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1、Table of ContentsUNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington,D.C.20549FORM 10-KANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31,2020orTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT
2、OF 1934For the transition period from toCommission File No.001-37852PROTAGONIST THERAPEUTICS,INC.(Exact name of registrant as specified in its charter)Delaware98-0505495(State or other jurisdiction ofincorporation or organization)(I.R.S.EmployerIdentification No.)7707 Gateway Boulevard,Suite 140Newa
3、rk,California 94560(510)474-0170(Address,including zip code,of registrantsprincipal executive offices)(Telephone number,including area code,of registrantsprincipal executive offices)Securities registered pursuant to Section 12(b)of the Act:Title of each classTrading SymbolName of each exchange on wh
4、ich registeredCommon Stock,$0.00001 par valuePTGXThe Nasdaq Global MarketSecurities registered pursuant to Section 12(g)of the Act:NoneIndicate by check mark if the registrant is a well-known seasoned issuer,as defined in Rule 405 of the Securities Act.Yes No Indicate by check mark if the registrant
5、 is not required to file reports pursuant to Section 13 or Section 15(d)of the Act.Yes No Indicate by check mark whether the registrant(1)has filed all reports required to be filed by Section 13 or 15(d)of the Securities Exchange Act of 1934 during thepreceding 12 months(or for such shorter period t
6、hat the registrant was required to file such reports),and(2)has been subject to such filing requirements for the past 90 days.Yes No Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T(
7、232.405 of this chapter)during the preceding 12 months(or for such shorter period that the registrant was required to submit such files).Yes No Indicate by check mark whether the registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,a smaller reporting company,or an em
8、erging growthcompany.See the definitions of“large accelerated filer,”“accelerated filer,”“smaller reporting company,”and“emerging growth company”in Rule 12b-2 of the Exchange Act.Large accelerated filerAccelerated filerNon-accelerated filerSmaller reporting companyEmerging growth companyIf an emergi
9、ng growth company,indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revisedfinancial accounting standards provided pursuant to Section 13(a)of the Exchange Act.Yes No Indicate by check mark whether the registrant has filed a
10、report on and attestation to its managements assessment of the effectiveness of its internal control over financialreporting under Section 404(b)of the Sarbanes-Oxley Act(15 U.S.C.7262(b)by the registered public accounting firm that prepared or issued its audit report.Indicate by check mark whether
11、the registrant is a shell company(as defined in Rule 12b-2 of the Exchange Act of 1934).Yes No The aggregate market value of the voting stock held by non-affiliates of the registrant was approximately$640.7 million as of June 30,2020,based upon the closing saleprice on The Nasdaq Global Market repor
12、ted on June 30,2020.Excludes an aggregate of 522,160 shares of the registrants common stock held by officers,directors andaffiliated stockholders.For purposes of determining whether a stockholder was an affiliate of the registrant at June 30,2020,the registrant assumed that a stockholder was anaffil
13、iate of the registrant at June 30,2020 if such stockholder(i)beneficially owned 10%or more of the registrants common stock,as determined based on public filings and/or(ii)was an executive officer or director or was affiliated with an executive officer or director of the registrant at June 30,2020.Ex
14、clusion of such shares should not be construedto indicate that any such person possesses the power,direct or indirect,to direct or cause the direction of the management or policies of the registrant or that such person iscontrolled by or under common control with the registrant.There were 43,808,308
15、 shares of registrants Common Stock,par value$0.00001 per share,outstanding as of February 26,2021.DOCUMENTS INCORPORATED BY REFERENCE:Portions of the registrants definitive Proxy Statement for the registrants 2021 Annual Meeting of Stockholders,to be filed subsequent to the date hereof with theSecu
16、rities and Exchange Commission(“SEC”),are incorporated by reference into Part III of this report.Such proxy statement will be filed with the SEC not later than 120 daysafter the end of the registrants fiscal year ended December 31,2020.Table of ContentsPROTAGONIST THERAPEUTICS,INC.2020 FORM 10-K ANN
17、UAL REPORTTABLE OF CONTENTSPagePART IItem 1.Business4Item 1A.Risk Factors29Item 1B.Unresolved Staff Comments52Item 2.Properties52Item 3.Legal Proceedings52Item 4.Mine Safety Disclosures52PART IIItem 5.Market for Registrants Common Equity,Related Stockholder Matters and Issuer Purchases of EquitySecu
18、rities53Item 6.Selected Financial Data55Item 7.Managements Discussion and Analysis of Financial Condition and Results of Operations55Item 7A.Quantitative and Qualitative Disclosures about Market Risk73Item 8.Financial Statements and Supplementary Data74Item 9.Changes in and Disagreements With Accoun
19、tants on Accounting and Financial Disclosure110Item 9A.Controls and Procedures110Item 9B.Other Information110PART IIIItem 10.Directors,Executive Officers,and Corporate Governance111Item 11.Executive Compensation111Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Sto
20、ckholder Matters111Item 13.Certain Relationships and Related Transactions,and Director Independence111Item 14.Principal Accounting Fees and Services111PART IVItem 15.Exhibits,Financial Statement Schedules112Item 16.Form 10-K Summary116SIGNATURES117Table of Contents1PART IStatements made in this Annu
21、al Report on Form 10-K contain certain forward-looking statements within the meaning ofSection 27A of the Securities Act of 1933,as amended,and Section 21E of the Securities Exchange Act of 1934,asamended.Forward-looking statements are identified by words such as“believe,”“will,”“may,”“estimate,”“co
22、ntinue,”“anticipate,”“intend,”“should,”“plan,”“expect,”“predict,”“could,”“potentially”or the negative of these terms orsimilar expressions.You should read these statements carefully because they discuss future expectations,containprojections of future results of operations or financial condition,or
23、state other“forward-looking”information.Thesestatements relate to our future plans,objectives,expectations,intentions and financial performance and the assumptionsthat underlie these statements.These forward-looking statements are subject to certain risks and uncertainties that couldcause actual res
24、ults to differ materially from those anticipated in the forward-looking statements.Factors that might causesuch a difference include,but are not limited to,those discussed in this report below,in“Item 1A.Risk Factors”andelsewhere in this Annual Report.In addition,statements that“we believe”and simil
25、ar statements reflect our beliefs andopinions on the relevant subject.These statements are based upon information available to us as of the date of this report,and while we believe such information forms a reasonable basis for such statements,such information may be limited orincomplete,and our stat
26、ements should not be read to indicate that we have conducted an exhaustive inquiry into,or reviewof,all potentially available relevant information.These statements are inherently uncertain and investors are cautioned notto unduly rely upon these statements.Forward-looking statements are based on our
27、 managements beliefs and assumptionsand on information currently available to our management.These statements,like all statements in this report,speak onlyas of their date,and we undertake no obligation to update or revise these statements in light of future developments.Wecaution investors that our
28、 business and financial performance are subject to substantial risks and uncertainties.Summary of Risk FactorsBelow is a summary of the principal factors that make an investment in our common stock speculative or risky.Thissummary does not address all of the risks that we face.Additional discussion
29、of the risks summarized in this risk factorsummary,and other risks that we face,can be found below under the heading“Item 1A.Risk Factors”and should becarefully considered,together with other information in this Annual Report on Form 10-K and our other filings with theSEC,before making an investment
30、 decision regarding our common stock.Under“Risks Related to the COVID-19 Pandemic”we describe risks to our business arising from the COVID-19pandemic.The pandemic has and could continue to adversely impact our business,including our ongoing and plannedclinical trials and preclinical and discovery re
31、search.The impacts on our business include,among others,delays to some ofour ongoing clinical trials.Under“Risks Related to Clinical Development”we describe risks related to on our ongoing clinical developmentefforts.They include,among others,the following:We have no approved products and no histori
32、cal product revenue,which makes it difficult to assess our futureprospects and financial results.We are heavily dependent on the success of our product candidates in clinical development.Clinical development is a lengthy and expensive process with an uncertain outcome,and failure can occur at anysta
33、ge of clinical development.Our product candidates may cause undesirable side effects or have other properties adversely impacting safetythat delay or prevent their regulatory approval,restrict their approved labeling,or otherwise limit theircommercial opportunity.Under“Risks Related to Financial Pos
34、ition and Capital Requirements”we describe risks associated with ourfinancial position and future capital requirements.They include,among others,the following:Table of Contents2We have incurred significant losses since our inception and anticipate that we will continue to incur significantlosses for
35、 the foreseeable future.We have never generated any revenue from product sales and may never be profitable.We expect to require substantial additional funding.Raising additional capital may cause dilution to our existing stockholders.Under“Risks Related to Our Reliance on Third Parties”we describe r
36、isks related to our reliance on third parties.They include,among others,the following:We rely on Janssen Biotech,Inc.(“Janssen”)to continue the development of product candidates subject to ourlicense and collaboration with Janssen,and to successfully commercialize any resulting products.Our existing
37、 or future collaborations with third parties may not be successful.We rely on third parties to conduct our pre-clinical studies and clinical trials and are subject to risks associatedwith their businesses and performance of their obligations to us.We rely on third party contract manufacturers to man
38、ufacture our drug substance and clinical drug product.Under“Risks Related to Regulatory Approval”we describe risks related to the potential regulatory approvalrequired to market our product candidates in the United States or other jurisdictions.If we are ultimately unable to obtainregulatory approva
39、l for our product candidates,our business will be substantially harmed.Under“Risks Related to Commercialization of our Product Candidates”we describe risks related to thecommercialization of any our product candidates that are eventually approved for marketing.We have no marketing andsales organizat
40、ion and may not be able to effectively market and sell any products or generate product revenue if any of ourproduct candidates are approved for marketing.Also,if we commercialize our product candidates abroad,we will besubject to the risks of doing business outside of the United States.Under“Risks
41、Related to Our Business and Industry”we describe risks related to our business in general,and to our company in the biotechnology and pharmaceutical industry.They include,among others,the following:We face significant competition from other biotechnology and pharmaceutical companies.Our success depe
42、nds on our ability to attract,retain and motivate qualified executives and other personnel.We may experience difficulties in managing the growth of our organization.We are subject to risks associated with information technology systems or breaches of data security.Any misconduct by our employees,ind
43、ependent contractors,principal investigators,consultants and vendorscould have a material adverse effect on our business.Our headquarters is located near known earthquake fault zones.Under“Risks Related to Our Intellectual Property”we describe risks related to the intellectual property that iscritic
44、al to the success of our business.They include,among others,the following:If we are unable to obtain or protect intellectual property rights related to our product candidates andtechnologies,we may not be able to compete effectively in our markets.Table of Contents3We may be involved in lawsuits to
45、protect or enforce our intellectual property,which could be expensive,timeconsuming and ultimately unsuccessful.Patents covering our product candidates could be found invalid or unenforceable.Third party claims of intellectual property infringement may prevent or delay our drug discovery anddevelopm
46、ent efforts.Under“Risks Related to Ownership of our Common Stock”we describe risks associated with owning our common stock.They include,among others,the following:Our stock price has been and will likely continue to be volatile and may decline,regardless of our operatingperformance.Any failure to ma
47、intain the adequacy of internal controls may adversely affect investor confidence in ourcompany and,as a result,the value of our common stock.Some provisions of our charter documents and Delaware law may have anti-takeover effects that coulddiscourage an acquisition of us by others,or make it diffic
48、ult for stockholders to replace members of our board ofdirectors.Table of Contents4Item 1.BusinessOverviewWe are a clinical-stage biopharmaceutical company that utilizes a proprietary technology platform to discover anddevelop novel peptide-based drugs to address significant unmet medical needs and
49、transform existing treatment paradigmsfor patients.We have multiple clinical assets derived from this platform in development for multiple indications.Ourclinical programs fall into two broad categories of diseases;(i)hematology and blood disorders,and(ii)inflammatory andimmunomodulatory diseases.Fi
50、gure 1:Our Product Pipeline*Subject to Covid-19 related delaysOur most advanced clinical asset,rusfertide(generic name for PTG-300)is an injectable hepcidin mimetic indevelopment for the potential treatment of erythrocytosis,iron overload and other blood disorders.Hepcidin is a keyhormone in regulat
51、ing iron equilibrium and is critical to the proper development of red blood cells.Rusfertide mimics theeffect of the natural hormone hepcidin,but with greater potency,solubility and stability.We initiated Phase 2 proof ofconcept(“POC”)studies in the blood disorders polycythemia vera(“PV”)in the thir
52、d quarter of 2019 and hereditaryhemochromatosis(“HH”)in January 2020.In December 2020,we presented four posters and one oral presentation relatingto rusfertide at the American Society for Hematologys virtual annual meeting,including updated interim Phase 2 resultsfor rusfertide in PV.We believe thes
53、e interim results provide evidence regarding the potential of rusfertide to eliminate theneed for phlebotomy by controlling hematocrit levels below 45%on an individual patient basis.Rusfertide has a uniquemechanism of action in the potential treatment of PV,which may enable it to decrease and mainta
54、in hematocrit levelswithin the range of recommended clinical guidelines without causing the iron deficiency that may occur with frequentphlebotomy.We selected PV as our first indication for potential pivotal study in rusfertide and expect to complete patientenrollment in the ongoing Phase 2 clinical
55、 trial by mid-2021.We are consulting with regulatory authorities in the first halfof 2021 to discuss the registrational clinical development plan.In June 2020,the U.S.Food and Drug Administration(“FDA”)granted orphan drug designation for rusfertide for the treatment of PV.In October 2020,the Europea
56、n MedicinesAgency granted orphan drug designation for rusfertide for the treatment of PV.In December 2020,the FDA granted FastTrack designation for rusfertide for the treatment of PV.In addition,we expect to disclose preliminary data from our Phase2 POC study in HH,our second indication,in the secon
57、d half of 2021.We discontinued development of rusfertide foranemia associated with beta-thalassemia and myelodysplastic syndromes during the first half of 2020.Table of Contents5Our clinical assets PTG-943 and PTG-200 are orally delivered investigational drugs currently in development forinflammator
58、y bowel disease(“IBD”),a gastrointestinal(“GI”)disease consisting primarily of ulcerative colitis(“UC”)andCrohns disease(“CD”),that are designed to block biological pathways currently targeted by marketed injectable antibodydrugs.Our orally stable peptide approach may offer targeted delivery to the
59、GI tissue compartment.We believe that,compared to antibody drugs,these product candidates have the potential to provide improved safety due to minimalexposure in the blood,increased convenience and compliance due to oral delivery,and the opportunity for the earlierintroduction of targeted oral thera
60、py.As a result,if successfully developed and approved,we believe they may transformthe existing treatment paradigm for IBD.PN-943 is an investigational,orally delivered,gut-restricted alpha-4-beta-7(“47”)specific integrin antagonist.Wedeveloped PN-943 as a potentially more potent orally delivered,gu
61、t-restricted 47 backup compound to PTG-100,ourfirst-generation orally delivered gut-restricted 47 inhibitor that was being developed for treatment of IBD.In 2019,wecompleted a Phase 1 single ascending dose(“SAD”)and multiple ascending dose(“MAD”)clinical study of PN-943 inhealthy volunteers to evalu
62、ate safety,pharmacokinetics and pharmacodynamics.The pharmacodynamic results indicatedthat the administration of PN-943 was well tolerated and showed results of target engagement that were suggestive ofhigher potency for PN-943 as compared to PTG-100.We submitted a U.S.Investigational New Drug appli
63、cation(“IND”)with the FDA for PN-943 in December 2019,which took effect in January 2020,and we initiated a Phase 2 POC study inUC in the second quarter of 2020 which is expected to be completed in 2022,subject to delays related to the COVID-19pandemic.PTG-200(also referenced as JNJ-67864238)is an in
64、vestigational,orally delivered,gut-restricted Interleukin-23receptor(“IL-23R”)antagonist for the treatment of IBD.In May 2017,we entered into a worldwide license andcollaboration agreement with Janssen Biotech,Inc.(“Janssen”),a Johnson&Johnson company,to co-develop and co-detail PTG-200 and certain
65、related compounds for all indications,including IBD.The agreement with Janssen wasamended in May 2019 to expand the collaboration by supporting efforts towards second-generation IL-23R antagonists,triggering a$25.0 million milestone payment to us.In January 2020,as part of the expanded research coll
66、aboration,weannounced the identification and nomination of an orally delivered IL-23R antagonist peptide as a second-generationdevelopment candidate,triggering a$5.0 million milestone payment to us.Janssen initiated a global Phase 2 POC clinicalstudy for PTG-200 in moderate-to-severe CD in the fourt
67、h quarter of 2019.Due to the uncertain effect on the timing ofclinical trials caused by the COVID-19 pandemic,we have suspended guidance on a timeline for completion of the PTG-200 Phase 2 study.In October 2020,we announced the selection of two second-generation IL-R antagonists foradvancement into
68、clinical development,PN-235(also referenced as JNJ-77242113)and PN-232(also referenced as JNJ-75105186).A Phase 1 study was initiated for PN-235 in December 2020 and is expected to be completed in 2021.PN-232is in the late preclinical stage and we expect to initiate and complete a Phase 1 study for
69、PN-232 in 2021.The advancementof three different oral co-development candidates provides us with several strategic options for development in multipleindications.We are also continuing our joint research efforts to identify additional IL-23R antagonists.Our clinical assets are all derived from our p
70、roprietary discovery platform.Our platform enables us to engineernovel,structurally constrained peptides that are designed to retain key advantages of both orally delivered small moleculesand injectable antibody drugs in an effort to overcome many of their limitations as therapeutic agents.Important
71、ly,constrained peptides can be designed to potentially alleviate the fundamental instability inherent in traditional peptides toallow different delivery forms,such as oral,subcutaneous,intravenous,and rectal.We continue to use our peptidetechnology platform to discover product candidates against tar
72、gets in disease areas with significant unmet medical needs.RUSFERTIDE:AN INJECTABLE HEPCIDIN MIMETICRusfertide,an injectable hepcidin mimetic,was discovered through our peptide technology platform.Hepcidin is anatural hormone that regulates iron metabolism.We are developing rusfertide for the treatm
73、ent of certain disorderscharacterized by excessive red blood cells,iron overload or imbalance.In healthy individuals,hepcidin regulates ironlevels by limiting release of iron from macrophages and inhibiting iron absorption from the GI tract.In diseases ofexcessive red blood cells(“RBCs”),such as PV,
74、the body consumes iron in the production of cells,leading to ironTable of Contents6deficiency which can be exacerbated by phlebotomy.In diseases of iron overload,such as HH,there may be insufficienthepcidin to maintain appropriate iron levels.In other disorders,iron imbalance can benefit from increa
75、sed levels ofhepcidin-like activity to restore proper balance.Because of stability issues,complexity of synthesis and solubilitylimitations,direct replacement with native hepcidin is not a practical therapeutic approach.We developed rusfertide as amore potent,stable,soluble,and more readily manufact
76、ured injectable hepcidin mimetic.Mechanism of Action and RationaleThe molecular target of the hormone hepcidin is the cellular trans-membrane protein ferroportin,which functions asthe major export channel for intracellular iron in macrophages,liver hepatocytes,and duodenal enterocytes.By binding tot
77、he extracellular domain of ferroportin,hepcidin redistributes iron by reducing the export of iron from inside theenterocytes and macrophages to the systemic circulation.As a hepcidin mimetic,rusfertide can downregulate ferroportinand normalize red blood cell production by controlling the supply of i
78、ron from the macrophages and other stores to thebone marrow.In addition,by limiting the release of iron into the blood,rusfertide may inhibit the damage caused byexcessive absorption of iron by vital organs such as the liver and heart.Iron Disorders OverviewPolycythemia vera(“PV”)PV is a rare myelop
79、roliferative neoplasm characterized primarily by the overproduction of red blood cells.PV istypically caused by a form of Janus Kinase 2(“JAK2”)mutation.PV is a serious chronic condition as the increased redblood cell count causes the blood to thicken and puts patients at higher risk of cardiovascul
80、ar and thrombotic events such asheart attack and stroke.Patients are typically stratified as low or high risk based on age and medical history.Regardless ofrisk categorization,treatment guidelines for PV are consistent:to control the patients hematocrit(red blood cells as apercentage of whole blood)
81、below 45%in order to reduce the risk of further cardiovascular or thrombotic events.PV mayprogress to myelofibrosis or leukemia.Currently patients are typically treated with low dose aspirin and phlebotomy alone or hydroxyurea alone or incombination with phlebotomy.At later stages,patients may recei
82、ve interferons or ruxolitinib,marketed as Jakafi.Jakafiis currently the only branded product in the United States for PV and the only FDA-approved treatment for PV in the past12 years.Cytoreductive therapies such as hydroxyurea,interferons and ruxolitinib can have challenging side effect profilesas
83、they reduce all cell types,not just red blood cells.Current treatments are effective in some patients but have limitations.We believe there are substantial PV patient groups that could benefit from a new non-cytoreductive therapeutic optionwhich focuses on red blood cells.PV Market OverviewPV is a r
84、are disease affecting approximately 160,000 patients living in the United States,with a similar prevalence inEurope,representing an estimated market opportunity of approximately$1.0 billion to$2.0 billion.Approximately 14,000new patients have been diagnosed each year since 2017.Patients are typicall
85、y diagnosed between the age of 50 and 70 andmedian survival is approximately 20 years.Recent analysis of a large medical claims database,representing approximately90%of U.S.lives,indicates that the current treatment paradigm consists primarily of therapeutic phlebotomy,hydroxyurea,or a combination o
86、f hydroxyurea and phlebotomy.The predominant treatment is phlebotomy for both low-risk and high-risk patients,and combination therapy is commonly used to control hematocrit.According to this database analysis,currenttherapies do not offer adequate hematocrit control below 45%.In fact,less than 25%of
87、 patients in the data set had allhematocrit test results under 45%as recommended in National Comprehensive Cancer Network(“NCCN”),indicating thatas many as 70,000 patients in the United States alone may be at elevated risk of cardiovascular and thrombotic events.We believe that rusfertide has the po
88、tential to provide substantial benefit to patients by providing a tool focusedentirely on managing hematocrit in a consistent and predictable manner and dramatically decrease the need for therapeuticphlebotomy.rusfertide is a non-cytoreductive mimetic of the natural hormone hepcidin,the master regul
89、ator of ironhomeostasis in the body.Rusfertide has a unique iron regulatory mechanism which,per early results from ourTable of Contents7Phase 2 study in PV,allows for persistent control of hematocrit without causing iron deficiency that is caused by excessivered blood cell production and exacerbated
90、 by frequent phlebotomy.Rusfertide acts by redistributing iron away from thebone marrow where iron is in high demand and essential for red blood cell production,thereby limiting excess red bloodcell production in patients with PV while still providing sufficient iron levels to support other normal c
91、ellular and organfunctions requiring iron.Hereditary Hemochromatosis(“HH”)HH is a blood disorder caused by genetic mutations that increase iron uptake from the diet and alter its distribution inthe body,leading to iron buildup in the bodys tissues and organs,particularly in the skin,heart,liver,panc
92、reas and jointtissues.Excess iron in these organs and tissues can be toxic and over time lead to cirrhosis,liver cancer,heart problems,joint pain and diabetes.Current treatments for HH are limited,the most common being therapeutic phlebotomy,which canbe a significant burden to patients.The treatment
93、 goal in HH is to bring ferritin levels into a range of 50-150ng/ml.Thereare currently no pharmaceutical interventions for HH,although iron chelators may be used off-label in certain cases.Rusfertide,if approved,could potentially reduce the need for phlebotomy and offer new solution for management o
94、f thedisease.The genetic defects that cause most HH are present in approximately five to seven million patients in the UnitedStates and European Union(“EU”).HH affects approximately one million people in the United States.In January 2020,we initiated a Phase 2 study of rusfertide in HH.This study is
95、 an open label,multicenter studydesigned to evaluate the effects of rusfertide in up to 20 adult patients over 24 weeks of treatment.Guidelines for HH focuson controlling baseline transferrin saturation(“TSAT”)and ferritin to prevent long-term complications.Given the TSATreductions from rusfertide o
96、bserved to date in both healthy volunteers and beta-thalassemia and PV patients,as well asregulation of organ iron content in a mouse model of HH,we believe that a significant reduction in phlebotomy may bepossible with rusfertide.The endpoints of this POC study include change in TSAT and serum iron
97、 levels,reductions inphlebotomy requirements and an assessment of participant-reported outcomes.We expect to report preliminary data fromthis Phase 2 study in 2021.Rusfertides Clinical Development ProgramIn 2018,we successfully filed an IND for in the United States and related clinical trial applica
98、tions outside theUnited States.In the first quarter of 2019,we began dosing patients in a global Phase 2 study of rusfertide in beta-thalassemia called TRANSCEND.Beta-thalassemia is a rare genetic blood disorder that is characterized by impaired redblood cell production.The study was a single-arm,op
99、en label,MAD design that evaluates safety,POC and dose finding inadolescent and adult patients with anemia associated with non-transfusion dependent(“NTD”)or transfusion dependent(“TD”)beta-thalassemia.NTD patients received 12 weeks treatment with rusfertide in escalating dose cohorts.Theprimary eff
100、icacy endpoint in NTD patients was a change in hemoglobin from baseline.TD patients received 16 weekstreatment with rusfertide in escalating dose cohorts.The primary efficacy endpoint in TD patients was a change intransfusion burden from baseline.The primary objectives of this study were to evaluate
101、 the safety,tolerability andpreliminary efficacy of rusfertide and identify an appropriate starting dose and titration regimen for registration studies.Preliminary results from the Phase 2 study in beta-thalassemia patients showed dose-related drug exposure reductionsfrom TSAT and serum iron levels,
102、with significant reductions at the 40 mg and 80 mg weekly doses and significant andsustained reductions at the 40 mg twice weekly doses.These early results suggested the potential of finding an appropriatedose of rusfertide for continued development in the treatment of beta-thalassemia.While we have
103、 observed clinicalresponders in the study based on the pre-specified criteria of reductions in transfusion burden,continued evaluation athigher doses would be required to evaluate the rate and durability of these effects in order to reach definitive conclusions.We discontinued development of rusfert
104、ide for anemia associated with beta-thalassemia and myelodysplastic syndromes,agroup of disorders in which blood cells do not mature properly in the bone marrow,during the first half of 2020.Table of Contents8Figure 2:Phase 2 Study of Rusfertide in PV Clinical DesignIn the fourth quarter of 2019,we
105、initiated a Phase 2 study of rusfertide in PV designed to evaluate safety andpreliminary efficacy in patients requiring phlebotomy(Figure 2).The Phase 2 study in PV is expected to enrollapproximately 50 patients and consists of a 16-week open-label dose finding stage every 4 weeks from 10 mg to 80 m
106、g anda 12-week maintenance period at doses which generate desired hematocrit levels,followed by a 12-week randomized andblinded withdrawal stage.The study has an open-label extension for up to one year to monitor long term safety andbenefits of the drug.The endpoints of this clinical POC study inclu
107、de measurement of blood parameters(hematocrit andhemoglobin levels),reductions or delay in phlebotomy requirements,and improvements in quality-of-life symptoms.In December 2020,we presented four posters and one oral presentation relating to rusfertide at the AmericanSociety for Hematologys virtual a
108、nnual meeting,including updated interim Phase 2 results for rusfertide in PV as shownbelow.These preliminary results from the Phase 2 study of rusfertide in PV demonstrated dramatic decreases in the needfor therapeutic phlebotomy in patients with PV,while maintaining control over blood hematocrit le
109、vels.Figure 3:Rusfertide Controlled HCT 48%).OVERVIEW OF INFLAMMATORY BOWEL DISEASEIBD is a group of chronic autoimmune and inflammatory conditions of the colon and small intestine,consistingprimarily of UC and CD.In UC,inflammation may be limited to part of the colon or extend through its entirety.
110、UC isprimarily characterized by ulceration of the intestinal surface,accompanied by rectal bleeding and frequent,urgent bowelmovements.CD occurs anywhere along the GI tract,commonly affecting the small intestine and the proximal largeintestine.CD complications may include strictures and fistula,whic
111、h penetrate all layers of the intestine.UC is usuallydiagnosed earlier than CD due to bleeding symptoms.Patients with CD may initially present with abdominal pain,fatigueand anorexia,which can be misdiagnosed.Both diseases peak diagnosis years are in young adulthood and are found aboutequally in bot
112、h males and females.Management is lifelong and affects school attendance,graduation rates,childbearingand work productivity.IBD prevalence is increasing worldwide and is correlated with the adoption of western diets andlifestyle,as well as genetic factors(5 to 20%of affected patients have a first de
113、gree relative with the disease).Market OverviewAccording to the Crohns&Colitis Foundation of America,there are more than 1.6 million IBD patients in theUnited States alone,an increase of approximately 200,000 patients since 2011.As many as 70,000 new cases of IBD arediagnosed in the United States ea
114、ch year,and there may be as many as 80,000 children in the United States with IBD.In2019,GlobalData estimated that the UC market was approximately$6.7 billion across seven major markets:United States,France,Germany,Italy,Spain,United Kingdom and Japan.This is expected to increase at a compound annua
115、l growth rateof approximately 6.1%to$12.1 billion by 2029.In 2016,GlobalData estimated that the CD market reached approximately$7.3 billion across those same seven major markets and is expected to grow approximately 5.5%per year to$12.4 billionby 2029.For many years,tumor necrosis factor-alpha(“TNF-
116、”)antibody drugs were the primary treatment for moderate-to-severe IBD.Humira and Remicade are injectable and infused,respectively.Approximately one third of IBD patients donot respond to TNF-antibody drugs and approximately another 30%to 40%become refractory within the first year oftreatment.Additi
117、onally,TNF-antibody drugs may predispose patients to an increased risk of serious infection and thedevelopment of anti-drug antibodies,which over time can cause loss of drug response.More recently,antibody productsfocused on potentially safer mechanisms of action have been gaining market share.One s
118、uch product is TakedaPharmaceuticals Entyvio,which targets the 47 integrin pathway.Takada Pharmaceuticals reported 2020 sales ofEntyvio of approximately$3.9 billion.Similarly,Johnson&Johnsons Stelara,which targets the Interleukin 12(“IL-12”)and Interleukin 23(“IL-23”)pathways,has gained significant
119、traction.Johnson&Johnson global sales of Stelara(approved for psoriasis,psoriatic arthritis,moderate-to-severe CD and UC)exceeded$7.7 billion in 2020.Current Standard of Care in IBDIn recent years,treatment of IBD has evolved from a focus on successful symptom management to an emphasis onmodifying t
120、he underlying disease to achieve long-term remission.While available treatments exist for moderate-to-severeIBD,there continues to be a significant medical need for novel,efficacious,safe and convenient treatments.Newtechnologies and outcome measures have been developed to improve staging definition
121、s and assessments of treatmentbenefit.Nonetheless,halting or reversing IBD progression has not yet been achieved with any single agent therapy,andattaining and maintaining long-term remission in most patients remains a significant unmet medical need.AcrossTable of Contents11therapeutic classes,15%to
122、 31%rates of clinical remission represent the current ceiling in patients with moderate-to-severely active disease.Biosimilar infliximab and other tumor necrosis factor(“TNF”)inhibitors are the first line standard of care inmoderate-to-severe IBD.Anti-TNFs bind to and neutralize a central pro-inflam
123、matory cytokine in the gut via systemicimmunosuppression.As a result,they can be associated with infection and malignancy risk.Although the magnitude ofthese risks is relatively low,they are significant for the young IBD population who must continue on lifelong treatment.Inaddition,more than 10%of p
124、atients treated with anti-TNF agents lose response with each year of treatment.In 2014,anovel anti-trafficking mechanism launched with vedolizumab,marketed as Entyvio,which blocks migration ofleukocytes into the gut via 47 integrins.This mechanism remains the only true“gut selective”approach in the
125、IBDmarket today,although formulation technologies can limit systemic exposure from orally delivered agents.Entyvio hasshown an excellent safety profile,although it requires intravenous administration.Entyvio was followed by the launch ofustekinumab,marketed as Stelara,in CD in 2016,which blocks infl
126、ammation produced through the IL-12 and IL-23pathways,and tofacitinib,marketed as Xeljanz,an orally delivered pan-Janus kinase(JAK)inhibitor approved in UC.A head-to-head trial called VARSITY comparing the long-term safety and efficacy of an anti-integrin and anti-TNFshas been completed.Entyvio demo
127、nstrated superior rates of clinical remission and endoscopic improvement comparedwith Humira,the market leader in the TNF inhibitor class.The first formal combination trials in IBD were initiated in thelast year,adding new mechanisms such as integrin inhibitors or IL-23 inhibitors to anti-TNFs.Most
128、IBD experts nowbelieve that combining treatment classes with additive or synergistic mechanisms of action will be required to attain thedisease-modifying effects and lasting remissions in a larger group of patients documented in other areas of immunology,such as psoriasis or rheumatoid arthritis.We
129、believe the development of new,potent and targeted orally delivered therapies for IBD may offer safer and moreeffective treatment options,alone or in combination,for moderate-to-severe IBD patients.In addition,many clinicianscontinue to advocate for earlier introduction of targeted therapeutics in m
130、ild-to-moderate IBD in order to prevent diseaseprogression and irreversible gastrointestinal damage.Our orally delivered,GI-restricted,peptide drugs PTG-200,PN-235,PN-232 and PN-943 work on the same specific validated targets as FDA-approved injectable antibodies and have thepotential to offer impro
131、ved safety and compliance and to minimize the risk of immunogenicity associated with antibodies.We believe that our product candidates,if approved,have the potential to be used more broadly,including treatment ofmild-to-moderate IBD.Our IBD Solution:Orally Delivered,GI-Restricted Peptides as Targete
132、d TherapiesFor the IBD targets of interest,the size and nature of our peptides are carefully selected and modified so as to acquirethe desired potency and specificity,and also to largely restrict their presence to the GI tissue compartment whenadministered orally.These features translate to orally d
133、elivered,GI-restricted,selective and potent peptide drug candidateswith specific advantages compared to antibody drugs:Oral administration.We are developing our peptide therapeutics in a convenient capsule or tablet formintended for oral administration.We believe oral administration may reduce many
134、of the problems andlimitations associated with injections or infusions,including injection site pain and local reactions,inconvenience,anxiety,high rates of immunogenicity and potential safety risks.Potential for improved safety and tolerability compared to antibody drugs.Oral and GI-restricted deli
135、very minimizes systemic exposure in the blood.Oral and GI-restricteddelivery results in lower drug levels in the blood that may provide the potential for an enhanced safetyprofile over antibody drugs.Peptides can be cleared more quickly from systemic circulation.Small molecules and peptides below as
136、ize threshold can be rapidly cleared from blood circulation by kidney filtration and excretion.Rapidclearance may be beneficial especially if patients need to discontinue therapy.In contrast,antibodyTable of Contents12drugs,because of their long plasma half-life,may take months to clear from blood c
137、irculation,leavingpatients exposed to continued or increased safety risk.The likelihood of much lower immunogenicity of small stable peptides compared to antibody drugsreduces the risk of loss of response.We believe that anti-drug antibodies are less likely to be elicitedagainst constrained peptides
138、,due to their small size,lack of epitope density,resistance to proteolysis,oral tolerance,and minimal systemic absorption.Potential for localized delivery to site of disease.We believe oral dosing of GI-restricted peptides results in substantially higher drug concentrations in the diseased GI tissue
139、 compartment compared to injectable antibody drugs.This targeted delivery to the site of action may lead to more immediate and significant target engagement at the site of active disease in the GI tissue compartment with the potential for improved efficacy.Cost-effective and less complex manufacturi
140、ng.Because of their size and stability,we believe that our orallydelivered,GI-restricted peptide product candidates can be produced,stored and shipped in a more cost-effective manner than many antibody drugs.In chronic GI diseases such as IBD,we believe that our orally delivered,GI-restricted peptid
141、e product candidatesmay offer improved delivery,the potential for improved safety and tolerability,and cost efficiencies that may provide anoverall benefit to patients,payors,and physicians.PN-943:AN ORALLY DELIVERED 47 INTEGRIN ANTAGONISTPN-943,a second-generation,orally delivered,gut-restricted 47
142、 specific integrin antagonist,was discoveredthrough our peptide technology platform and is being developed initially for patients with moderate-to-severe UC.47integrin is considered to be one of the most GI-specific biological targets for IBD due to its binding to MAdCAM-1,anextracellular protein th
143、at resides mostly in the GI vasculature.Like Entyvio,which is dosed as an infusion and as aninjectable antibody drug,PN-943 specifically inhibits 47 integrin.We have leveraged the development and regulatorypath of Entyvio and other approved antibody drugs for IBD to help inform the design of our cli
144、nical development studies.Mechanism of Action and RationaleIntegrins,such as 47,are transmembrane proteins that regulate cellular movement into extravascular tissue andplay an important role in modulating the inflammatory reaction in the gut.The 47 integrin is expressed on the surface ofT cells,immu
145、ne cells that help defend against foreign and potentially harmful substances that enter the body.Thedevelopment of IBD is driven by the migration of 47 T cells into the GI tissue compartment and their subsequentactivation within the GI tissue compartment.The entry of 47 T cells into the GI tissue co
146、mpartment is facilitated by theprotein-protein interactions between the 47 integrin and its corresponding ligand,MAdCAM-1,which is primarilyexpressed in the GI tissue compartment.Hence,the binding of 47 to MAdCAM-1 can be categorized as a GI-specificinteraction and has been identified as an IBD-spec
147、ific targeted therapeutic approach.By blocking the binding of 47integrin to MAdCAM-1,PN-943 may prevent trafficking and activation of T cells,thereby reducing the inflammation thatleads to the clinical manifestations and long-term implications of UC.47 for IBD is targeted by Entyvio,which has demons
148、trated safety and efficacy in patients with moderate-to-severe UC and CD.Since PN-943 targets the same biological pathway as Entyvio,we utilized similar PD-based POC inour pre-clinical studies and Phase 1 clinical trial to inform and guide our Phase 2 development program.We sourced thesePD biomarker
149、 assays from public scientific publications and do not maintain any contractual arrangement providing accessto this information with the makers of these marketed products.Table of Contents13PN-943 Pre-Clinical Proof-of-Concept StudiesWe have completed extensive pre-clinical studies of PN-943 in whic
150、h we established pharmacodynamic targetengagement POC,including effects on receptor occupancy,T cell trafficking and mucosal healing in rodents and monkeys.Pre-clinical data indicated that PN-943 may be a more potent 47 integrin antagonist compound than PTG-100 withoutsacrificing its other positive
151、attributes,such as selectivity and tolerability.PTG-100 is our first generation 47 inhibitorthat shares the same 47 integrin target as Entyvio for the treatment of moderate-to-severe UC and CD.We completedextensive pre-clinical studies of PTG-100 in which we established pharmacological POC and compl
152、eted a Phase 1 clinicaltrial in Australia in 2016.PN-943s Phase 1 Clinical Trial OverviewWe completed a Phase 1 randomized,double-blind,placebo-controlled clinical trial of PN-943 in normal healthy male volunteers in Australia in 2019.The Phase 1 SAD and MAD components were conducted with a solution
153、-based liquid formulation.In addition to determining the safety and tolerability and pharmacokinetics of PN-943,the SAD and MAD components of the trial evaluated PD-based POC through the assessment of 47 receptor occupancy and 47 target expression that indicate target engagement on peripheral blood
154、memory T cells similar to what was done in the pre-clinical studies and in the Phase 1 trial with PTG-100.In the clinical trial,dose escalation proceeded from 100 mg up to 1,400 mg for the SAD portion and 1,000 mg for the MAD portion.We reported results of the SAD part of the study during the second
155、 quarter of 2019 and the MAD part of the studyduring the third quarter of 2019.The pharmacodynamic results of target engagement were supportive of the three-foldhigher potency of PN-943 as compared to PTG-100 and saturation at 1000 mg.This is consistent with data from pre-clinical studies and confir
156、med by this Phase 1 pharmacodynamic data.We believe this links PN-943 to greater probabilityof success in a Phase 2 trial based on signs of clinical efficacy of PTG-100 in the Phase 2 PROPEL trial in UC patients.The administration of PN-943 was well-tolerated.PN-943 Phase 2 Clinical Trial OverviewFi
157、gure 6.PN-943 Phase 2 in UC IDEAL Study DesignTable of Contents14We submitted a U.S.IND with the FDA for PN-943 in December 2019,which took effect in January 2020.Duringthe second quarter of 2020,we initiated a global,randomized,double-blind placebo-controlled study called IDEALevaluating the safety
158、,tolerability and efficacy of PN-943 in approximately 150 patients with moderate-to-severe UC(Figure 6).This Phase 2 study is expected to be completed in 2022,subject to delays related to the COVID-19 pandemic.PTG-200,PN-235&PN-232:ORALLY DELIVERED IL-23R ANTAGONISTSPTG-200,an orally delivered,gut-r
159、estricted IL-23R specific antagonist for the treatment of IBD,was discoveredthrough our peptide technology platform.IL-23,a member of the IL-12 family of pro-inflammatory cytokines,is a proteinthat regulates inflammatory and immune function and plays a key role in the development of IBD.By blocking
160、IL-23Rwith PTG-200 in the GI tissue compartment,we hope to improve disease symptoms and reduce bowel wall damage whilepotentially minimizing the risk of systemic side effects due to its GI-restricted nature.Mechanism of Action and RationaleIL-23 is a member of the IL-12 family of cytokines with pro-
161、inflammatory and autoimmune properties.Cytokines arecell signaling proteins that are released by cells and affect the behavior of other cells.Binding of the IL-23 ligand to the IL-23R receptor leads to an expression of pro-inflammatory cytokines involved in the mucosal autocrine cascade that is anim
162、portant pathway of many inflammatory diseases,including IBD.Furthermore,genetic analyses of IBD patients haveimplicated IL-23R mutations as a risk factor associated with susceptibility to IBD.The infused antibody drug Stelara(marketed for psoriasis,psoriatic arthritis,UC and moderate-to-severe CD)is
163、 a p40 antagonist antibody that inhibits boththe IL-23 and IL-12 pathways.Next-generation IBD antibody drugs,such as guselkumab,target the p19 subunit of the IL-23 ligand and are specific to the IL-23 pathway,which is believed to be an important driver of local IBD pathology,whilenot blockading the
164、IL-12 pathway.IL-12 is believed to be important in immune surveillance against the development ofinfections and malignancies.We believe that the orally delivered,GI-restricted nature of PTG-200 may allow PTG-200 to be a potent inhibitor ofthe IL-23 pathway for the treatment of IBD.By targeting IL-23
165、R with our orally delivered GI-restricted IL-23R antagonistPTG-200,we believe PTG-200 may restore proper immune function in the GI tissue compartment where there is activedisease while minimizing the risk of systemic side effects.Several key cell types that reside in gut-associated lymphoidtissue(“G
166、ALT”),including T cells,innate lymphoid cells,and natural killer cells,increase their expression of IL-23Rduring the progression of IBD.Therefore,the high concentrations of PTG-200 in GALT will facilitate access and bindingto IL-23R expressed in the same tissue with the potential for concomitant eff
167、icacy benefits.PTG-200s Phase 1 Clinical StudyWe completed a Phase 1 clinical trial of PTG-200 in Australia during the fourth quarter of 2018.The Phase 1 studywas a randomized,double-blind,placebo-controlled,SAD and MAD-escalation trial in 80 normal healthy volunteers.Theprimary endpoint was safety
168、and tolerability.Secondary endpoints included the identification of the maximally tolerateddose and the evaluation of pharmacokinetic parameters.Results of the Phase 1 study demonstrated that administration of PTG-200 was well-tolerated.No serious adverseevents or dose-limiting toxicities were obser
169、ved.The pharmacokinetic and pharmacodynamic parameters were consistentwith the GI-restricted design of PTG-200.PTG-200s Clinical Development PlanWe have a worldwide license and collaboration agreement with Janssen to co-develop and co-detail PTG-200 andany second-generation compounds for all indicat
170、ions,including IBD.The agreement was amended in May 2019 to expandthe collaboration by supporting efforts towards second-generation IL-23R antagonists,triggering a$25.0 million milestonepayment to the Company.In January 2020,we announced the identification and nomination of an orally delivered,gut-r
171、estricted IL-23R antagonist peptide as a second-generation development candidate under our license and collaborationagreement with Janssen,advancing the collaboration and triggering a$5.0 million milestone payment toTable of Contents15us.See“Item 7.Managements Discussion and Analysis Overview”and No
172、te 3 to the Consolidated Financial Statementsincluded elsewhere in this Annual Report on Form 10-K for additional information.Janssen submitted an IND for PTG-200 in CD during the second quarter of 2019,which took effect in July 2019.Janssen initiated a Phase 2 clinical study of PTG-200 in CD called
173、 PRISM in the fourth quarter of 2019.The global,randomized,double blind,placebo-controlled,Phase 2 study is evaluating the efficacy of oral administration of PTG-200 in90 patients with moderate-to-severe CD.The study will assess the effect of twice-daily dosing of PTG-200 on change frombaseline in C
174、rohns Disease Activity Index score at week 12 as the primary endpoint.The study will also assess changefrom baseline in simple endoscopic score for CD rates of clinical response and remission,endoscopic response andremission,and patient-reported outcome-2 remission.Because of the COVID-19 pandemic,w
175、e have suspended guidanceon a timeline for PTG-200 Phase 2 study completion.Second Generation IL23-R Antagonists PN-235 and PN-232In October 2020,we announced the selection of two second-generation IL-R antagonists for advancement intoclinical development,PN-235(also referenced as JNJ-77242113)and P
176、N-232(also referenced as JNJ-75105186),and aPhase 1 study was initiated for PN-235 in December 2020.The Phase 1 for PN-235 study is designed to determine thesafety,tolerability and pharmacokinetics of PN-235 in approximately 100 healthy volunteers.The study will be conductedin three parts:a SAD comp
177、onent,an MAD component,and a randomized,crossover solid dose comparison component.The primary endpoint is safety as measured by number and severity of adverse events.Secondary outcomes includepharmacokinetics measurements of peak concentration and area under the curve.We expect results from the Phas
178、e 1 studyfor PN-235 in 2021.PN-232 is in the late preclinical stage and we expect to initiate and complete a Phase 1 study for PN-232 in 2021.The advancement of three different oral co-development candidates provides us with several strategic options fordevelopment in multiple indications.We are als
179、o continuing our joint research efforts to identify additional IL-23Rantagonists.OUR PEPTIDE TECHNOLOGY PLATFORMOur proprietary technology platform is purposefully built to exploit the advantages of constrained peptides,which aremuch smaller than antibody-based drugs and may be delivered orally but
180、are big enough to bind and block the difficulttargets that antibodies bind and modulate.The platform has been successfully applied to a diverse set of biological targetsthat has led to several pre-clinical and clinical stage peptide-based new chemical entities,including our clinical stageproduct can
181、didates,for a variety of clinical indications.Our platform is comprised of a series of tools and methods,including a combination of molecular design,phage display,stability assays,medicinal chemistry,biomarker,formulations,in vitro biochemical,cell and tissue-based assays,and in vivo pharmacology an
182、d pharmacokinetic approaches.We applythis platform to the discovery and development of constrained peptides to develop new drug candidates.The platform is used to develop potential drug candidates(agonists and antagonists):(i)using the structure of atarget,when available,(ii)de novo when no target s
183、tructure exists,or(iii)from publicly disclosed peptide starting points.In a structure-based approach,our proprietary molecular design software and structural database of several thousandconstrained peptides,termed Vectrix,are screened to identify suitable scaffolds.The scaffolds identified form the
184、basisof designing and constructing the first set of phage or chemical libraries.The initial hits are identified by either panning orscreening such libraries,respectively.When structural information is unavailable for a target,hits are identified by panninga set of 34 proprietary cluster-based phage
185、libraries consisting of millions of constrained peptides.Once the hits areidentified,they are optimized using a set of peptide,peptide mimetic and medicinal chemistry techniques that include theincorporation of new or manipulation of existing cyclization-constraints,as well as natural or unnatural a
186、mino acids andchemical conjugation or acylation techniques.These techniques are applied to optimize potency,selectivity,stability,exposure and ultimately efficacy.For rusfertide,hit discovery and optimization relied exclusively on medicinal andcomputational chemistry,with no phage display,to develop
187、 potent and selective injectable candidates with enhancedstability and exposure in blood.For injectable products,stability in blood is determined using in vitro assay techniques toidentify chemical and biological sites of degradation,which are then optimized while stillTable of Contents16maintaining
188、 potency and selectivity.Conjugation strategies are used to optimize the exposure of the injected peptide.ForPN-943,PTG-200,PN-235 and PN-232,phage display is tightly coupled to medicinal chemistry,structural biology andoral stability techniques to develop potent,selective and orally delivered molec
189、ules that are GI-restricted.Oral stability isprofiled in a series of in vitro and ex vivo assays that portray the chemical and metabolic barriers a peptide will encounter as it transits the GI tract.These metabolically labile spots in the peptides are optimized using medicinal chemistry-based approa
190、ches to engineer oral stability whilst maintaining selectivity and potency.Various in vivo pharmacology tools arethen used to quantify peptide exposure in relevant GI organs and tissues.This data can be used to optimize required GIexposure over the required time frame to achieve in vivo efficacy.Thi
191、s is complemented by formulation technologies toenhance GI and systemic exposure by exploiting the intrinsic stability of our oral peptides.Finally,various biomarkers arealso developed to correlate exposure with efficacy to guide candidate selection,dose selection and provide preliminaryproof-of-con
192、cept of target engagement in clinical trials.Future Applications of our PlatformWe believe we have built a versatile,well-validated and unique discovery platform.For example,this peptidetechnology platform has been used to develop product candidates for diverse target classes including G-protein-cou
193、pledreceptors,ion channels,transporters,cytokines and their receptors for a variety of therapeutic areas.In the future we maytackle other GI and blood disorders and expand our delivery techniques to include other organ/tissue systems,such as thelung and eye,which will provide potential opportunities
194、 to pursue a wider variety of diseases.In addition,the gut maycommunicate with the immune,central nervous,and endocrine systems,providing the potential of our GI-restrictedapproach to treat metabolic,cancer and cardiovascular diseases.Lastly,we intend to progress our platform to achievesystemic bioa
195、vailability and activity with oral peptides,macrocycles and peptidomimetics,thereby enabling us to addresssystemic diseases.An example of this approach is our preclinical stage program to identify an orally active hepcidinmimetic as was recently reported at the American Society for Hematologys virtu
196、al annual meeting in December 2020.Webelieve this will be complementary to the injectable rusfertide for offering the best treatment options for polycythemiavera,hereditary hemochromatosis and other potential erythropoietic and iron imbalance disorders.COVID-19 Business UpdateWe are continuing to cl
197、osely monitor the impact of the ongoing global COVID-19 pandemic on our business andhave taken and continue to take proactive efforts designed to protect the health and safety of our patients,studyinvestigators,clinical research staff and employees,and to maintain business continuity.Following guida
198、nce from federal,state and local authorities,we transitioned to a fully remote working environment for a portion of 2020.As a result,ourlaboratories and office locations were closed for approximately two weeks.Our facility partially re-opened in April 2020for laboratory personnel and a small number
199、of critical personnel to resume limited operations.We have experiencedrelatively minor impacts on productivity overall,which were experienced primarily in as our personnel adjusted to workingremotely in the early stages of the COVID-19 pandemic.Enrollment in certain of our clinical studies has been
200、adverselyaffected by the pandemic.It is possible the pandemic will have a more significant negative impact on our business in thefuture,depending on the depth of the effects and the duration of the crisis.We cannot predict whether these trends willcontinue or be exacerbated,or when we will return to
201、 a normal working model.For information regarding the current andpotential impacts of the effects of the COVID-19 pandemic on our business,see Part II,Item 7,“Managements Discussionand Analysis of Financial Condition and Results of OperationsOverview”and elsewhere in this Form 10-K.Material Agreemen
202、tsJanssen License and Collaboration AgreementIn May 2017,we and Janssen entered into an exclusive license and collaboration agreement for the clinicaldevelopment,manufacture and potential commercialization of PTG-200 and certain related compounds worldwide for thetreatment of CD and UC(the“Janssen L
203、icense and Collaboration Agreement”).The Janssen License and CollaborationAgreement became effective on July 13,2017 and was subsequently amended effective May 2019(the“FirstAmendment”).The First Amendment expands the original collaboration by supporting efforts towards research anddevelopment of se
204、cond-generation IL-23R antagonists.During the third quarter of 2017,we received a non-Table of Contents17refundable,upfront cash payment of$50.0 million from Janssen.During the second quarter of 2019,we received a non-refundable cash payment of$25.0 million upon execution of the First Amendment.Duri
205、ng the first quarter of 2020,wereceived a milestone payment of$5.0 million triggered by the identification and nomination of a second-generationdevelopment candidate.See“Item 7.Managements Discussion and Analysis Overview”and Note 3 to the ConsolidatedFinancial Statements included elsewhere in this
206、Annual Report on Form 10-K for additional information.Research Collaboration and License Agreement with Zealand Pharma A/SIn June 2012,we entered into a Research Collaboration and License Agreement with Zealand Pharma A/S(“Zealand”)to identify,optimize and develop novel disulfide-rich peptides to di
207、scover a hepcidin mimetic.We amendedthis agreement on February 28,2014,at which point Protagonist assumed responsibility for the development program.See“Item 3.Legal Proceedings”,“Item 7.Managements Discussion and Analysis Contractual Obligations and OtherCommitments”and Note 7 and Note 11 to the Co
208、nsolidated Financial Statements included elsewhere in this Annual Reporton Form 10-K for additional information.CompetitionThe biotechnology and pharmaceutical industries are intensely competitive and subject to rapid and significanttechnological change.While we believe that our product candidates,t
209、echnology,knowledge and experience provide uswith certain competitive advantages,we face competition from established and emerging pharmaceutical andbiotechnology companies,academic institutions,governmental agencies and public and private research institutions,among others.Ruxolitinib,marketed as J
210、akafi,is currently the only branded product in the United States approved for PV.OnJune 4,2020,the FDA accepted a Biologics License Application for ropeginterferon alfa-2b for use in treatment forpatients with PV in the absence of symptomatic splenomegaly from PharmaEssentia Corporation,the manufact
211、urer of thenovel pegylated interferon.A decision from the FDA on this application is expected in early 2021.There are currently no approved orally delivered peptide-based 47 or IL-23R products for IBD.We believe ourprincipal competition in the treatment of IBD will come from companies with injectabl
212、e agents in the anti-integrin classthat are or will be approved by 2028,including:Takedas vedolizumab(Entyvio)IV and SC;andAbbvies risankizumab(Skyrizi)SC(UC and CD Phase 3).In addition,orally delivered agents with novel mechanisms of action are approved or in development and may be approvedfor UC a
213、nd/or CD prior to the launch of our product candidates.These include JAK inhibitors,pan-JAK tofacitinib(Xeljanz)approved in UC and next-generation JAK1 inhibitors filgotinib and upadacitinib,as well as S1P inhibitors,ozanimod,amiselmod and etrasimod.The anti-IL-23 antibodies are also demonstrating p
214、ositive data in IBD.Our assetsPTG-200,PN-235 and PN-232,if approved,will compete as the only orally delivered IL-23R antagonists.Intellectual PropertyWe strive to protect and enhance the proprietary technology,inventions,and improvements that are commerciallyimportant to the development of our busin
215、ess,including seeking,maintaining,and defending patent rights,whetherdeveloped internally or licensed from third parties.We also rely on trade secrets relating to our proprietary technologyplatform and on know-how,and continuing technological innovation to develop,strengthen,and maintain our proprie
216、taryposition in the field of peptide-based therapeutics that may be important for the development of our business.We will alsotake advantage of regulatory protection afforded through data exclusivity,market exclusivity and patent term extensionswhere available.Our commercial success may depend in pa
217、rt on our ability to obtain and maintain patent and other proprietaryprotection for commercially important technology,inventions and know-how related to our business;defend and enforceTable of Contents18our patents;preserve the confidentiality of our trade secrets;and operate without infringing the
218、valid enforceable patentsand proprietary rights of third parties.Our ability to stop third parties from making,using,selling,offering to sell orimporting our products may depend on the extent to which we have rights under valid and enforceable patents or tradesecrets that cover these activities.We c
219、annot be sure that patents will be granted with respect to any of our pending patentapplications or with respect to any patent applications filed by us in the future,nor can we be sure that any of our existingpatents or any patents that may be granted to us in the future will be commercially useful
220、in protecting our commercialproducts and methods of manufacturing the same.For more information,please see“Item 1A.Risk FactorsRisks Relatedto Our Intellectual Property.”We own or co-own 20 issued U.S.patents,over 35 granted ex-U.S.patents,and numerous U.S.and ex-U.S.patentapplications related to ou
221、r clinical assets.We possess substantial know-how and trade secrets relating to the developmentand commercialization of peptide based therapeutic products.Our proprietary intellectual property,including patent andnon-patent intellectual property,is generally directed to,for example,peptide-based the
222、rapeutic compositions,methods ofusing these peptide-based therapeutic compositions to treat or prevent disease,methods of manufacturing peptide-basedtherapeutic compositions,and other proprietary technologies and processes related to our lead product developmentcandidates.Specific patents and patent
223、 applications are directed to compositions of 47 integrin peptides,IL-23Rantagonist peptides,and hepcidin and enkephalin mimetics peptides,as well as methods of synthesizing and using thesepeptides to treat inflammatory disorders.Applications are currently pending in the United States and other majo
224、rjurisdictions,including Australia,Canada,China,Japan,and Europe.We expect our patents and patent applications,ifissued,and if the appropriate maintenance,renewal,annuity,or other governmental fees are paid,to expire fromOctober 2033 to July 2041(excluding possible patent term extensions).Our object
225、ive is to continue to expand our portfolio of patents and patent applications in order to protect our clinicalassets and related peptide-based drug technologies.We also license patents and patent applications directed to processes and methods related to our technology platform.These patents have iss
226、ued in the United States and other major jurisdictions,including Australia and Europe.Somelicensed patents are expired,and others are expected to expire before or by February 2023.Material aspects of ourtechnology platform are protected by trade secrets and confidentiality agreements.In addition to
227、the above,we have established expertise and development capabilities focused in the areas of pre-clinical research and development,manufacturing and manufacturing process scale-up,quality control,quality assurance,regulatory affairs and clinical trial design and implementation.We believe that our fo
228、cus and expertise will help us developproducts based on our proprietary intellectual property.The term of individual patents depends upon the legal term of the patents in the countries in which they are obtained.In most countries in which we file,the patent term is 20 years from the date of filing t
229、he non-provisional application.In theUnited States,a patents term may be lengthened by patent term adjustment,which compensates a patentee foradministrative delays by the U.S.Patent and Trademark Office in granting a patent or may be shortened if a patent isterminally disclaimed over an earlier-file
230、d patent.The term of a patent that covers an FDA approved drug may also be eligible for patent term extension,which permitspatent term restoration of a U.S.patent as compensation for the patent term lost during the FDA regulatory review process.The Hatch-Waxman Act permits a patent term extension of
231、 up to five years beyond the expiration of the patent.The lengthof the patent term extension is related to the length of time the drug is under regulatory review.A patent term extensioncannot extend the remaining term of a patent beyond a total of 14 years from the date of product approval and only
232、onepatent applicable to an approved drug may be extended.Moreover,a patent can only be extended once,and thus,if a singlepatent is applicable to multiple products,it can only be extended based on one product.Similar provisions are available inEurope and other foreign jurisdictions to extend the term
233、 of a patent that covers an approved drug.When possible,weexpect to apply for patent term extensions for patents covering our product candidates and their methods of use.Table of Contents19Trade SecretsWe rely on trade secrets to protect certain aspects of our technology,particularly in relation to
234、our technologyplatform.However,trade secrets can be difficult to protect.We seek to protect our proprietary technology and processes,inpart,by entering into confidentiality agreements with our employees,consultants,scientific advisors and contractors.Wealso seek to preserve the integrity and confide
235、ntiality of our data and trade secrets by maintaining physical security of ourpremises and physical and electronic security of our information technology systems.While we have confidence in theseindividuals,organizations and systems,agreements or security measures may be breached,and we may not have
236、 adequateremedies for any breach.In addition,our trade secrets may otherwise become known or be independently discovered bycompetitors.To the extent that our consultants,contractors or collaborators use intellectual property owned by others intheir work for us,disputes may arise as to the rights in
237、related or resulting know-how and inventions.For moreinformation,please see“Item 1A.Risk FactorsRisks Related to Our Intellectual Property.”ManufacturingWe contract with third parties for the manufacturing of our product candidates for pre-clinical and clinical studies andeventually for commercial s
238、upplies,and intend to continue to do so in the future.We do not own or operate anymanufacturing facilities and we have no plans to build any owned clinical or commercial scale manufacturing capabilities.We believe that the use of contract manufacturing organizations(“CMOs”)eliminates the need for us
239、 to directly invest inmanufacturing facilities,equipment and additional staff.We have established a global supply chain for raw material,activepharmaceutical ingredients(“API”),drug product manufacturing and distribution.We work with contract manufacturers inthe United States,Europe and Asia.Althoug
240、h we rely on contract manufacturers,our personnel and consultants haveextensive manufacturing and quality control experience overseeing CMOs.We regularly consider second source or back-upmanufacturers for both API and drug product manufacturing.To date,our third-party manufacturers have met themanuf
241、acturing requirements for our product candidates.We expect third-party manufacturers to be capable of providingneeded quantities of our product candidates to meet anticipated full-scale commercial demands,and we have selectedCMOs that can manufacture our product candidates for our ongoing and planne
242、d clinical trials as well as commercialsupplies.We currently engage CMOs on a“fee for services”basis for our current development and clinical supplies.Webelieve there are alternate sources of manufacturing that have been and could be engaged and enabled to satisfy our clinicaland commercial requirem
243、ents,however we cannot guarantee that identifying and establishing alternative relationships withsuch sources will be successful,cost effective,or completed on a timely basis without significant delay in the developmentor commercialization of our product candidates.Government RegulationThe FDA and c
244、omparable regulatory authorities in state and local jurisdictions and in other countries imposesubstantial requirements upon companies involved in the clinical development,manufacture,marketing and distribution ofdrugs,such as those we are developing.These agencies and other federal,state and local
245、entities regulate,among otherthings,the research and development,testing,manufacture,quality control,safety,effectiveness,labeling,storage,recordkeeping,approval,advertising and promotion,distribution,post-approval monitoring and reporting,sampling and exportand import of our product candidates.U.S.
246、Government RegulationIn the United States,the FDA regulates drugs under the Federal Food,Drug,and Cosmetic Act(“FDCA”)and itsimplementing regulations.The process of obtaining regulatory approvals and the compliance with applicable federal,state,local and foreign statutes and regulations requires the
247、 expenditure of substantial time and financial resources.Failure tocomply with the applicable U.S.requirements at any time during the product development process,approval process orafter approval,may subject an applicant to a variety of administrative or judicial sanctions,such as the FDAs refusal t
248、oapprove pending new drug applications(“NDAs”),withdrawal of an approval,imposition of a clinical hold,issuance ofwarning letters,product recalls,product seizures,total or partial suspension of production or distribution,injunctions,fines,refusals of government contracts,restitution,disgorgement or
249、civil or criminal penalties.Table of Contents20The process required by the FDA before a drug may be marketed in the United States generally involves thefollowing:completion of pre-clinical laboratory tests,animal studies and formulation studies in compliance withthe FDAs good laboratory practices re
250、gulations;submission to the FDA of an IND application,which must become effective before human clinical trialsmay begin;approval by an independent institutional review board(“IRB”)at each clinical site before each trial maybe initiated;performance of adequate and well-controlled human clinical trial
251、s in accordance with good clinicalpractice(“GCP”)requirements to establish the safety and efficacy of the proposed drug product for eachindication;submission to the FDA of an NDA(or Biologics License Application(“BLA”)for a biologic product;satisfactory completion of an FDA advisory committee review
252、,if applicable;satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which theproduct is produced to assess compliance with current good manufacturing practices(“cGMP”)requirements and to assure that the facilities,methods and controls are adequate to preserve t
253、he drugsidentity,strength,quality and purity;satisfactory completion of an FDA inspection of one or more clinical trial sites to assure compliancewith GCP requirements and the clinical protocol;andFDA review and approval of the NDA.Pre-clinical StudiesPre-clinical studies include laboratory evaluati
254、on of product chemistry,toxicity and formulation,as well as animalstudies to assess potential safety and efficacy.An IND sponsor must submit the results of the pre-clinical tests,togetherwith manufacturing information,analytical data and any available clinical data or literature,among other things,t
255、o theFDA as part of an IND.Some pre-clinical testing may continue even after the IND is submitted.An IND automaticallybecomes effective 30 days after receipt by the FDA,unless before that time the FDA raises concerns or questions related toone or more proposed clinical trials and places the clinical
256、 trial on a clinical hold.In such a case,the IND sponsor and theFDA must resolve any outstanding concerns before the clinical trial can begin.As a result,submission of an IND may notresult in the FDA allowing clinical trials to commence.Clinical TrialsClinical trials involve the administration of th
257、e investigational new drug to human subjects under the supervision ofqualified investigators in accordance with GCP requirements,which include the requirement that all research subjectsprovide their informed consent in writing before their participation in any clinical trial.Clinical trials are cond
258、ucted underprotocols detailing,among other things,the objectives of the trial,the parameters to be used in monitoring safety,and theeffectiveness criteria to be evaluated.A protocol for each clinical trial and any subsequent protocol amendments must besubmitted to the FDA as part of the IND(or equiv
259、alent submission ex-US).In addition,an IRB or ethics committee(“EC”)must review and approve the plan for any clinical trial at each institution participating in the clinical trial before itcommences at that site.Information about certain clinical trials must be submitted within specific timeframes t
260、o theNational Institutes of Health(“NIH”)for public dissemination on their www.clinicaltrials.gov website.Table of Contents21Human clinical trials are typically conducted in three sequential phases,which may overlap or be combined:Phase 1:The drug is initially introduced into healthy human subjects
261、or patients with the target diseaseor condition and tested for safety,dosage tolerance,absorption,metabolism,distribution,excretion and,if possible,to gain an early indication of its effectiveness.Phase 2:The drug is administered to a limited patient population to identify possible adverse effects a
262、ndsafety risks,to preliminarily evaluate the efficacy of the investigational drug product for specific targeteddiseases and to determine dosage tolerance and optimal dosage.Phase 3:The drug is administered to an expanded patient population,generally at geographicallydispersed clinical trial sites,in
263、 well-controlled clinical trials to generate enough data to statisticallyevaluate the efficacy and safety of the product for approval,to establish the overall risk-benefit profile ofthe product,and to provide adequate labeling information(labeling)for the safe and efficaciousadministration for the l
264、abeling of the product.Progress reports detailing the results of the clinical trials must be submitted at least annually to the FDA and morefrequently if serious adverse events occur.Phase 1,Phase 2 and Phase 3 clinical trials may not be completed successfullywithin any specified period,or at all.Fu
265、rthermore,the FDA or the sponsor may suspend or terminate a clinical trial at anytime on various grounds,including a finding that the research subjects are being exposed to an unacceptable health risk.Similarly,an IRB or EC can suspend or terminate approval of a clinical trial at its institution if
266、the clinical trial is not beingconducted in accordance with the IRBs requirements or if the drug has been associated with unexpected serious harm topatients.Marketing ApprovalAssuming successful completion of the required clinical testing,the results of the pre-clinical and clinical studies,together
267、 with detailed information relating to the products chemistry,manufacture,controls and proposed labeling,amongother things,are submitted to the FDA as part of an NDA requesting approval to market the product for one or moreindications.In most cases,the submission of an NDA is subject to a substantia
268、l application user fee.Under the PrescriptionDrug User Fee Act(“PDUFA”)guidelines that are currently in effect,the FDA has a goal of ten months from the date of“filing”of a standard NDA for a new molecular entity to review and act on the submission.This review typically takestwelve months from the d
269、ate the NDA is submitted to FDA because the FDA has approximately two months to make a“filing”decision.In addition,under the Pediatric Research Equity Act of 2003(“PREA”),as amended and reauthorized,certain NDAsor supplements to an NDA must contain data that are adequate to assess the safety and eff
270、ectiveness of the drug for theclaimed indications in all relevant pediatric subpopulations,and to support dosing and administration for each pediatricsubpopulation for which the product is safe and effective.The FDA may,on its own initiative or at the request of theapplicant,grant deferrals for subm
271、ission of some or all pediatric data until after approval of the product for use in adults,orfull or partial waivers from the pediatric data requirements.The FDA also may require submission of a risk evaluation and mitigation strategy(“REMS”)plan to ensure that thebenefits of the drug outweigh its r
272、isks.The REMS plan could include medication guides,physician communication plans,assessment plans,and/or elements to assure safe use,such as restricted distribution methods,patient registries,or other riskminimization tools.The FDA conducts a preliminary review of all NDAs within the first 60 days a
273、fter submission,before accepting themfor filing,to determine whether they are sufficiently complete to permit substantive review.The FDA may requestadditional information rather than accept an NDA for filing.In this event,the application must be resubmitted with theadditional information.The resubmi
274、tted application is also subject to review before the FDA accepts it for filing.Once thesubmission is accepted for filing,the FDA begins an in-depth substantive review.The FDA reviews an NDA to determine,among other things,whether the drug is safe and effective and whether the facility in which it i
275、sTable of Contents22manufactured,processed,packaged or held meets standards designed to assure the products continued safety,quality andpurity.The FDA may refer an application for a novel drug to an advisory committee.An advisory committee is a panel ofindependent experts,including clinicians and ot
276、her scientific experts,that reviews,evaluates and provides arecommendation as to whether the application should be approved and under what conditions.The FDA is not bound bythe recommendations of an advisory committee,but it considers such recommendations carefully when making decisions.Before appro
277、ving an NDA,the FDA typically will inspect the facility or facilities where the product is manufactured.The FDA will not approve an application unless it determines that the manufacturing processes and facilities are incompliance with cGMP requirements and adequate to assure consistent production of
278、 the product within requiredspecifications.Additionally,before approving an NDA,the FDA may inspect one or more clinical trial sites to assurecompliance with GCP requirements.After evaluating the NDA and all related information,including the advisory committee recommendation,if any,andinspection rep
279、orts regarding the manufacturing facilities and clinical trial sites,the FDA may issue an approval letter,or,insome cases,a complete response letter.A complete response letter generally contains a statement of specific conditions thatmust be met in order to secure final approval of the NDA and may r
280、equire additional clinical or pre-clinical testing in orderfor FDA to reconsider the application.Even with submission of this additional information,the FDA ultimately may decidethat the application does not satisfy the regulatory criteria for approval.If and when those conditions have been met to t
281、heFDAs satisfaction,the FDA will typically issue an approval letter.An approval letter authorizes commercial marketing ofthe drug with specific prescribing information for specific indications.Even if the FDA approves a product,it may limit the approved indications for use of the product,require tha
282、tcontraindications,warnings or precautions be included in the product labeling,require that post-approval studies,includingPhase 4 clinical trials,be conducted to further assess a drugs safety after approval,require testing and surveillanceprograms to monitor the product after commercialization,or i
283、mpose other conditions,including distribution and userestrictions or other risk management mechanisms under a REMS,which can materially affect the potential market andprofitability of the product.The FDA may prevent or limit further marketing of a product based on the results of post-marketing studi
284、es or surveillance programs.After approval,some types of changes to the approved product,such as addingnew indications,manufacturing changes and additional labeling claims,are subject to further testing requirements andFDA review and approval.Fast Track DesignationThe FDA has various programs,includ
285、ing fast track designation,which are intended to expedite or simplify theprocess for the development and FDA review of drugs that are intended for the treatment of serious or life threateningdiseases or conditions and demonstrate the potential to address unmet medical needs.The purpose of these prog
286、rams is toprovide important new drugs to patients earlier than under standard FDA review procedures.Under the fast track program,the sponsor of a new drug candidate may request that the FDA designate the drug candidate for a specific indication as afast track drug concurrent with,or after,the filing
287、 of the IND for the drug candidate.To be eligible for a fast trackdesignation,the FDA must determine,based on the request of a sponsor,that a product is intended to treat a serious or lifethreatening disease or condition and demonstrates the potential to address an unmet medical need.The FDA will de
288、terminethat a product will fill an unmet medical need if it will provide a therapy where none exists or provide a therapy that maybe potentially superior to existing therapy based on efficacy or safety factors.Fast track designation provides additionalopportunities for interaction with the FDAs revi
289、ew team and may allow for rolling review of NDA components before thecompleted application is submitted,if the sponsor provides a schedule for the submission of the sections of the NDA,theFDA agrees to accept sections of the NDA and determines that the schedule is acceptable,and the sponsor pays any
290、required user fees upon submission of the first section of the NDA.However,the FDAs time period goal for reviewing anapplication does not begin until the last section of the NDA is submitted.The FDA may decide to rescind the fast trackdesignation if it determines that the qualifying criteria no long
291、er apply.Table of Contents23Orphan DesignationThe FDA may grant orphan designation to drugs or biologics intended to treat a rare disease or condition that affectsfewer than 200,000 individuals in the United States,or if it affects more than 200,000 individuals in the United States,andthere is no re
292、asonable expectation that the cost of developing and marketing the product for this type of disease orcondition will be recovered from sales in the United States.Orphan designation must be requested before submitting anNDA or BLA.After the FDA grants orphan designation,the identity of the therapeuti
293、c agent and its potential orphan useare disclosed publicly by the FDA.Orphan designation does not convey any advantage in or shorten the duration of theregulatory review and approval process.In the United States,orphan designation entitles a party to financial incentives such as opportunities for gr
294、ant fundingtowards clinical trial costs,tax advantages and user-fee waivers.In addition,if a product receives the first FDA approvalfor the indication for which it has orphan designation,the product is entitled to orphan exclusivity,which means the FDAmay not approve any other application to market
295、the same product for the same indication for a period of seven years,except in limited circumstances,such as a showing of clinical superiority over the product with orphan exclusivity orwhere the manufacturer with orphan exclusivity is unable to assure sufficient quantities of the approved orphan de
296、signatedproduct.Competitors,however,may receive approval of different products for the indication for which the orphan producthas exclusivity or obtain approval for the same product but for a different indication for which the orphan product hasexclusivity.Orphan product exclusivity also could block
297、 the approval of one of our products for seven years if a competitorobtains approval of the same product as defined by the FDA or if our product candidate is determined to be containedwithin the competitors product for the same indication or disease.If a drug or biological product designated as an o
298、rphanproduct receives marketing approval for an indication broader than what is designated,it may not be entitled to orphanproduct exclusivity.Post-Approval RequirementsDrugs manufactured or distributed pursuant to FDA approvals are subject to pervasive and continuing regulation bythe FDA,including,
299、among other things,requirements relating to recordkeeping,periodic reporting,product sampling anddistribution,advertising and promotion and reporting of adverse experiences with the product.After approval,mostchanges to the approved product,such as adding new indications or other labeling claims,are
300、 subject to prior FDA reviewand approval.There also are continuing,annual program user fee requirements for any marketed products,as well asapplication fees for supplemental applications with clinical data.The FDA may impose a number of post-approval requirements as a condition of approval of an NDA
301、.For example,the FDA may require post-marketing testing,including Phase 4 clinical trials,and surveillance to further assess andmonitor the products safety and effectiveness after commercialization.In addition,drug manufacturers and other entities involved in the manufacture and distribution of appr
302、oved drugs arerequired to register their establishments with the FDA and state agencies and are subject to periodic unannouncedinspections by the FDA and these state agencies for compliance with cGMP requirements.Changes to the manufacturingprocess are strictly regulated and often require prior FDA
303、approval before being implemented.FDA regulations alsorequire investigation and correction of any deviations from cGMP requirements and impose reporting and documentationrequirements upon the sponsor and any third-party manufacturers that the sponsor may decide to use.Accordingly,manufacturers must
304、continue to expend time,money,and effort in the area of production and quality control to maintaincGMP compliance.Once an approval is granted,the FDA may withdraw the approval if compliance with regulatory requirements andstandards is not maintained or if problems occur after the product reaches the
305、 market.Later discovery of previouslyunknown problems with a product,including adverse events of unanticipated severity or frequency,or with manufacturingprocesses,or failure to comply with regulatory requirements,may result in mandatory revisions to the approved labeling toadd new safety informatio
306、n;imposition of post-market studies or clinical trials to assess new safetyTable of Contents24risks;or imposition of distribution or other restrictions under an REMS program.Other potential consequences include,among other things:restrictions on the marketing or manufacturing of the product,complete
307、 withdrawal of the product fromthe market or product recalls;fines,warning letters or holds on post-approval clinical trials;refusal of the FDA to approve pending NDAs or supplements to approved NDAs,or suspension orrevocation of product approvals;product seizure or detention,or refusal to permit th
308、e import or export of products;orinjunctions or the imposition of civil or criminal penalties.The FDA strictly regulates marketing,labeling,advertising and promotion of products that are placed on the market.Drugs may be promoted only for the approved indications and in accordance with the provision
309、s of the approvedprescribing information.The FDA and other agencies actively enforce the laws and regulations prohibiting the promotionof off-label uses,and a company that is found to have improperly promoted off-label uses may be subject to significantliability.Coverage and ReimbursementSales of ou
310、r product candidates,if approved,will depend,in part,on the extent to which the cost of such productswill be covered and adequately reimbursed by third-party payors,such as government healthcare programs,commercialinsurance and managed health care organizations.These third-party payors are increasin
311、gly limiting coverage and/orreducing reimbursements for medical products and services by challenging the prices and examining the medical necessityand cost-effectiveness of medical products and services,in addition to their safety and efficacy.If these third-party payorsdo not consider our products
312、to be cost-effective compared to other therapies,they may not cover our products afterapproval as a benefit under their plans or,if they do,the level of payment may not be sufficient to allow us to sell ourproducts on a profitable basis.There is no uniform policy requirement for coverage and reimbur
313、sement for drug products among third-party payorsin the United States.Therefore,coverage and reimbursement for drug products can differ significantly from payor topayor.The coverage determination process can be a time-consuming and costly process that may require us to providescientific and clinical
314、 support for the use of our products to each payor separately,with no assurance that coverage andadequate reimbursement will be obtained or applied consistently.Even if reimbursement is provided,market acceptance ofour products may be adversely affected if the amount of payment for our products prov
315、es to be unprofitable for health careproviders or less profitable than alternative treatments,or if administrative burdens make our products less desirable to use.In addition,the U.S.government,state legislatures and foreign governments have continued implementing cost-containment programs,including
316、 price controls,restrictions on reimbursement and requirements for substitution of genericproducts.Adoption of price controls and cost-containment measures,and adoption of more restrictive policies injurisdictions with existing controls and measures,could further limit our net revenue and results.De
317、creases in third-partyreimbursement for our product candidates or a decision by a third-party payor to not cover our product candidates couldreduce physician usage of our products candidates,once approved,and have a material adverse effect on our sales,resultsof operations and financial condition.Th
318、e Patient Protection and Affordable Care Act,as amended by the Health Care and Education Reconciliation Act of2010,collectively referred to as the ACA,enacted in March 2010,has had and is expected to continue to have a significantimpact on the health care industry.The ACA,among other things,imposes
319、a significant annual fee on certain companiesthat manufacture or import branded prescription drug products.The ACA also increased the Medicaid rebate rate andexpanded the rebate program to include Medicaid managed care organizations.It also contains substantial newTable of Contents25provisions inten
320、ded to broaden access to health insurance,reduce or constrain the growth of health care spending,enhanceremedies against health care fraud and abuse,add new transparency requirements for the health care industry,impose newtaxes and fees on pharmaceutical manufacturers,and impose additional health po
321、licy reforms,any or all of which mayaffect our business.There have been executive,judicial and Congressional challenges to certain aspects of the ACA.For example,President Trump signed several Executive Orders and other directives designed to delay the implementation of certainrequirements mandated
322、by the ACA or otherwise circumvent some of the requirements for health insurance mandated bythe ACA.Concurrently,Congress considered legislation to repeal or repeal and replace all or part of the ACA.WhileCongress has not passed comprehensive repeal legislation,several bills affecting the implementa
323、tion of certain taxes underthe ACA have been enacted.The Tax Cuts and Jobs Act of 2017,or the Tax Act,included a provision repealing,effectiveJanuary 1,2019,the tax-based shared responsibility payment imposed by the ACA on certain individuals who fail tomaintain qualifying health coverage for all or
324、 part of a year.Additionally,the 2020 federal spending package permanentlyeliminated,effective January 1,2020,the ACA-mandated“Cadillac”tax on high-cost employer-sponsored health coverageand the medical device tax and,effective January 1,2021,also eliminated the health insurance tax.Further,the Bipa
325、rtisanBudget Act of 2018,or the BBA,among other things,amends the ACA,effective January 1,2019,to close the coveragegap in most Medicare drug plans,commonly referred to as the“donut hole”,and increase from 50%to 70%the point-of-sale discount that is owed by pharmaceutical manufacturers who participa
326、te in the Medicare Part D program.On December14,2018,a Texas U.S.District Court Judge ruled that the ACA is unconstitutional in its entirety because the“individualmandate”was repealed by Congress as part of the Tax Act.Additionally,on December 18,2019,the U.S.Court of Appealsfor the 5th Circuit uphe
327、ld the District Court ruling that the individual mandate was unconstitutional and remanded the caseback to the District Court to determine whether the remaining provisions of the ACA are invalid as well.The U.S.SupremeCourt is currently reviewing this case,but it is unclear when a decision will be m
328、ade.Although the U.S.Supreme Court hasnot yet ruled on the constitutionality of the ACA,on January 28,2021,President Biden issued an executive order to initiatea special enrollment period from February 15,2021 through May 15,2021 for purposes of obtaining health insurancecoverage through the ACA mar
329、ketplace.The executive order also instructs certain governmental agencies to review andreconsider their existing policies and rules that limit access to healthcare,including among others,reexamining Medicaiddemonstration projects and waiver programs that include work requirements,and policies that c
330、reate unnecessary barriersto obtaining access to health insurance coverage through Medicaid or the ACA.It is unclear how the Supreme Court ruling,other such legislation and the healthcare reform measures of the Biden administration will impact the ACA and ourbusiness.In addition,other legislative ch
331、anges have been proposed and adopted since the ACA was enacted.These changesincluded aggregate reductions to Medicare payments to providers of 2%per fiscal year,which went into effect in April2013 and,due to subsequent legislative amendments to the statute,including the BBA,will remain in effect thr
332、ough 2030unless additional action is taken by Congress.However,COVID-19 relief legislation suspended the 2%Medicare sequesterfrom May 1,2020 through March 31,2021.In January 2013,the American Taxpayer Relief Act of 2012 was signed intolaw,which,among other things,further reduced Medicare payments to
333、 several types of providers and increased the statuteof limitations period in which the government may recover overpayments to providers from three to five years.New lawsmay result in additional reductions in Medicare and other health care funding.Further,there has been heightened governmental scrutiny over the manner in which manufacturers set prices for theirmarketed products.Such scrutiny has r
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