the first quarter of 2024.
As of December 31, 2023, we had cash and cash equivalents of $81.3 million. We expect that our current cash and cash equivalents, which includes proceeds from our January 2024 public offering and at-the-market offerings, will be sufficient to fund our operating expenditures and capital expenditure requirements necessary to advance our research efforts and clinical trials into 2026.
Removed
We also initiated a Phase 1 healthy volunteer study of PRAX-628 in the fourth quarter of 2022 and expect to report topline results in mid-2023. For our most advanced product candidate under the Solidus™ platform, PRAX-222, we expect to announce topline results from the first dose cohort of our EMBRAVE study in mid-2023.
Added
The 2021 Sales Agreement was terminated in June 2023. During the year ended December 31, 2023, we issued and sold an aggregate of 952,794 shares under the 2021 Sales Agreement for aggregate net proceeds of $24.1 million, after deducting commissions and offering expenses payable by us.
Removed
Since our cash, cash equivalents and marketable securities as of December 31, 2022 are not sufficient to fund our operations for at least the next twelve months from the date of issuance of the consolidated financial statements included elsewhere in this Annual Report on Form 10-K, there is substantial doubt about our ability to continue as a going concern.
Added
In June 2023, we completed a public offering of: (i) an aggregate of 4,296,646 shares of common stock at a public offering price of $14.25 per share, including the underwriters' full exercise of their option to purchase 619,979 additional shares of common stock, and (ii) pre-funded warrants to purchase 470,000 shares of common stock at a public offering price of $14.2485 per share.
Removed
Our future viability is dependent on our ability to raise additional capital to finance our operations. We expect to finance our operations through potential public or private equity financings, debt financings, collaboration agreements or other capital sources.
Added
The purchase price per share for each pre-funded warrant represents the per share offering price for the common stock, less the $0.0015 per share exercise price for each underlying 88 Table of Contents share. Total net proceeds generated from the offering were approximately $63.4 million, after deducting underwriting discounts, commissions and other offering expenses payable by us.
Removed
Our inability to raise capital as and when needed could have a negative impact on our financial condition and ability to pursue our business strategies. There can be no assurance that the current operating plan will be achieved or that additional funding will be available on terms acceptable to us, or at all.
Added
In December 2023, we entered into an Open Market Sale Agreement, or the 2023 Sales Agreement, with Jefferies, to provide for the offering, issuance and sale of up to an aggregate amount of $75.0 million of common stock in at-the-market offerings. The 2023 Sales Agreement was terminated in January 2024.
Removed
If our development efforts for our current or future product candidates are successful and result in marketing approval or collaboration or license agreements with third parties, we may generate revenue in the future from a combination of product sales or payments from such collaboration or license agreements.
Added
In January 2024, we issued and sold 192,190 shares under the 2023 Sales Agreement for aggregate net proceeds of $5.3 million, after deducting commissions and offering expenses payable by us.
Removed
This is due to the numerous risks and uncertainties associated with drug development, including the uncertainty of: • our ability to add and retain key research and development personnel; • the timing and progress of preclinical and clinical development activities; • the number and scope of preclinical and clinical programs we decide to pursue; • our ability to successfully complete clinical trials with safety, tolerability and efficacy profiles that are satisfactory to the U.S.
Added
In January 2024, we completed a public offering of: (i) an aggregate of 3,802,025 shares of our common stock at a public offering price of $35.50 per share, including the underwriters' full exercise of their option to purchase 633,750 additional shares of common stock, and (ii) pre-funded warrants to purchase 1,056,725 shares of common stock at a public offering price of $35.4999 per share of common stock underlying the warrants.
Removed
General and Administrative Expense The $12.9 million increase in general and administrative expenses was primarily attributable to an $11.8 million increase in personnel-related costs due to changes in headcount, including an increase of $5.3 million in stock-based compensation expense. 89 Table of Contents Other Income Other income for the years ended December 31, 2022 and 2021 was comprised of interest income on our cash, cash equivalents and marketable securities and investment premium and discount amortization.
Added
The purchase price per share for each pre-funded warrant represents the per share offering price for the common stock, less the $0.0001 per share exercise price of each underlying share. Total net proceeds generated from the offering were approximately $161.7 million, after deducting underwriting discounts, commissions and other offering expenses payable by us.
Removed
We have incurred recurring losses since our inception, including a net loss of $214.0 million for the year ended December 31, 2022. In addition, as of December 31, 2022, we had an accumulated deficit of $530.6 million. We expect to continue to generate operating losses for the foreseeable future.
Added
See “—Liquidity and Capital Resources.” Reverse Stock Split On November 28, 2023, we filed a Certificate of Amendment to our Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware to effect a 1-for-15 reverse stock split of our common stock, or the Reverse Stock Split.
Removed
We have evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern within one year of the issuance of the consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
Added
The Reverse Stock Split became effective at 5:00 p.m., Eastern Time, on November 28, 2023, or the Effective Time.
Removed
Since we 91 Table of Contents expect that our cash, cash equivalents and marketable securities as of December 31, 2022 will not be sufficient to fund operations for at least the next twelve months from the date of issuance of the consolidated financial statements included elsewhere in this Annual Report on Form 10-K, there is substantial doubt about our ability to continue as a going concern.
Added
As a result of the Reverse Stock Split, every 15 shares of our issued and outstanding common stock were automatically reclassified into one validly issued, fully-paid and non-assessable share of common stock, subject to the treatment of fractional shares as described below, without any action on the part of the holders thereof.
Removed
Our future viability is dependent on our ability to raise additional capital to finance our operations. We expect to finance our operations through potential public or private equity financings, debt financings, collaboration agreements or other capital sources.
Added
The Reverse Stock Split did not affect the number of authorized shares of common stock or the par value of the common stock. No fractional shares were issued in connection with the Reverse Stock Split.
Removed
Our inability to raise capital as and when needed could have a negative impact on our financial condition and ability to pursue our business strategies. There can be no assurance that the current operating plan will be achieved or that additional funding will be available on terms acceptable to us, or at all.
Added
Stockholders who would otherwise be entitled to receive fractional shares as a result of the Reverse Stock Split were entitled to a cash payment in lieu thereof at a price equal to the fraction to which the stockholder would otherwise be entitled multiplied by the closing price per share of the common stock (as adjusted for the Reverse Stock Split) on the Nasdaq Global Select Market on November 28, 2023, the last trading day immediately preceding the Effective Time.
Added
We recognized $2.4 million of collaboration revenue from the Collaboration Agreement during the year ended December 31, 2023 and did not recognize any revenue from the Collaboration Agreement during the year ended December 31, 2022.
Added
Results of Operations Comparison of the Years Ended December 31, 2023 and 2022 The following table summarizes our consolidated statements of operations for each period presented (in thousands): 92 Table of Contents Year Ended December 31, Change 2023 2022 Collaboration revenue $ 2,447 $ — $ 2,447 Operating expenses: Research and development 86,766 155,040 (68,274) General and administrative 42,054 59,946 (17,892) Total operating expenses 128,820 214,986 (86,166) Loss from operations (126,373) (214,986) 88,613 Other income: Other income, net 3,096 957 2,139 Total other income 3,096 957 2,139 Net loss $ (123,277) $ (214,029) $ 90,752 Collaboration Revenue The $2.4 million increase in collaboration revenue is associated with the revenue recorded as research services provided and costs incurred under the Collaboration Agreement with UCB that was executed in December 2022.
Added
General and Administrative Expense The $17.9 million decrease in general and administrative expenses was primarily attributable to the following: • $7.6 million decrease in professional fees and consulting expenses; • $7.4 million decrease in personnel-related costs due to decreased headcount; and • $2.9 million decrease in other general and administrative expenses.
Added
In November 2021, we entered into an Open Market Sale Agreement, or the 2021 Sales Agreement, with Jefferies LLC, or Jefferies, to provide for the offering, issuance and sale of up to an aggregate amount of $125.0 million of common stock from time to time in at-the-market offerings for which Jefferies acted as sales agent.
Added
The 2021 Sales Agreement was terminated in June 2023. During the year ended December 31, 2023, we issued and sold an aggregate of 952,794 shares under the 2021 Sales Agreement for aggregate net proceeds of $24.1 million, after deducting commissions and offering expenses payable by us.
Added
On June 21, 2023, we completed a public offering of: (i) an aggregate of 4,296,646 shares of common stock at a public offering price of $14.25 per share, including the underwriters' full exercise of their option to purchase 619,979 additional shares of common stock, and (ii) pre-funded warrants to purchase 470,000 shares of common stock at a public offering price of $14.2485 per share.
Added
The purchase prices per share for each pre-funded warrant represents the per share offering price for the common stock, less the $0.0015 per share exercise price for each underlying share. Total net proceeds generated from the offering were approximately $63.4 million, after deducting underwriting discounts, commissions and other offering expenses payable by us.
Added
In December 2023, we entered into an Open Market Sale Agreement, or the 2023 Sales Agreement, with Jefferies, to provide for the offering, issuance and sale of up to an aggregate amount of $75.0 million of common stock in at-the-market offerings. The 2023 Sales Agreement was terminated in January 2024.
Added
In January 2024, we issued and sold 192,190 shares under the 2023 Sales Agreement for aggregate net proceeds of $5.3 million, after deducting commissions and offering expenses payable by us.
Added
In January 2024, we completed a public offering of: (i) an aggregate of 3,802,025 shares of our common stock at a public offering price of $35.5 per share, including the underwriters' full exercise of their option to purchase 633,750 additional shares of common stock, and (ii) pre-funded warrants to purchase 1,056,725 shares of common stock at a public offering price of $35.4999 per share of common stock underlying the warrants.

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Other PRAX 10-K year-over-year comparisons